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How to Optimize Payroll for Your Staffing Agency

By Timerack

May 4, 2021

To succeed, every staffing agency needs to have an optimized payroll system.

If payments are late or full of errors, this can damage staff morale and raise questions about the overall health of your staffing business. However, knowing what to change and how to implement an efficient payroll system can be a challenge. To be successful, you need a comprehensive payroll strategy that leaves no stone unturned.

Every business comes with its unique challenges, but when it comes to designing an efficient payroll system, you can benefit by following a few simple steps.

So, as you try to get your staffing agency up and running, make sure you take these into account as you lay out your staffing agency business plan.

What is Payrolling in Staffing?

First off, let’s get this question out of the way, what exactly is payrolling?

The majority of people assume it has something to do with ensuring staff are paid on time. Well, they would be correct.

That being said, payrolling encompasses so much more, for example, like setting up an employer of record. This means that employee and employer liabilities are attached to the payrolling company, not the client. This has important legal ramifications as tax regulations are constantly changing. Furthermore, payrolling is also responsible for handling worker’s compensation and paying all of the employer’s taxes.

For staffing agencies, your ability to handle all of this is a prime reason why clients turn to you when they are hiring seasonal or temporary staff. Having an efficient payroll system can play a crucial part in your marketing efforts to find new clients and should be a top priority for your staffing agency.

How to Optimize Your Payrolling System

Drawing up a plan for an efficient payrolling system for your staffing agency can be time-consuming but well worth the effort. Here’s a look at some of the ways a staffing agency can offer payroll solutions and achieve full optimization.

1. Upgrade Your Payroll Software

Your choice of software for recording and managing your payroll data can make or break your business.

Make sure you have the most up-to-date software for streamlining your payroll processing. A good system can make a significant difference in time spent processing data and ensure better accuracy. 

PRO TIP: You can use Timerack to integrate payroll software with time and attendance? Take a look at our staffing agency software to learn more. 

2. Create a Paperless Payroll Process

This is the 21st century and almost everything is managed digitally. Your payroll process is no different and you should seek to eliminate a payroll paper trail.

Not only does it save on costs, it’s also good for the environment and makes life easier for your agency’s recruits.

Therefore, step two is to eliminate all physical time cards, pay stubs, and paychecks. In their place, you can set up an online portal system for your employees that will allow them to access everything electronically. It’s just one less thing to worry about.

3. Consolidate Your Pay Schedules

It’s normal for many staffing agencies to have different pay schedules. For instance, monthly paydays for management and bi-weekly paydays for hourly employees.

This can seem sensible but often leads to payroll errors. Instead, you should seek to maximize efficiency by having all your members paid on the same day. This makes administration a lot easier and reduces the chances of pay duplication.

4. Simplify Your Systems

Even the best payrolling system can run into problems if it’s not properly synchronized with your accounting system. There Seamless integration for bi-directional support of payroll systems

Multiple layers of systems for tracking, inputting, and processing employee’s data can create danger zones where mistakes can happen. All it takes is one missed email or forgotten data entry to make a mess of your whole system.

Instead, what’s needed is a consolidated system where everything is handled under one roof. Review your entire administration system and look for ways to simplify it. 

Take a look a Timerack’s seamless payroll integrations that allow for bi-directional support of payroll systems

5. Stay Up to Date With State and Federal Tax Requirements

Ah taxes, everyone’s favorite subject.

In all seriousness though, staying abreast of your local and federal tax requirements is of prime importance. In most states, a staffing agency is considered the full employer for many temporary employees. As a result, it’s your responsibility to withhold and remit payroll taxes.

You also have to be on your guard against misclassifying employees and not documenting or responding to notices from the IRS. Tax requirements are also constantly changing, so you should have an ongoing process for staying informed and reviewing your requirements every year. As with the above point, try to consolidate this into the rest of your payroll system for better efficiency and simplicity.

 6. Design a System For Calculating Payroll Accrual For Your Staffing Agency

Your payroll accrual is the amount owed to your employees from work they have already completed.

As a staffing agency, it’s your responsibility to pay your members for the work they carry out for clients.

Once payments for a set period have been completed, you must then adjust the entries in your payroll journal to offset your expense account. You’ll need to develop a system for processing this in the most efficient way possible.

Final Thoughts

Setting up an efficient payroll system is a worthy achievement for any staffing agency, but it’s only ever half the battle.

To stay competitive, you need to constantly review it to ensure you’re up-to-date and in compliance.

Furthermore, with the pace of change these days, a new technology could be right around the corner that changes your entire business model. All businesses thrive on their ability to adapt to a changing market, and your staffing agency should be no different.

If you’re looking to optimize payroll for your staffing agency once and for all, get in touch with us and get a free demo of our staffing agency software.



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