Think back to the last time you restructured your office. You might have reduced your team, redefined roles and rearranged the furniture but what did you think to reconsider any processes that may be holding you back?
It’s often the older, more set-in-stone processes that go on behind the scenes that get left behind when we’re busy rethinking how other aspects of the business could affect performances.
Take payroll for instance, did you know that according to research from ADP, a staggering 55% of companies fail to measure the true costs of payroll? That’s a pretty significant number and one, which could be drastically cut if companies reconsidered their options, particularly outsourcing.
A few years ago, an article in HRWorld magazine stated: ‘Big businesses can afford to maintain big payroll departments. For small businesses however, an in-house payroll service is a money burner.’ With that in mind, let’s take a look at exactly how outsourcing payroll could save you time and money…
On the clock
Regardless of the size of your company, outsourcing payroll can save you crucial time. That time that could be utilised more efficiently to look at other areas of the business that need improving or fine-tuning.
Or perhaps the time is given back to employees to carry out their jobs efficiently without having to rush tasks at the last-minute in order to squeeze both the payroll paperwork and their projects into the out tray by the end of the day.
Whether it’s your time, your staff’s time or a mix of both, the chances are the hours could be divided up more efficiently. After all, working late is no one’s idea of fun and could lead to errors, an unmotivated work force and a bitter office atmosphere.
Outsourcing your payroll will save time by enabling professionals who are experts in their field to administer tasks such as:
- Processing payroll
- Cutting and distributing pay slips
- Calculating and paying withholding and employment taxes
- Preparing and distributing HMRC and tax paperwork
- Keeping up with HMRC and tax legislation updates
- Handling employee payroll enquiries
Underestimate costs; prepare to overspend
Remember that figure we stated earlier? That over half of companies fail to measure the true costs of payroll? If you’re not tallying up all the hours spent and resources used to complete payroll duties, you could wind up falling into this category.
A thorough cost assessment usually proves that businesses of all sizes save money by outsourcing the processing, tracking and filing of payroll documents. If you’re wondering how much time and money you currently spend on payroll administration, consider the following:
- Whose time is being used up and just how important is that time if it could be switched to another area of the business? Consider both your time and anyone who processes or gets involved with payroll. Often, many people in a small company will be involved whereas if you outsource, you’re handing over the responsibility to one sole provider who can release this burden from the rest of the team
- What savings would outsourcing provide? You may actually be able to downsize your team depending on how many people are involved in the process, saving you money which could be invested into other areas which are more in need of development
- Trust the statistics. According to a 2011 survey by BPO analysts Nelson Hall, the number one reason for outsourcing payroll continues to be cost reduction, with approximately 85% of respondents citing this as their primary business goal
If you can’t beat ‘em, join ‘em
You’re never going to get anywhere in business copying someone else. In almost all other areas, it pays to buck the trend and be original. But when it comes to processing payroll, did you know that a recent survey of UK firms by the CIPD revealed that around half of organisations intend to outsource part of their HR activities within the next three years?
There are countless reasons why outsourcing payroll has become so popular (increased quality of service, streamlined processes, increased compliance, reduced risk and introduction of advanced new HR technology) and it’s a rare that you will ever match the exceptionally high standards of the professionals who pride themselves on delivering meticulously accurate, prompt payroll services so if you can’t beat ‘em, it might pay to join ‘em.
About the author: Morgan Danaher is Managing Director of Ceridian Ireland http://www.ceridian.ieRead More
When you own your own business, there are certain perks you get to enjoy. One is the ability to write off a home office. This can make a substantial difference in the size of your income, and you don’t want to overlook the deduction if it is available to you. However, you need to tread lightly when claiming it. The rules are clear, and violating them can land you in hot water with the IRS.
Suppose you have a desk in the corner of the family room that serves as your “office.” The rest of the room is for the family’s enjoyment, but the desk is only for you. If you decide to write off the entire room, then you fail the first test. The space must be used exclusively and regularly for business if it will qualify. Spaces that are used a few times a year do not qualify, and a room that doubles as the guest room or a hobby area will also be denied this deduction. The exception is homes that use certain rooms for a daycare because the daycare is used only during certain hours.
Why Are You Working from Home?
If you are an independent contractor or small business owner working from home, then you will pass this test. However, employees who have a work station available at the office and choose to work from home cannot take the deduction. If you are an employee, then you can only write off the home office if your employer has mandated that you work from home. If there is an alternate location available, then the deduction is closed to you.
Tread Carefully if You Have More than One Business
If you have multiple pans in the fire and are working on several businesses, then you need to tread lightly with the home office deduction. You can only claim the deduction if all the businesses meet the standards. The rules are clear, and if even one business fails the tests, then you cannot claim the home office for any of them.
You Are Only Taking a Percentage
Calculate the square footage of your home office, and then divide it by the total square footage of your home. This is the percentage that you can claim for the home office. You will deduct that percentage of all related home office expenses including real estate taxes, mortgage interest, utilities, annual depreciation and insurance. Maintenance directly benefiting only the home office can be deducted in full.
Limited to Income Levels
Finally, the home office deduction is limited to your income levels. You cannot write off more for the home office than you actually brought in. If your income is $3,000 and deductions are $3,500, then you will only be allowed to write off $3,000 of the deductions. The good news is that you can carry the loss forward to the next year.
The home office deduction is an important one for business owners working from home. It will help you shrink the tax bill, but you have to tread lightly. You must have a dedicated space that is only used for work, and you can only write off a certain percentage. Also, if you have access to another office at one of your stores or through your employer, then you should not take this deduction at all.
- License: Creative Commons image source
My name is Ben Sawyer. I’m currently working as a marketing consultant for a construction project building new homes in NYC. As a person with extensive experience of working from home, I’ve been familiarized with tax procedures for small personal businesses. This articles aims to provide a short overview of the thinks you should look out for when running a registered home business.Read More
Getting your finances on track can often best be performed during times of change and when better than spring to give your money relationship a quick one over. So, let’s look at how you can de clutter your finances and get them in spick and span shape for the rest of the year.
The ISA is a great addition and one that can allow you to benefit from increased interest, once you do so before the end of the next tax year. The ISA allowance is £11,280 and you can deposit half in cash form. This investment is tax-free and allows you one of the best opportunities to shelter your account from the tax man and also earn a quite nice sum in interest. Getting on top of it now and investing before the deadline means you can benefit and won’t lose out.
We all have current account issues and so a nice spring clean can make all the difference. Sort out all of those direct debits that you no longer use, such as those magazine subscriptions or that gym membership from a half decade ago. This can save you dozens of pounds over a month and perhaps hundreds over the space of a year.
Also, take a look at your overdraft and if you are constantly paying off high rates on it then you should switch to a current account with a lower rate. Some even give you a free period for up to 12 months, thereby allowing you the chance to pay it off.
If you are prone to savings in current accounts, then look at the accounts that offer you more. Some accounts can provide you with up to 5% for your savings for a set period; though watch as afterwards they may fall to very low rates. Others offer you the chance to make money on your savings depending on how much you have in your current account at the time. Take a look about; there are plenty of products available.
The credit card can be a real hindrance too and ensuring you have the right one and that it is working for you can make all the difference. If you have an old card with a high rate, you may be paying a lot on the card and should perhaps consider switching to a lower rate card, or a balance transfer card. Be aware of all the terms and conditions before you apply for a credit card.
If you are a person who pays off their balance in full each month, then you should look for a card that gives you something back. There are a number of cards out there that offer you rewards in return for spending, so take a look and see what best suits your needs.
A lot of people tend to purchase all their services separately, however great savings can be made by combining them all together. Why not consider bundling your TV, phone and broadband and see if you can save. Of course, you will need to check all services are available in your area – but if they are you can do well and save significant amounts yearly.
These tips should help you to save your money and sort out those finances nice and easily.
Cormac Reynolds writes for a range of credit card and finance sites and offers financial advice in print and online.Read More
Expecting your first child can produce a rollercoaster of emotions; it is exciting, but it can also be terrifying in so many ways. You wonder if you will be a good parent; you may feel stress over preparing for your new bundle of joy; and perhaps the greatest source of terror is the financial aspect of raising a child. For many expectant parents, the costs of having a baby will produce major changes to their current financial picture.You need to consider things you’ve never had to think about before. By making a few smart choices and good financial planning, you can ease into this new life with greater confidence.
Get a Life Insurance Policy
If you are currently without life insurance, you need to start thinking about getting some when preparing for your new child. You now have a tiny person wholly dependent on you financially. Should you die when your child is still young, you want a solid life insurance policy in place to provide for him. The best bet is a term-life insurance policy that is valid for at least 20 years. As far as how much to take out, it is really dependent on your personal financial situation, but the biggies to consider are how much it would take to pay off your mortgage and to cover the expense of college. Do not underestimate the value of a non-working spouse either—even someone who does not work outside the home should have some sort of coverage.
Carefully Examine Your Health Insurance Policy
You are going to need to add your baby to your health insurance plan.If you and your spouse both have a plan, it is important to carefully review both policies to see if it is better to remain on separate plans and add the child to one of them or get family coverage. You want to consider the pediatrician you will be choosing for your child and other factors once the baby arrives when deciding on what plan is best. Understanding costs as they relate to your pregnancy and delivery is also crucial for getting the full financial picture of giving birth—this is not the time to be taken by surprise with thousands of dollars in medical costs that your insurance will not cover.
Do Not Neglect Your Retirement Savings
Raising children is expensive and it is understandable that focus on your own future may be pushed to the back burner. But many financial experts caution against neglecting your retirement savings in favor of expenses for your child, such as college. While you are working, you want to contribute as much as you can. There are other avenues to secure money for college, should it come down to that. A Roth IRA is a good vehicle since it can be used for both retirement and college.
…But Start Saving for College as Well
While you should not neglect your retirement nest egg to save for your child’s college, this does not mean you should not worry about college until your child enters his senior year of high school. Sure, you can get loans, but as the cost of a college education continues to skyrocket, it would behoove you to save as much as you can through those first 18 years of life. By 2030, it is estimated that a four-year public university education may run as high as 250,000—even if that estimate is grossly overestimated, you are still looking at a big chunk of change to get that degree. There are many types of savings accounts that offer tax-advantages and make minimal impact on financial aid eligibility, such as the 529 College Savings Plan or a Coverdell account.
About the Author: Kelli Cooper is a freelance writer who has written on a variety of personal and professional finance topics.In writing her pieces, she frequently seeks the guidance of finance experts, such as John Studzinski.Read More
Most companies, especially new businesses, have an unpredictable cash flow on a regular basis. Sales can vary due to a change of season, new promotional events, and fluctuations in the economy. Expenses will differ week to week and month to month, so it is hard to know for sure exactly how much cash flow will be available in the future.
Since you can’t accurately predict how much money you will have in your bank account, you need to monitor it closely. Simply checking your bank statement each month will not be enough to ensure that you have the cash you need to cover all of your upcoming expenses. It won’t take into consideration any outstanding checks or any payments that have not been received yet.
Here are a few helpful ways you can manage your company’s inconsistent cash flow:
Run Your Cash Flow Statement Often
It is essential that you regularly run and review a proper cash flow statement. This will take into account outstanding payables and receivables, so you are given the most accurate forecast of your cash flow. If you use an accounting software program or an online billing application, it will only take a few minutes to generate a detailed cash flow statement that takes into account your entire financial situation.
Plan out Your Expenses
Try to create a payment schedule with your vendors, so not everything is coming out at once. For example, if it costs you $200 per month for janitorial services and it is usually scheduled to come out on the 1st of the month, ask the supplier if you can pay $100 on the 10th and $100 on the 20th. It shouldn’t make a difference to the vendor, but it will help you spread out your payments, so they are more manageable.
Encourage Your Clients to Pay Earlier
You can always offer your customers a small incentive (1-5%) for early payment. They want to save money just as much as you do, so it should inspire them to pay the invoice immediately. There are other ways to reduce the amount of time it takes to receive payment that you should be doing already. For example, always email the invoice instead of waiting for snail-mail, follow up with a professional reminder notice, and offer them an electronic payment option for added convenience.
Keep a Minimum Balance in Your Account
Ideally, you should try to maintain a month’s worth of expenses as a minimum balance whenever possible. If you don’t currently have this extra cash available, you can slowly work on building it up. Take a small percentage of each receivable and put it aside in a separate account. Once it reaches your target amount, transfer it back into your regular business account. This financial cushion can be incredibly beneficial when something unexpected occurs that requires a higher cash flow than normal.
There is no doubt that having ample cash flow to stay afloat is crucial to every business. By monitoring your cash flow statement, spreading out your supplier payments, encouraging earlier payments from your clients, and maintaining a minimum balance, it will be a lot easier for you to manage.
The article is posted by Gerwyn Wallto. You can find more articles here.Read More
Organizing Your Taxes
Successfully running and operating a business can be quite an involved task. You have a lot on your plate and the last thing you need is to worry about tax planning. Because of this, it may be a good idea to hire the help of a professional. Now, I do recommend that you keep an eye on the details so that you know exactly what is going on at all times. This will allow you to make better plans and also assist anyone who is going to be working on your taxes. Let’s go into a bit more detail about tax planning.
The “check the box” regulation was introduced in 1997 by the IRS. This is basically a regulation that allows business owners to be classified as either a partnership or corporation so that they are able to gain corporate tax benefits. When a single person owns a company they have the option to be classified as a corporation. Businesses that have multiple owners will be classified as partnerships. You should take a bit of time to research which way you wish you claim your taxes in order to see which option is the most beneficial to you and your company.
Paying your taxes
Paying your taxes is a very important thing that everyone has to do. No matter how much you try to fight it, you’re going to have to pay taxes. The good news is that you can lower your taxes and also increase your capital by doing some careful planning. Your business can grow much larger and become a lot more profitable if you take the right steps. You should make sure that you take the necessary time to factor in all of your appropriate write-offs in order to get the most when it comes time to file your taxes.
Planning your taxes
A great way to plan your taxes is to take a look at your previous results. Take a bit of time to examine all of the figures and see how they were processed. This will not give you an exact figure, but it will certainly give you a broad range of what to expect. This will be beneficial because it can save you from having a large amount of unexpected expenses. You can also make a solid game plan by using methods that were previously used. It’s always a good idea to have a head start, and this can be the key for you.
You don’t have to be an expert to properly plan your taxes, but it will take a bit of time and research. If you’re uncomfortable in taking on the task of planning your taxes, it may be in your best interest to consult the help of a professional tax planner to ensure that everything is being taken care of in the most efficient and profitable way. There’s no need to worry; using the tips above combined with the help of a professional you should have a seamless tax experience.
- License: Creative Commons image source
James Randolph works with Hong Kong offshore companies and has over 10 years of experience within the tax planning field.Read More