From a CPA's perspective, let's take a look at some payroll best practices.

Work With A Reputable Firm

Did you know a payroll audit can follow you for years, even if you no longer own your practice? If you do your own payroll, or even if your local CPA does it, you're exposed to massive risk in the form of a potential payroll audit. That's why we recommend ADP to all of our clients. Working with a large, nationwide firm shifts the liability away from you and your practice while giving you an easy platform to plug into. We're an accounting firm and we don't even do our own payroll. Avoid the unnecessary risk.

Run Payroll On Fixed Dates

"Every 2 weeks" and "twice per month" aren't the same. If you run payroll every 2 weeks, there are actually 2 months out of the year where you have 3 payroll cycles. That might not sound like a huge deal, but what if that's the month you decide to take a vacation and your collections drop? You can find yourself in a cash flow pinch simply due to bad timing. Having an additional payroll date in 2 of the months also means your financial reports are off. In the 2 months with 3 cycles, your team expense is artificially high, making it artificially low in the other 10 months.

Solution: Set your payroll on fixed days of the month.* For example, we pay our team on the 8th and 23rd. We avoid any unexpected cash flow strains and stagger our major expenses so they aren't all due on the first of the month.

Have A Separate Bank Account Just For Payroll

Every doctor, especially early in practice ownership, has had a close call or two when it comes to covering payroll. Not every practice is sitting on large cash reserves and cash flow can be difficult to manage for a new business. To alleviate that stress, we recommend opening a separate bank account just for payroll funds. By transferring money into the account regularly, you can ensure that your largest expense is always covered (and you guarantee you don't accidentally spend the money on something else.)

*West Virginia is the only state to our knowledge that requires businesses to pay their team every 2 weeks.