Getting off track when it comes to paying employees can lead to a downshift in profits, which no one wants, especially during shifting times. “Every dollar counts right now,” says Michele DiMeo, founder and CEO of Squisito Pizza & Pasta, a fast-casual Italian franchise with 10 locations in Maryland and Virginia.

Fortunately, the flipside is true: a streamlined system can reduce payroll costs and lead to higher profit margins. Use these guidelines as a checklist to see where improvements could be made to maximize every resource.

Start with the Basics

Consistency is key when it comes to an efficient payment system. “Set a payroll cycle and stick to it,” says Charlette Beasley, a careers and workplace analyst at FitSmallBusiness.com. If you decide every Friday will be payday, or if you establish that checks will be sent every two weeks, staff members will know when to expect their wages. “If you’re working with a payroll provider, take note of the direct deposit processing time so no one receives their money late,” Beasley adds. “Some providers require a four-day lead time, which means you have to process payroll at least four days before you want your employees to receive the funds.”

If you have drivers, make sure a policy is in place for filling up with gas. “The simplest route would be to have a company credit card they can use when they need to refill,” Beasley says. If you ask drivers to cover the cost of gas themselves and then reimburse them, you’ll want a system that allows them to submit the number of miles they drive each shift. “This will enable you to do a reasonableness check to ensure the mileage was spent on business trips versus personal,” Beasley says.

For tip-earning employees, check that it’s easy for them to report their tips for every shift. You might print of copies of the IRS Daily Tip Reporting Form and ask staff members to fill one out every day. If your system makes it possible to enter tips electronically, set reminders for workers to report tips when their shift ends.

Keep Track of Time

Without a time clock in place, “on average, 10 percent of wages are wasted,” says Charles Read, president and CEO of GetPayroll in Lewisville, Texas. This means if you ask staff members to simply write down on a card the time they come in and when they leave, you’ll likely spend 110 percent of what you should be paying for their hourly wages.

To correctly align wages with the number of hours worked, consider technology that helps record time. “A biometric clock prevents buddy punching,” Read says. This type of clock scans an employee to check for unique physical characteristics, such as their fingerprint, to verify the worker’s identity.

If your payroll system allows employees to swipe a card to check in and out electronically, you’ll still want to manually review their working times. You might find, for instance, that a worker forgot to swipe their card at the end of the shift, making it appear they worked for an extraordinarily long shift, like 24 hours.

Ensure Legal Compliances

If you manually calculate employee paychecks and the amount of taxes due, check that you’re using the most up-to-date tax tables. “The IRS tax rates can change on an annual basis,” Beasley says.

For places with more than a handful of employees, a payroll system or service can sort out the different federal, state and local tax requirements. “They provide payroll tax support by automating deductions and tax withholdings from employee wages, and remitting the correct amount to the various tax agencies based on the latest payroll tax regulations,” says Mark Dockham, president of Intrepid Payroll, Inc.

Payroll services can also manage annual tax forms. “When tax season rolls around, they create, distribute and file W-2s for employees or 1099s for independent contractors,” Dockham says. “Tax management services might also include 940 and 941 filings, W-2 and W-3 processing, state withholding and unemployment.”

Clearly Communicate Policies

Once you have your payroll system in place, write out the guidelines for employees in a policy manual or handbook. “Every aspect of how you pay your employees should be covered in detail,” Read says. Include information about pay rates, tax requirements, tip policies, overtime, time keeping, pay periods and pay dates, and payment on termination. Also list how employees are paid, such as through checks or a direct deposit.

When you hire staff, ask them to read and sign the manual or handbook. “Having policies for your employees that they have read and acknowledged at the beginning of employment reduces turnover, disagreements, misunderstandings and other unpleasant aspects of dealing with upset workers,” Read says. If you make changes to the way you do payroll, update the manual and ask employees to sign it again. This will allow state and federal labor offices to see you have written contracts with employees that outline your current policies.

Rachel Hartman is a freelance writer who covers small business, finance and lifestyle topics.