How to handle “payroll” in your cleaning business

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by Tom Watson on September 5, 2012

Many of us when starting a cleaning business do the work ourselves in the beginning. This means no payroll headaches to speak of.

All of that changes after you bring your first employee on board. Once that happens, you need to “keep track of it all”.

This is no small matter, as you need to be “spot on” whenever it comes to all the various elements of handling payroll. For instance if you perform the payroll yourself and make a mistake somewhere on just one employee, the penalties from screwing up could be bigger than the mistake itself.

My Payroll Service Story

 
This brings me back to when I first started out. I didn’t know anything, I mean NOTHING about how to handle payroll for my business. I was good at getting the accounts, and cleaning them, but that was it.

To make a long story short I called my accountant Bob on the phone and asked him to teach me how I to do the payroll myself. I was basically thinking that I could do it with just a “little” help. What do you think Bob did when I asked that question?

He laughed out loud!

This caught me off guard a bit as Bob is the definition of “Ultra Professional”. He is all business all the time. Anyway, once he stopped laughing he calmly told me I should hire a service to do that for me. He said the cost was a small price to pay to make sure it’s done right. Sadly, just one mistake on your FICA, state or federal deductions could lead to penalties.

Now this was news to me, as I knew nothing of any service that did that sort of thing for such a small company. But as I was soon to learn, there are tons of experts in various fields whose SOLE MISSION is to make your life as a small business owner easier.

Anyway… In this particular case Bob pointed me in the direction of a company that would do my payroll for me at a really good price. I think it was less than $25 bucks at the time for each payroll.

So for me, someone who pays every two weeks, my cost to hire an outside company to perform ALL MY PAYROLL functions when I first started was less than $50 per month. No headaches, no worries and no giant learning curve. That’s an incredible deal!

This is how the payroll service works in a nutshell

  • You go through the setup process which is easy.
  • You keep track of the hours your staff works.
  • The payroll service calls you.
    • You provide the hours worked for each employee.
    • You provide any info on new hires or terminated ones.
  • The payroll service either has a courier deliver the employees checks to you or they mail them, which you in turn hand out or mail to each employee.
  • The payrolls service deduct’s the employee payroll and associated taxes out of your bank account and files them with the state and federal agencies.
  • You repeat the process every week or two depending upon your preferences.

That’s it! It’s real simple from start to finish.

If you don’t know where to start and would like to get some pricing for when you are ready (or even just to compare prices) then I would check out Paychex®. That’s who my accountant recommended and they are a favorite of mine because they provide free quotes to both big companies and beginners alike. Just fill out the form to get a quote.

So the moral of the story is it’s a safe bet to “sub out” the payroll part of your business. This is because your goal shouldn’t be to become a payroll expert, it should be to become a “sell your cleaning services expert“.

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{ 4 comments… read them below or add one }

1 James September 12, 2012 at 11:57 am

Hi Tom,

Interesting theory, but I don’t fully agree. Yes, a company should focus on its core competencies, but maximising profits is the most important thing in business (in my opinion). Including cutting costs.

We do weekly payroll for 30 odd employees – this would be a massive cost ($25*30 employees *52 weeks ??) – or have i misunderstood? My advise would be to learn it yourself (which I have done). We now operate a system where we simply type the hours into a log and a macro does all the rest – including electronic distribution of payslips via email. Takes around 2 hours per week.

Once you get to grips with it its simple. Its just the initial learning process that takes the time.

Food for thought…

James
Supreme Cleans
UK

2 Tom Watson September 12, 2012 at 12:43 pm

Hi James!

Nothing wrong with maximizing profits, I just think that the beginner would be EASILY overwhelmed by thinking they had to learn (and master to a degree) so many different disciplines. With that said, if someone has the ability to do payroll themself, then by all means do it and pocket the money (it all adds up).

As to cost, here in the states it does not cost a lot to add employees to the payroll. Once you get above 20 employees your cost may rise to $60.00 to $70.00 per payroll ($120.00 to $140.00 per month). That (to me anyway) seems like a small price to pay and a good trade-off of your time.

Thanks for your comments James, I appreciate them!

3 James September 13, 2012 at 7:13 am

No – thank you. Your website has inspired some different thinking about my business.

e.g. We have never really been successful with leaflet distribution. Following you comments on this site, I’m now going to give it another shot over the next 2-3 months… will let you know how I get on.

thanks

James

4 Tom Watson September 13, 2012 at 8:47 am

Make sure you have a compelling offer of some kind and a DEADLINE for people to respond. That’s the driving force that gets people to call.

Good luck and let me know how it went when the results are in.

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