Best Practices for Running a Smooth, Error-Free Payroll
In today's economically challenging times, you are probably taking a deeper look at how you run your business, so you can ensure your operations are as efficient as possible and your expenses are low. Intuit Payroll Services wants to help by offering you some best practices that not only allow you to run your business more efficiently, but also help you avoid unnecessary fees.
By following these three best practices, you can ensure error-free, on-time payrolls and avoid the ancillary fees that take away from your bottom line:
- Plan your payroll in advance and run on time
- Ensure you always have sufficient funds to cover your payroll
- Keep a minimum balance in your payroll account as long as you have an active payroll service
Plan Your Payroll in Advance and Run on Time
When you plan your payroll in advance and keep it running on time, you can avoid issues and fees related to backdating paychecks. There are primarily two situations that are considered backdating: when you send your payroll less than two days prior to the paycheck date, and when you send a payroll with a paycheck date prior to the send date. Keep the following tips in mind:
- Send your payroll to Intuit two banking days prior to the date on your payroll checks.
- Plan ahead when cutting payroll checks. If you must pay corporate officers or employees for past periods, consider where you are in the payroll process to determine if dating it in the past is necessary. Have your returns been filed? You may need to file an amendment in addition to backdating your payroll, which may be costly.
- Remember that tax agencies may also assess penalty fees, and the agencies base their payment requirements on the check date. If you backdate a paycheck and haven't yet paid the taxes, the tax agencies may assess additional fees.
- Consider holidays. A banking day is a banking business day (Monday through Friday) that does not fall on a Federal Reserve holiday.
It is easy to create and modify payment checks in QuickBooks, which might lead some people to believe that it is just as easy to modify payroll checks. Modifying a payroll check, however, especially backdating it, could have a negative impact on your payroll and your books. Backdating paychecks may delay direct deposit payroll and may result in late payments to tax agencies, or in an amendment if used at quarter-end and/or year-end. You will also incur a backdating fee from Intuit of $100 per payroll, regardless of how many paychecks are in the payroll. Backdating requires Intuit to rework payroll amounts from liabilities to W-2 totals to ensure accuracy for your filing, which can be a time-intensive process.
Learn more about when you may need to backdate a paycheck, and see some backdating examples.
Ensure You Always Have Sufficient Funds to Cover Your Payroll
By understanding when Intuit Payroll debits your account and making sure your account is sufficiently funded for each payroll, you can avoid non-sufficient funds (NSF) fees. Here are some reminders:
- Your account will be debited for payroll, payroll taxes, and payroll service fees the banking day prior to the payroll check date—ensure your account is sufficiently funded at the time you send payroll, or by the day before the check date at the very latest. For example, if your payroll check date is Friday, Oct. 9, your checking account will be debited for payroll, payroll taxes, and payroll service fees on Thursday, Oct. 8.
- Be sure to send payroll at least two banking days in advance of your paycheck date. Intuit requires two business days to process payroll, so meeting this deadline will help ensure your payroll is processed timely, including your direct deposits. For example, if your payday is Friday, Oct. 9, you must send payroll by Wednesday, Oct. 7. Remember, the funds should be in your account at the time you send payroll, and no later than one day before the check date.
- As with all financial institutions, Intuit considers repeat NSFs as strikes against your account, which can affect your payroll service. Each strike will be used in determining direct deposit credit limits and continuation of your payroll service.
Just as a bank will charge you NSF fees if you write a check without the money to cover it, Intuit will assess an NSF fee on any payroll processed without funds to cover it. One of the key things to remember is timing: Payroll dollars are being moved between several agencies, including your checking account. Using direct deposit adds another layer to the complex process, so have your payroll funds available at the time you send your payroll. But if you need float time, be aware of when debits occur, so you avoid the $100 NSF charge per instance.
Read these FAQs about NSFs and how Intuit handles them.
Keep a Minimum Balance in Your Payroll Account As Long As You Have an Active Payroll Service
Some businesses keep their payroll service active even though they have no employees or if the business is seasonal. But keep in mind that Intuit Assisted Payroll automatically debits your account for your monthly service fee for all active accounts. Intuit continues to act on behalf of your business as long as you are an active customer, and this includes filing returns quarterly and charging for the payroll service. Keep your account in good standing by remembering the following:
- Even if you do not currently have active employees, your monthly service fee will still be debited.
- Be sure your account is funded sufficiently to cover your monthly service fee. Intuit debits your account on the first business day in the following month. For example, if you do not process payroll in October, you will be debited for your monthly service fee on Nov. 2, 2009.
If your account does not have sufficient available funds, you will be charged a $25 NSF fee.
Avoid Unnecessary Fees
At a time when many small businesses are struggling to stay afloat, business owners can hang on to more of their bottom line by being smart about their finances. Following the best practices described in this article won't just reduce your paperwork or keep you from receiving tax notices—it'll keep more money in your business.
See a list of all ancillary fees that Intuit QuickBooks Assisted Payroll charges.