Every company will experience growing pains as they scale, especially small businesses on the path to growth. For some, that looks like ordering way too much inventory one month. For others, it means stepping on each other’s toes as you divvy up new responsibilities and settle into more defined roles.
But payroll is one place where you never want to feel growth-related problems. Missing payroll isn't just embarrassing—it can devastate employee trust and cripple your business momentum. Not to mention, you can get into trouble with the IRS if you don’t comply with certain payroll requirements.
It's safe to say you want to avoid that altogether. Keep your employees happy and your business running smoothly. Read on to learn what payroll problems you can experience as a growing business and how you can solve them.
Warning signs of impending payroll problems
There are a few telltale signs that you may struggle with payroll problems as you grow. The sooner you spot these problems, the sooner you can address them and save yourself the headache.
Payroll nightmares might be looming if:
- You house employee data in multiple systems
- You’ve missed payroll filing tax in the past
- Your list of vendors keeps getting longer
- It takes hours to fix payroll issues
- You have to pay extra to make payments outside your usual schedule
You may think that these warning signs aren't too serious. But what starts as a small problem today can spiral into a much more frustrating situation over time.
Five common payroll problems that plague small businesses
A lot of the payroll growing pains that you can experience as a small business boil down to some core problems.
1. Manual payroll processes
You're gathering timesheets and pulling employee hours via check-in emails. You have to manually approve all direct deposits and invoices. The calculator has become your best friend as you figure out wage withholdings and taxes in a spreadsheet.
Not only does this leave you wide open to payroll and accounting mistakes, but as a small business with a thousand other responsibilities, you simply don't have the time for this.
2. Complex legal compliance
You operate in multiple states and must comply with numerous payroll and HR compliance standards. You have international employees who have specific needs. You’re subject to multiple tax roll dates.
It doesn't matter if you have to keep track of rules from all 50 states and four countries. You need to remain compliant and stay on top of all payroll standards to avoid serious financial penalties and ensure every employee gets what they’re owed.
3. Poor record keeping
You have no idea where the last five years of employee records are (which you’re legally required to keep). You’re housing employee data in multiple disconnected systems. When you check those systems, a document or information is always missing.
Poor record-keeping makes for extremely inefficient payroll processes and puts you at risk for additional payroll compliance issues.
4. Lack of employee access
Your employees can't access your payroll system themselves. They constantly hound the HR team for something as simple as a pay stub. They're stuck hoping that you're withholding the correct amount of their wages so they don't get screwed come tax season.
Employees want to be involved in their work payments. Without being able to check in on certain payroll items themselves, employees begin to feel a sense of distrust and frustration.
5. Constant need to upgrade solutions
You're in year three of your business and on your fifth payroll solution. You're consistently paying extra fees for services your existing plan doesn't include. If you want to avoid those fees, you have to upgrade to an entirely new tier plan..
You need a lot of flexibility as a small business. That means you need to operate within a payroll solution that works and scales with you.
There's no shame in admitting you've struggled with payroll issues—so many small businesses do as they grow. You just have to take steps to address these problems and implement better systems and processes.
How to solve payroll pain points
For every growing pain you experience, there's a direct solution when you use the right outsourced payroll services.
Implement a 13-week cash flow
A 13-week cash flow forecast gives you the visibility to spot potential payroll shortfalls weeks before they happen, transforming an "oh no!" moment into a manageable situation. By mapping your expected cash inflows and outflows across a rolling 13-week horizon, you'll see exactly when tight periods might affect payroll and can take proactive steps like accelerating customer payments or adjusting vendor terms.
The beauty of the 13-week approach is its practical timeframe—long enough to give you runway for corrections, but short enough to be accurate. Review your forecast weekly, tracking actual results against projections, and you'll develop a rhythm that prevents cash surprises.
List to what Hiline CEO and Co-Founder, Matt Garner says about the situation:
Centralize processes in one system
Forget keeping employee data and payroll processes spread across multiple platforms. Look for a solution that allows you to integrate those systems into a central hub so everything is right in front of you in one place.
Establish structured onboarding
Enable smooth payroll management from the very start. Develop an onboarding playbook that clearly outlines the steps for getting your new employees’ data loaded into the system, set up for wage withholdings, and ready for direct deposit.
Automate payroll processing
Never refer to a spreadsheet again. Rely on cutting-edge outsourced accounting software to provide payroll automation, accurately calculate wages, and dispense on-time payments for every employee, regardless of headcount.
Get compliance reminders
Don't get hit by surprise compliance requirements. Leverage a payroll system that keeps you up to date on all regulatory requirements and sends you automatic reminders for upcoming deadlines related to payroll and taxes.
Opt for user-friendly platforms
Give your employees the self-service they're looking for. Choose a solution that lets your team easily access their payroll data, clearly see their deductions, and make necessary changes to their employee benefits—all without bothering your HR team.
Take care of your people the right way
If you’re going to build a seamless HR & payroll experience that your employees love, you need a system that places people at the forefront, backed by proven processes and technology.
Hiline’s automated payroll system scales with you, ensuring accurate, timely payments regardless of your headcount. Ensure your employees understand their benefits and always get paid on time by leveraging our combination of human expertise and tailored technology.
Kiss payroll problems goodbye — contact us today to get started.
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