Your small retail store has done well and is ready to expand. You are considering opening a second, or even a third, location. While this is an exciting time for your business, you’ll find that some of the paperwork is overwhelming. A bigger payroll can bring its own problems, depending on where you are opening your new store. Here are some pointers for handling the bigger payroll you’ll have when you increase your store locations.
EIN
You probably already have an EIN (Employer Identification Number) if you had any employees in your original store. If not, and EIN is available from the IRS. Fill in a form SS-4, and you’ll get an EIN that allows you to report taxes for all of your retail stores.
Employees vs. Independent Contractors
Normally, retail stores have employees, rather than independent contractors. An independent contractor usually offers services that are paid for on a job-by-job basis. For example, a small music studio that employs additional teachers may pay them as independent contractors.
However, be sure that you know all of the differences. In some cases, you may be in danger of breaking the law by classifying an employee as an independent contractor. Check with an accountant to find out for sure what you should do as you expand your business. New locations may have different requirements, especially if you are going out of state to open your second or third store.
The main difference between an employee and an independent contractor is that you have to withhold income taxes and pay employment taxes on an employee, whereas an independent contractor is responsible for paying all of their own taxes, including self-employment taxes. Withholding for bigger payrolls may require the use of an accountant.
Payroll Systems
Be sure that, as you expand and add more retail stores, you use the same payroll system between the stores. If you find a manager that can handle payroll for one store, that’s great. See if they can handle payroll for both stores in order to keep it consistent. Otherwise, you may be better off hiring an accountant. Reporting and paying all payroll taxes are ultimately your responsibility as the owner, so you want it to be as consistent as possible.
Pay Period
You may have implemented a certain pay period at your store that works well for your employees. Don’t change it at the other stores. Keep the same pay period, or you could end up with a lot of confusion and dissatisfaction among your employees. It is very hard to run payroll for a variety of pay periods, and mistakes can harm your employees.
Time Off
Another big change in how you run your stores may be in time off for employees. With one store, while you were in charge, you may have been more flexible with time off, whether paid or unpaid.
Now, however, with a bigger payroll, you’ll need a written policy. This will apply to paid time off, overtime, and other payroll issues. Compensation may also be in the form of benefits such as health insurance. All of these need to be either added to or deducted from the employees’ paychecks according to the policy you have implemented. Document your policies, and stick to them.
Employee Satisfaction
People work hard for their paycheck. If you don’t provide them with a paycheck, you create hardships for them – they can’t make a car payment, put food on the table, or even buy gas to get to work. You also set yourself up for legal action. So, make sure you always meet payroll in a timely manner.
Statistics show that about 33% of new employees quit their jobs after only six months. This creates a real problem for employers who find themselves training new employees over and over again. Of the employees who stay, a third of them will start looking for a new job if they don’t get a pay raise after the first year.
Expectations
Along with steady, fair pay, you must make sure your employees know what is expected of them. If you don’t have expectations, they will never measure up, or they will look for another job. If you don’t set high enough expectations, they will let important details slide, hurting the store. Talk to other store owners, read industry journals, and participate in online forums to find out what some realistic expectations are for your employees. Clear expectations are crucial when you are putting a dollar value on your employees’ time.