Q How can I prepare for possible changes to my payroll when the new president takes office?
A Payroll is probably the biggest line item in your profit-and-loss statement, and you should expect more changes to this part of your operation than any other in 2017. If President-elect Donald Trump stays true to his “pro-business” theme and his pledge to repeal the Affordable Care Act (ACA), his policies could quickly impact your business in many ways.
First, don’t go overboard on ACA compliance or worry about developing a long-term compliance plan. Many payroll processing and third-party providers use fear tactics to get you to overcommit to ACA rules that might soon be repealed entirely. I recommend you comply for now at the minimum level and make sure you understand what you’ve committed to.
Meanwhile, make sure your payroll processing company will have your back during these uncertain times. The first quarter of any new tax year is the best time to look at your current processes, fees, measurement tools and results. I just assisted a restaurateur who discovered that his payroll reports did not list employee hours for an entire day for all three locations, resulting in no pay (regular or overtime) for nearly 50 workers for that day! To make matters worse, the company that operates the three restaurants was already undergoing a Department of Labor audit. Fortunately, the operator had started matching up the point-of-sale timekeeping system to the payroll reports generated from an independent third party, so someone spotted this discrepancy before the auditor found it. Systems are now in place to double-check the data generated between the two companies that contribute to this operator’s payroll processing system.
On a similar note, make sure your payroll system allows you to manage crew labor as a percentage of sales and provides you with fully loaded payroll costs, including salaried employees and payroll taxes. Many third-party systems do not allow for this measurement, invariably leading to confusion and arguments over the previous month’s labor cost percentage when you receive monthly financial statements from your accountant. You and your accountant need to agree on the exact payroll costs you intend to measure from week to week, and your accountant should reconcile the difference prior to submitting the reports. Then you can spend your time serving your customers and making profits rather than figuring out labor cost percentages!
You’ll also want to implement a labor scheduling program that’s tied to your daily sales, preferably based on each day’s history compared to the same day the previous year. Yes, another monthly subscription might be required, but it’s worth the cost. Most chains have this ability built into their franchise system procedures. As an independent, you should evaluate your POS and back-of-the-house third-party providers and make sure your system integrates with your daily sales.
Finally, implement a mandate requiring that your POS system captures the hours worked by waitstaff and sends the data directly to your payroll processor. Your processor should then process the payroll and electronically remit the summary results back to your platform of choice, providing you with daily analytics for your operations. With this approach, vital end-to-end data will be captured and transmitted electronically, avoiding human errors in data entry. Implement procedures to double-check the results along the way, and you will be on your way to profitability!
