Simple payroll system

A simple payroll system fundamentally provides a structured, efficient way for businesses to manage employee compensation, ensuring that wages are paid accurately and on time while adhering to all necessary tax and regulatory requirements.

Think of it as the bedrock of your financial operations, directly impacting employee morale, cash flow, and legal compliance.

Without a streamlined approach, payroll can quickly become a time sink and a source of costly errors, distracting you from what truly matters: growing your business.

It’s about optimizing a critical, repetitive task so you can focus your energy on strategic initiatives, not chasing down misplaced timesheets or correcting tax miscalculations.

Understanding the Core Components of a Simple Payroll System

A truly simple payroll system breaks down into several key components that, when integrated, handle the entire payment cycle from start to finish. It’s not just about cutting a check. it’s about a holistic process.

Employee Data Management

This is your foundation.

Accurate and up-to-date employee information is non-negotiable. Without it, everything else falls apart.

• Personal Information: This includes name, address, contact details, and emergency contacts. Imagine trying to mail a pay stub to the wrong address – it happens more than you’d think.
• Employment Details: Start date, job title, department, employment status full-time, part-time, contractor, and pay rate are crucial. For example, a study by PwC found that companies with inaccurate employee data face an average of $185 per employee per year in administrative costs due to corrections and rework.
• Tax Information: Federal and state tax withholding forms W-4, state equivalents, social security numbers, and bank details for direct deposit are essential for compliance. Roughly 40% of small businesses cite tax compliance as their biggest payroll challenge, often stemming from poor initial data capture.

Time and Attendance Tracking

This is where the rubber meets the road for hourly employees, and even salaried staff benefit from accurate time tracking for project costing and leave management.

• Recording Work Hours: Whether it’s punch clocks, mobile apps, or manual timesheets, consistency is key. A Kronos survey revealed that 33% of employees admit to “time theft” by rounding up their hours.
• Leave Management: Tracking sick leave, vacation time, and other paid time off PTO accruals and usage. This prevents overpayments or underpayments and ensures you meet legal obligations.
• Overtime Calculation: Automatically calculating overtime based on federal and state labor laws e.g., FLSA in the US, where overtime is generally 1.5x regular pay for hours over 40 in a workweek. Incorrect overtime calculation is a leading cause of wage disputes and audits.

Gross Pay Calculation

This is the initial sum before any deductions.

It’s straightforward but requires meticulous attention to detail.

• Hourly Wages: Total hours worked multiplied by the hourly rate. Simple, right? But factor in different rates for different tasks or shifts.
• Salaries: Fixed amount per pay period. Still, pro-rating for partial periods or mid-month hires needs to be precise.
• Commissions and Bonuses: These variable components need clear rules and accurate tracking. A WorldatWork study indicates that 75% of companies offer some form of incentive pay, which must be accurately integrated into payroll.

Deductions and Net Pay Calculation

This is where things get a bit more complex, as various mandatory and voluntary deductions are applied.

• Pre-Tax Deductions:
  • Health Insurance Premiums: Often deducted from gross pay before taxes are calculated, reducing taxable income.
  • Retirement Contributions 401k, IRA: Employee contributions to qualified plans are typically pre-tax. Data from the IRS shows that in 2022, the 401k contribution limit was $20,500 for employees under 50.
• Post-Tax Deductions:
  • Garnishments: Court-ordered deductions for child support, alimony, or tax levies. These are legally binding and must be handled with extreme care. The Department of Labor provides strict guidelines for wage garnishments.
  • Loan Repayments: Company loan repayments or other specific employee-requested deductions.
• Net Pay: Gross pay minus all pre-tax and post-tax deductions, resulting in the amount the employee actually receives.

Tax Withholding and Reporting for Simple Payroll Systems

This is often the most daunting aspect for small businesses, but a simple system automates much of the complexity. Tax compliance is paramount. the IRS doesn’t mess around.

Federal Income Tax Withholding

Based on the employee’s W-4 form, this determines how much federal income tax is withheld from each paycheck.

• W-4 Form: Employees complete this form to inform employers of their marital status and allowances, which directly impacts the amount of tax withheld. A minor error here can lead to underpayment for the employee or an audit for the business.
• IRS Tax Tables: Employers use official IRS publications e.g., Publication 15-T to calculate the correct withholding based on the employee’s W-4 and their gross pay. These tables are updated annually.

FICA Taxes Social Security and Medicare

These are mandatory contributions that fund Social Security and Medicare programs. Both employers and employees contribute. Process payroll

• Social Security Tax: In 2023, the employee and employer each pay 6.2% on wages up to the annual earnings limit of $160,200. For someone earning $50,000, that’s $3,100 from both sides.
• Medicare Tax: Both employee and employer each pay 1.45% on all wages, with no earnings limit. Additionally, a 0.9% Additional Medicare Tax applies to individuals earning over certain thresholds $200,000 for single filers and is only paid by the employee.

State and Local Taxes

These vary significantly by location and can include income tax, unemployment insurance, and local taxes.

• State Income Tax: Some states, like California and New York, have high-income tax rates, while others, like Texas and Florida, have no state income tax.
• State Unemployment Insurance SUI: Employers typically pay SUI taxes, which fund unemployment benefits. Rates vary based on the state and the employer’s claim history.
• Local Taxes: Some cities or counties impose their own income taxes or other payroll-related levies. For instance, Philadelphia has a city wage tax.

Quarterly and Annual Reporting Form 941, W-2

Meeting these deadlines is crucial to avoid penalties.

• Form 941 Employer’s Quarterly Federal Tax Return: Reports wages paid, tips reported, federal income tax withheld, and FICA taxes. Due dates are typically April 30, July 31, October 31, and January 31. The IRS imposes penalties for late or incorrect filings, which can be 5% of the unpaid tax for each month or part of a month the tax remains unpaid, up to 25%.
• Form W-2 Wage and Tax Statement: Provided to employees by January 31 of the following year, reporting their annual wages and taxes withheld. Also filed with the Social Security Administration SSA.
• Form W-3 Transmittal of Wage and Tax Statements: A summary form submitted with all W-2s to the SSA.

Choosing the Right Simple Payroll System for Your Business

The “right” system isn’t a one-size-fits-all solution.

It depends on your business size, complexity, and specific needs.

Manual Payroll Not Recommended for Most

While seemingly “simple” initially, manual payroll quickly becomes complex, error-prone, and time-consuming as your business grows.

• Pros: Zero upfront cost for software.
• Cons:
  • High Risk of Error: Human error is inevitable. A single misplaced decimal can lead to significant issues. The American Payroll Association estimates that 1-8% of payrolls contain errors, with manual systems being far more susceptible.
  • Time-Consuming: Calculating wages, deductions, taxes, and preparing forms manually is a huge time sink. If you’re spending 5-10 hours a month on payroll, that’s time you’re not spending on sales or strategy.
  • Compliance Risk: Keeping up with ever-changing tax laws and labor regulations manually is a full-time job. A single missed update can lead to fines and penalties.
  • Lack of Audit Trail: Difficult to track changes and verify accuracy.

Payroll Software Recommended for Small to Medium Businesses

Dedicated payroll software automates calculations, deductions, and reporting, significantly reducing errors and saving time.

• Key Features to Look For:
  • Direct Deposit: Essential for employee convenience and reducing administrative overhead. Over 93% of employees use direct deposit.
  • Tax Filing and Remittance: The software should automatically calculate, withhold, and pay federal, state, and local taxes on your behalf.
  • Automated Reporting: Generates W-2s, 941s, and other necessary reports with a few clicks.
  • Time Tracking Integration: Seamlessly connects with time clocks or apps to feed hours directly into payroll.
  • Employee Self-Service: Allows employees to view pay stubs, update personal information, and access tax documents, reducing inquiries to HR.
  • Scalability: Can it grow with your business? Adding new employees or changing pay structures shouldn’t break the system.
• Popular Options:
  • Gusto: Known for its user-friendly interface, comprehensive features, and good customer support. Ideal for small to medium-sized businesses. Their pricing starts around $40/month plus $6 per person.
  • QuickBooks Payroll: Integrates seamlessly with QuickBooks accounting software, making it a strong choice for existing QuickBooks users. Offers various tiers with different features.
  • ADP Run: A robust solution from a large, established payroll provider, offering extensive features for growing businesses, though it can be pricier.
  • Paychex Flex: Similar to ADP, offering comprehensive services for businesses of all sizes, often with dedicated support.

Full-Service Payroll Provider Good for Businesses with Limited Internal Resources

Outsourcing payroll entirely to a provider like ADP or Paychex frees up your time and ensures expert handling of compliance.

• Pros:
  • Reduced Administrative Burden: They handle everything: calculations, deductions, tax filings, and year-end reporting.
  • Compliance Expertise: Stay up-to-date with complex and ever-changing tax laws, minimizing audit risk.
  • Error Reduction: Professional services have robust internal controls to ensure accuracy.
  • Higher Cost: Generally more expensive than in-house software, but the time savings and reduced risk can justify the investment.
  • Less Direct Control: You hand over control to a third party, though reputable providers offer transparency.
• When to Consider: If you have multiple employees, complex benefits, or simply want to completely offload the payroll burden and focus on your core business.

Implementing and Optimizing a Simple Payroll System

Once you’ve chosen a system, successful implementation and ongoing optimization are key to truly leveraging its benefits.

Step-by-Step Implementation Guide

Don’t rush this. A smooth setup saves headaches down the line.

1. Gather All Necessary Information: Collect all employee data W-4s, direct deposit info, pay rates, company tax IDs EIN, and state tax account numbers.
2. Configure the System: Input all company settings, including pay periods, tax jurisdictions, and benefits. For example, if you pay bi-weekly, ensure the system is set up for 26 pay periods a year.
3. Add Employees: Enter each employee’s detailed information, including their W-4 elections and direct deposit details. Double-check everything, especially bank account numbers. A single wrong digit could send funds to the wrong place.
4. Set Up Deductions and Contributions: Configure health insurance, retirement plans, and any other pre-tax or post-tax deductions.
5. Run a Test Payroll: This is CRITICAL. Process a “dummy” payroll to ensure calculations are correct, direct deposits are set up, and reports generate properly. Compare it against manual calculations for a few employees.
6. Go Live: Process your first official payroll run. Be prepared for minor adjustments in the initial runs.

Best Practices for Ongoing Payroll Management

A system is only as good as its ongoing management. Payroll paycom

• Regular Data Updates:
  • Employee Changes: Promptly update pay rate changes, address changes, or W-4 revisions.
  • New Hires/Terminations: Onboard new employees correctly and process terminations accurately to avoid overpayment or underpayment.
• Reconcile Payroll Records:
  • Bank Statements: Compare payroll disbursements against your bank statements.
  • Tax Payments: Verify that tax remittances match your payroll liabilities.
• Stay Updated on Regulations: Tax laws and labor laws change. Subscribe to IRS and state tax agency newsletters, or rely on your payroll provider to keep you informed. For example, the minimum wage can change at federal, state, and local levels.
• Maintain Clear Documentation: Keep accurate records of timesheets, pay rate changes, and employee agreements. The Fair Labor Standards Act FLSA requires employers to keep payroll records for at least three years.

Common Pitfalls and How to Avoid Them in Simple Payroll Systems

Even with a simple system, mistakes can happen. Proactive prevention is your best defense.

Inaccurate Employee Data

This is the source of many payroll headaches.

• Problem: Incorrect names, Social Security numbers, addresses, or bank details. Leads to misdirected payments, tax filing rejections, and compliance issues.
• Solution:
  • Verification: Verify new hire information against official documents SSN card, driver’s license.
  • Employee Self-Service: Empower employees to review and update their personal information through a portal, reducing administrative burden and improving accuracy.
  • Regular Audits: Periodically review employee records for completeness and accuracy.

Misclassifying Employees vs. Contractors

This is a huge red flag for the IRS and Department of Labor.

• Problem: Treating an independent contractor as an employee, or vice versa, can lead to significant tax penalties, fines, and lawsuits for unpaid wages and benefits. The IRS has strict guidelines for distinguishing between the two, focusing on behavioral control, financial control, and the type of relationship.
  • Understand the IRS Guidelines: Familiarize yourself with the “common law rules” for employee classification.
  • Consult Legal Counsel: If unsure, seek advice from an attorney specializing in labor law.
  • Proper Documentation: Have clear contracts for contractors outlining their independent status.

Non-Compliance with Tax and Labor Laws

Ignorance is not a defense when it comes to compliance.

• Problem: Missing tax deadlines, incorrect tax calculations, failing to pay overtime, or not adhering to minimum wage laws. This can result in hefty fines, interest charges, and legal action. The Department of Labor recovered $272 million in back wages for workers in FY 2022 due to violations of federal labor laws.
  • Automated Payroll Software: Rely on systems that automatically update tax tables and help ensure compliance.
  • Professional Advice: Use a payroll provider or consult with a tax professional.
  • Stay Informed: Regularly check federal and state labor department websites for updates.

Poor Record-Keeping

If you can’t prove it, it didn’t happen in the eyes of an auditor.

• Problem: Incomplete or disorganized payroll records, lack of documentation for pay changes or deductions. Makes it difficult to respond to audits, resolve disputes, or generate accurate year-end reports.
  • Digital Records: Store all payroll documents digitally in a secure, accessible system.
  • Regular Backups: Back up your payroll data frequently to prevent loss.
  • Consistent Filing: Implement a clear system for organizing all payroll-related documents.

Benefits of a Simple and Efficient Payroll System

Beyond just cutting checks, a well-implemented simple payroll system brings significant strategic advantages to your business.

Time Savings

This is perhaps the most immediate and tangible benefit.

• Reduced Administrative Hours: Automating calculations, deductions, and tax filings frees up hours that would otherwise be spent on manual data entry and reconciliation. For a small business owner, this could mean 5-10 hours saved per pay period, totaling hundreds of hours annually.
• Focus on Core Business: Reinvest the saved time into sales, marketing, product development, or customer service – areas that directly impact your bottom line. A SurveyMonkey study found that 46% of small business owners spend at least one day per month on administrative tasks, with payroll being a significant portion.

Accuracy and Compliance

Minimizing errors and ensuring adherence to regulations protects your business.

• Eliminate Calculation Errors: Automated systems reduce the chance of mathematical mistakes in wages, taxes, and deductions.
• Minimize Tax Penalties: Correct and timely tax filings significantly reduce the risk of fines and interest from the IRS or state tax authorities. Penalties for late or incorrect filings can range from 5% to 25% of the unpaid tax.
• Adherence to Labor Laws: Ensures compliance with minimum wage, overtime, and leave laws, reducing the risk of costly lawsuits. Wage and hour lawsuits are a significant burden for businesses, with the average settlement often in the tens of thousands of dollars.

Improved Employee Satisfaction

A well-run payroll system directly impacts employee morale and retention.

• On-Time and Accurate Payments: Employees rely on their paychecks. Consistent, accurate payments build trust and reduce financial stress. 75% of employees consider payroll accuracy crucial to their job satisfaction.
• Transparency and Access: Employee self-service portals allow staff to view pay stubs, check PTO balances, and update information, reducing inquiries to HR and increasing transparency.
• Reduced Disputes: Clear and accurate payroll minimizes misunderstandings or disputes over wages or benefits.

Enhanced Reporting and Data Insights

Beyond just paying people, a simple payroll system provides valuable data. Payroll software providers

• Financial Visibility: Generate reports on labor costs, tax liabilities, and payroll expenses, providing clear insights into one of your largest operating costs. For many businesses, labor costs represent 50-70% of total operating expenses.
• Budgeting and Forecasting: Use historical payroll data to accurately budget for future labor expenses and forecast cash flow needs.
• Audit Readiness: Organized, easily accessible payroll records make audits significantly less stressful and more efficient.

Key Considerations for Sharia-Compliant Payroll

When operating a business as a Muslim, ensuring all financial operations, including payroll, align with Islamic principles is paramount.

This isn’t just about avoiding forbidden elements, but actively seeking out ethical and just practices.

Avoiding Riba Interest

Riba, or interest, is strictly prohibited in Islam and is a significant concern in conventional financial systems.

• Problem: Conventional financial products often involve interest. While payroll itself isn’t directly an interest-bearing transaction, how you finance your operations, manage cash flow, and offer employee benefits like loans or certain investments can inadvertently involve Riba. For example, if you use interest-based credit lines to cover payroll shortfalls, or if employee benefits include interest-bearing savings plans.
  • Halal Financing: Prioritize financing options that are Riba-free. This includes Murabaha cost-plus financing, Musharakah joint venture, Mudarabah profit-sharing partnership, or Ijarah leasing. Many Islamic financial institutions offer such products.
  • Equity-Based Investments: If offering investment-related benefits, ensure they are in Sharia-compliant funds or equity instruments that avoid interest-bearing securities.
  • Prompt Payment: Ensure timely payment of wages to avoid any implication of delaying rights, which some scholars view as a form of injustice. The Prophet Muhammad peace be upon him said, “Give the laborer his wages before his sweat dries.”
  • Avoid Conventional Credit Cards for Business Expenses: If managing business expenses that might impact payroll, opt for debit cards or explore Sharia-compliant charge cards where available.

Ethical Business Practices Muamalat

Islamic finance extends beyond just Riba to encompass overall ethical conduct in transactions.

• Transparency and Fairness:
  • Clear Wage Agreements: Ensure employment contracts clearly state wages, benefits, and payment terms, leaving no ambiguity.
  • Accurate Calculations: The “simple payroll system” must ensure absolute accuracy in wages and deductions, preventing any injustice to the employee.
  • Timeliness: Paying wages on time is a core principle. Delays without legitimate reasons are considered unjust.
• Avoiding Gharar Excessive Uncertainty/Speculation: While less directly applicable to standard payroll, ensure any employee benefits, especially those involving investments or complex insurance products, do not contain excessive uncertainty.
• Avoiding Maysir Gambling/Speculation: Ensure no element of gambling is present in any employee bonus structures or benefit plans. This includes avoiding lotteries or prize draws tied to performance if they resemble gambling.

Halal Source of Income

The underlying business activity generating the funds for payroll must also be permissible.

• Problem: If the business itself is involved in haram forbidden activities e.g., alcohol sales, gambling, interest-based lending, or entertainment that promotes immorality, then the earnings derived from it, and consequently the payroll, become problematic.
  • Conduct Halal Business: Ensure your primary business operations are entirely Sharia-compliant. This means avoiding industries or services that deal with forbidden goods or practices.
  • Purification of Earnings if necessary: If, inadvertently, a small portion of earnings comes from a non-halal source, it’s a common Islamic practice to purify those earnings by donating them to charity, ensuring the core business income remains halal. However, the goal is always to avoid such sources entirely.

Employee Benefits and Sharia Compliance

When considering employee benefits, careful thought is needed to ensure they align with Islamic principles.

• Conventional Insurance Takaful vs. Commercial Insurance:
  • Problem: Traditional commercial insurance often contains elements of Gharar uncertainty and Maysir gambling, as well as Riba interest in its investment of premiums.
  • Solution: Explore Takaful Islamic insurance options for health, life, or other coverage. Takaful operates on principles of mutual cooperation and donation, where participants contribute to a fund to support each other, and investments are Sharia-compliant. If Takaful isn’t available, some scholars allow conventional insurance as a necessity, but active effort should be made to seek compliant alternatives.
• Retirement Plans Sharia-Compliant Funds:
  • Problem: Standard 401ks or pension plans may invest in companies or industries that are not Sharia-compliant e.g., alcohol, tobacco, conventional banking or use interest-bearing instruments.
  • Solution: Offer or direct employees to Sharia-compliant investment funds. These funds screen companies for adherence to Islamic principles and avoid Riba-based instruments. Many major investment firms now offer such options.
• Employee Loans:
  • Problem: Offering interest-bearing loans to employees is Riba.
  • Solution: If providing financial assistance, offer Qard Hasan good loan, which is an interest-free loan. This is an act of charity and benevolence. Repayment is expected, but no additional amount can be charged.

By actively integrating these Sharia-compliant considerations into your simple payroll system and overall business practices, you ensure not only financial efficiency and legal compliance but also a deeper adherence to Islamic ethical principles, gaining blessings Barakah in your endeavors.

Frequently Asked Questions

What is a simple payroll system?

A simple payroll system is a streamlined method for managing employee compensation, ensuring accurate and timely payments, tax withholdings, and regulatory compliance, often utilizing automated software or outsourced services to reduce manual effort and errors.

Why is a simple payroll system important for small businesses?

It’s crucial for small businesses because it saves time, reduces errors, ensures compliance with complex tax and labor laws, improves employee satisfaction through accurate payments, and provides better financial visibility, allowing owners to focus on core business growth instead of administrative burdens.

What are the basic steps in running payroll?

The basic steps involve gathering employee data and timesheets, calculating gross pay, applying pre-tax and post-tax deductions, calculating net pay, withholding and remitting taxes, and generating pay stubs and tax reports. Workful hris

Can I do payroll manually?

Yes, you can do payroll manually, but it’s generally not recommended for most businesses due to the high risk of human error, the significant time investment required, and the complexity of staying compliant with ever-changing tax and labor laws, which can lead to costly fines.

What are the main taxes I need to withhold for employees?

The main taxes you need to withhold are Federal Income Tax, FICA taxes Social Security and Medicare, and potentially state and local income taxes, as well as state unemployment insurance SUI contributions.

How do I calculate gross pay?

Gross pay is calculated by multiplying an hourly employee’s hours worked by their hourly rate, or by simply taking the fixed salary amount for salaried employees before any deductions are made.

What’s the difference between pre-tax and post-tax deductions?

Pre-tax deductions like health insurance premiums or 401k contributions are taken out of an employee’s gross pay before taxes are calculated, reducing their taxable income. Post-tax deductions like wage garnishments or some loan repayments are taken out after all taxes have been calculated and withheld.

What is a Form W-4 and why is it important?

A Form W-4 Employee’s Withholding Certificate is an IRS form that an employee completes to tell their employer how much federal income tax to withhold from their paycheck.

It’s crucial because it directly impacts the accuracy of tax withholding and ensures employees don’t overpay or underpay their taxes throughout the year.

What is Form 941?

Form 941, the Employer’s Quarterly Federal Tax Return, is used by employers to report income taxes, Social Security tax, or Medicare tax withheld from employee paychecks, as well as the employer’s share of Social Security and Medicare taxes. It’s filed quarterly.

What is a Form W-2?

A Form W-2, Wage and Tax Statement, is a form that employers must provide to each employee by January 31st of the following year.

It reports the employee’s annual wages and the amount of taxes withheld for the year.

It’s also filed with the Social Security Administration SSA. Top payroll systems

How often should I run payroll?

Most businesses run payroll weekly, bi-weekly every two weeks, semi-monthly twice a month, or monthly.

The best frequency depends on your business’s cash flow, industry standards, and employee preferences. Bi-weekly is the most common.

What are common payroll software options for small businesses?

Common payroll software options for small businesses include Gusto, QuickBooks Payroll, ADP Run, and Paychex Flex.

These systems automate calculations, deductions, and tax filings, significantly simplifying the process.

What is direct deposit and why should I use it?

Direct deposit is the electronic transfer of an employee’s net pay directly into their bank account.

You should use it because it’s convenient for employees, reduces administrative costs no printing checks, no bank fees, and is more secure than paper checks. Over 93% of employees prefer direct deposit.

What are the risks of incorrect payroll?

The risks of incorrect payroll include significant fines and penalties from tax authorities, costly lawsuits from employees for wage disputes, reduced employee morale, and potentially damaging your business’s reputation.

How does time tracking integrate with a simple payroll system?

Integrated time tracking allows employee hours to be automatically fed into the payroll system, eliminating manual data entry and reducing errors.

This is especially useful for hourly employees and for calculating overtime accurately.

Should I outsource my payroll or do it in-house with software?

The decision depends on your business size, complexity, and available internal resources. Paycheck payroll company

Outsourcing to a full-service provider reduces administrative burden and ensures compliance expertise ideal for busy owners or complex payrolls, while in-house software offers more control and can be more cost-effective for simpler needs.

What are common payroll pitfalls to avoid?

Common pitfalls include inaccurate employee data, misclassifying employees as independent contractors, non-compliance with tax and labor laws, and poor record-keeping.

Avoiding these requires diligence, proper system setup, and staying informed.

How long should I keep payroll records?

The Fair Labor Standards Act FLSA requires employers to keep payroll records for at least three years. Tax records, such as Forms W-2, generally need to be kept for at least four years after the tax becomes due or is paid, whichever is later.

What is the employer’s responsibility for FICA taxes?

Employers are responsible for withholding the employee’s portion of FICA taxes 6.2% for Social Security up to the annual limit, and 1.45% for Medicare on all wages and paying a matching employer portion for both Social Security and Medicare taxes.

How can a simple payroll system help with budgeting?

A simple payroll system provides clear, organized data on labor costs, including wages, taxes, and benefits.

This allows you to accurately track your largest expense, budget effectively for future periods, and make informed financial decisions.