Article
7 min read
Author
Shannon Hodgen
Published
April 15, 2024
Last Update
July 23, 2024
Table of Contents
Evaluate the current payroll process
Review and apply any federal and state tax changes
Re-think employee benefits and incentives
Optimize your forecasting and budgeting
Assess your recordkeeping
Consider outsourcing payroll functions
Ensure engagement and communication with employees
Run US payroll effortlessly with Deel
Peak tax season is over, and you’re feeling relieved until you look back at your spreadsheets, documents, and records.
You may have identified a few process inefficiencies that led to data errors you needed to fix at the last minute. Or a number of recently changed tax laws that you need to apply to your calculations before the next tax deadline to ensure compliance. Speaking of calculations—there might be room for changes in your compensation strategy and an opportunity to offer more incentives to your workers.
The post-tax season is ideal for tackling these questions and challenges, preparing you for the next round of filings, deductions, and returns.
Below, we’re sharing some best practices for improving your payroll process after the tax season rush.
Inefficiencies in your payroll and tax filing processes can become painfully evident during the busy tax season.
This is why, once the deadlines are behind you, you should use the quiet period to evaluate your current payroll management process and identify potential solutions for improvement.
Conduct a payroll audit in a few simple steps to answer these questions and get a realistic image of your payroll and tax management process:
The two crucial goals of this audit are to:
Identify bottlenecks in the process
Assess process accuracy and security
Now when you understand what went well and what could have gone better, you can plan appropriate steps to improve the process.
Deel’s comprehensive Reporting feature allows you to generate seven primary types of reports:
Thanks to these reports, you can get a detailed overview of your costs on a global and regional level, including payroll summary and employee contributions and deductions, to understand exactly where you can make adjustments to optimize the payroll process.
Tax laws aren't static, and staying informed can sometimes feel like chasing a moving target. Especially if you have US team members across different states.
Here are a few potential tax law changes to look out for because they can affect your payroll:
Note: The IRS typically announces annual inflation-related tax relief toward the end of the year. For tax year 2024, there’s an inflation adjustment for more than 60 tax provisions.
💡 Read more: Payroll Compliance Checklist and Tax Law Guide for 2024
To make sure you stay informed and never miss an important tax-related update, you can sign up for alerts from the IRS or state tax authorities.
However, tracking tax laws for 50 states can still be overwhelming as your team grows and payroll gets more complex. Partnering with payroll services like Deel can keep you updated without you lifting a finger, as all the changes are reflected in the platform.
Deel’s Compliance Hub provides:
What else can you do to avoid missing any tax deadlines in the future? The post-tax season is ideal for setting reminders for upcoming due dates.
📖 Read more: US Payroll Taxes: Your State-by-State Guide
If you take your time to optimize the costs of running payroll for your US team, you may discover that some of the budget can be redirected to move attractive employee benefits and incentives.
The first step is to review payroll data to assess the cost-effectiveness of current benefits. Are certain options underutilized? Can you negotiate better rates with providers?
The insights gleaned from payroll data can be a springboard for boosting employee satisfaction and retention.
Here’s an example.
How many of your team members:
Analyzing this data can help identify areas where benefits fall short—e.g., you’re not providing childcare support or are offering generous learning budgets that are not being used.
Combined with the feedback from your employees, payroll data can help target specific incentives that your workers will actually use and appreciate, based on their individual needs.
A well-planned payroll system can also facilitate a more attractive compensation package through:
The data generated from your most recent tax filing is a goldmine for future financial planning, as it sheds light on your actual payroll expenses, including:
Note: This data can be used to benchmark costs and potentially negotiate better rates for future services or look for another vendor that can provide a better deal.
By further analyzing this data, you can uncover valuable trends and patterns, such as seasonal fluctuations (periods throughout the year with higher or lower payroll expenses due to seasonal hiring, overtime, or bonuses), departmental spending (some departments may be consistently exceeding or falling short of payroll budgets) and year-over-year changes (how your payroll expenses have changed compared to previous years).
Knowing this information helps predict future growth and allows for more targeted resource allocation.
Tax season data also helps you estimate future tax liabilities with greater accuracy. By analyzing previous tax filings, which you should do in between two tax season rushes, you can:
Deel automatically generates and takes care of filing tax documents with the respective tax authorities, usually the IRS and Social Security Administration. Our team then distributes W-2s to employees at year-end.
Tax season may be over, but the importance of accurate recordkeeping remains constant, no matter where your employees reside.
Thorough and organized payroll records are the foundation for efficient payroll processing, ensuring compliance, streamlining audits, and making next year’s tax season a breeze.
Note: Although the IRS requires you to maintain tax records for three years, some states may have different tax laws: the requirement is four years in California and Arizona, five in Montana, etc.
Other than remaining compliant with your federal and state tax laws, what are some other benefits of keeping tax records? Well-organized records can:
The strategy for organizing your records depends on your business size and preferences.
Digital vs. physical: Consider a digital storage system for most records (paystubs, timesheets) for easy retrieval and searchability. However, some essential documents (W-4s, signed contracts) might require physical storage for legal purposes.
💡 Deel ensures safe and easy documentation management in our all-in-one platform—for all contract types, compliance documents, tax forms, and more.
Secure storage: For both digital and physical records, prioritize security. Use password-protected systems for digital storage and ensure physical documents are kept in a locked filing cabinet or secure off-site location.
💡 Deel’s world-class security features, such as Okta Single-Sign-On and SOC2 security certification, ensure your data is 100% protected.
The post-tax season is the ideal moment to think about the potential benefits of outsourcing payroll functions.
For small businesses seeking efficiency in payroll processing, cost savings, reduced errors, and compliance benefits, investing in a payroll provider can come with a significant ROI:
📖 See also: Optimize Payroll: 12 Benefits of Payroll Automation With Deel
If you decide to partner with a vendor to ensure tax management efficiency and accuracy, take your time to evaluate your options and select the right payroll provider from the very beginning:
Adjustments based on the data you reveal during the audit may require changes to your payroll system—and you need your team on board. Here's how to help your employees build a sense of control over their finances and reduce any anxiety around the payment process.
Be upfront with employees about any payroll changes resulting from post-tax season adjustments. This could include modifications to tax withholdings, benefits packages, or payroll schedules.
To help the team understand why the changes happened, provide a clear explanation of the reasons behind the changes. This fosters trust and understanding among employees.
Other than transparent communication and open door for employees to share their concerns, consider offering educational resources or workshops to help employees understand how tax changes might affect their paychecks.
Bonus tip: Provide employees with self-service options through a payroll portal. This allows them to access paystubs, review their W-4 forms, and manage their own information electronically.
When employees feel informed and involved in the process, it fosters trust and improves overall morale, avoiding a drop in your team’s productivity levels. Also, by empowering employees with self-service options and educational resources, you can potentially decrease the number of support tickets related to payroll inquiries.
Tax season may have passed, but its impact lingers in the form of valuable data for small businesses.
By taking a proactive approach to analyzing this data and implementing strategic planning, you can set yourself up for a smoother and more financially secure year ahead.
Managing payroll, tax filings, and employee benefits can be a complex and time-consuming task for small businesses.
Deel’s Deel US Payroll and Deel PEO solutions can be your game-changer:
Whether your company only hires in the US or expands into foreign markets, Deel can scale with you. Our in-house payroll advisors are experts in local jurisdictions in 100+ countries, and we regularly add new countries to our payroll operations.
Explore Deel’s solutions today and experience the peace of mind that comes with streamlined payroll management.
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