What is the best way to pay my employees?
From salary supplemented by incentives to deferral programs, here are six answers to the question, “What are the best ways to pay employees in a small business?”
- Salary Plus Commission-Based Incentives
- Hourly Wage
- Direct Deposit
- Salary Deferral Programs
Salary Plus Commission-Based Incentives
As a remote-based company, we found that adding commission-based incentives on top of the discussed monthly salary makes for a good motivator.
We use this compensation scheme on most of our team members working on lead generation, marketing, customer acquisition, and other positions with easily measurable outcomes. Since it is a little challenging to manage the performance and productivity of team members who work in different parts of the world, it is easier to offer additional compensation for great work outcomes. This way, members will have something to look forward to in return for giving the best value to the company.
The best way to pay employees in a small business is by paying by check. This works well because it is a suitable proof of payment. Business owners should pay their employees by check as a way for them to have a record of their pay stubs. Also, employers who pay by check are eligible to get tax deductions. It is also good because you can make up to 50 checks at one time. There is a cost to issuing checks, but it is much cheaper than using direct deposit.
Gregg Dean, Co-Founder & CEO, Layla Sleep
When running a small business, cash is king. While there are certainly digital payment solutions and automated payroll systems that provide convenience, cash remains the most preferred form of payment among employees.
Cash allows employees to immediately access and use their funds, providing a sense of security and control over their financial situation. This is especially meaningful for those who are cash-strapped due to job insecurity or fluctuating incomes throughout the year.
Additionally, cash payments provide valuable feedback in terms of how much you’d like to pay your employees, informing decisions on raises and bonuses in the future. Ultimately, cash continues to be the most reliable way to pay your small business’ employees quickly and securely.
Depending on the nature and financial position of the business, offering hourly wages is the best way to pay employees in a small business. Offering hourly wages is a straightforward and easy-to-administer payment option for the company. It’s a method that eradicates wastefulness and ensures that we pay employees for the exact number of hours they work. This form of payment provides room for the employer to devise ways of giving off-hours benefits like tokens or just add-ons to the wages.
This is one of the most common forms of payment for an excellent reason. Its biggest advantage is the convenience it offers to employees and employers, as everything is electronically handled, eliminating paperwork.
Direct deposits allow accounting and HR staff to focus on more important things than manually running the payroll. Aside from employees gaining access to their pay quickly and easily, direct deposits also offer flexibility and maintain compliance with payroll laws. Furthermore, all transactions are automatically recorded, making it easier to quickly and efficiently address discrepancies.
Salary Deferral Programs
Essentially, this means that you allow your employees to defer receiving a portion of their wages until some point in the future. This can be useful if your employees are struggling to make ends meet and need more money to pay for expenses like housing or healthcare, as it allows them to focus on things other than their financial situation while still providing them with income when they need it.
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