The payroll management system efficiently manages employee’s financial records, such as incremental adjustments, salaries, bonuses, insurance payouts, and much more. The system is managed to comply with the legalities and ensure maintenance of documentation, be it in the form of hard copy or stored as digital data.
The financial health of any business depends highly upon payroll administration and its efficiency. To manage the financial records reliably and accurately, any business needs to learn and understand the payroll management system. Below are some interesting and essential points to keep in mind while managing payroll to help deliver detailed financial records.
Stay informed about state and federal tax regulations.
All employers need to stay updated with local tax obligations, as well as any changes in state/federal regulations. Running a business requires a lot of quick decisions and actions like hiring a remote employee, relocating business or even relocating employees. All these factors may also lead to changes in legal tax obligations. Thus, as a responsible employer, it is essential to learn about any updates that are required regarding payout and taxation.
Employees should be asked to fill and submit a W-2 form to the Social Security Administration by April every year. This helps the business keep up with the changes in the state and federal deadlines and makes sure the financial recordings are correct and accurate.
Automate the payroll process of your company.
Manually managing payroll processes can consume your company’s precious time and money. In today’s world, the most efficient way to manage your employee’s payroll is through automation. Automation not only helps to save time, but there are generally little to no errors in the process. Mistakes that could result in penalties are virtually eliminated.
If you are a growing or upcoming business with a growing number of employees, it has become increasingly beneficial to automate many of these time consuming processes.
Always Create a Payroll Calendar
Payroll calendars are a must for any business with multiple employees. It helps the employees better understand when they are going to get paid and makes it easier for the payroll staff to plan the payment tasks.
There are many payroll software available that allows businesses to automatically create payroll calendars and schedule them according to the company. Gusto is a popular option and a reliable one.
While software is available to automatically create payroll schedules and calendars, it is also possible to create an excel sheet to track this information:
- Using colored fonts for different information makes it easy to understand.
- Provide a copy of the calendar to supervisors and above to assist with management.
- Show all the pay periods throughout the year.
Maintain Transparency in the Payroll Process
Maintaining a transparent payroll process keeps the employer and employee relationship better. Problems can arise due to misunderstandings between the organization and the employee. The payroll policies of any business should be clear and upfront.
Here is a list detailing information that a transparent payroll policy should contain:
- A clear statement about how the payroll process works.
- How the classification of employees is done.
- Salary determination basis.
- Company procedures in case of payroll mistakes.
- Vacation pay and how it works.
- How wages and promotions are calculated in the company.
Always Document the Payroll Process
Finding an excellent personalized payroll system can be hectic for companies. Analyzing previously documented payroll processes can help to ensure the software you choose meets your businesses specific needs. Documenting the payroll process is beneficial for the company on multiple levels. It helps the payroll processing department work efficiently and also helps the organization of company audits.
Businesses need to maintain standard payroll processing instructions for the payroll management department in order to drive better reporting and handling of different processes.
Payroll training should be available to HR staff.
To make employee and payroll management an efficient process in the business, it is essential to allow HR staff to attend payroll training. Payroll is a part of the HR profession, but their actual expertise focuses on records management and recruitment.
Although the payroll and HR departments have distinct designations, it is always better to get HR staff trained on payroll systems as it is interlinked with what they handle in a business.
Here are some benefits of providing Payroll training to your HR staff:
- Better collaboration
- Simplified processes
- Prevents any conflicts
Timely completion of on-boarding paperwork
Various employment forms are necessary depending upon the country and the state in which you employees work. When hiring a new employee, always make sure to get all legal employment forms filed and submitted timely. This process keeps your business informed about the classification of jobs and helps organization of payroll.
The most common types of employment forms are:
- W-2 Form
- W-4 Form (or W-9 for contractors)
- I-9 Employment Eligibility Verification Form
- Direct Deposit Form
Employee feedback on payroll procedures should be sought
Always ensure your employees fully understand your company’s payroll procedures. Make it a point to educate employees on the process and encourage them to ask questions so you can identify areas of misunderstanding, like incorrect timesheet submissions or issues relating to timecard use.
Ask your staff for suggestions to improve the process to get their support once you’ve implemented the changes.
Audit Company’s Payroll Process
To ensure an error-free payroll process, it is necessary to audit the data frequently. Though rare, mistakes can happen in automated systems, and employees may complain about errors in payroll computations. In these cases, an effective audit is the best solution as it helps to keep the data clean.
These are some points to consider for an effective audit of payroll processes:
- Confirm the currency values across all accounting, payroll, and cash records by verifying and reconciling.
- Ensure that employees are logged in at work by installing a check-in system and biometric hardware.
- Ensure that your time and attendance system is integrated with payroll software properly by testing plugins or add-ons.
Conclusion:
Employee retention can be affected if the accuracy of paychecks becomes an on-going issue. Maintaining consistent payroll practices ensures that the business is trustworthy and shows distinct goodwill.
Curate a personalized payroll management strategy and always make sure your business is running the payroll system with the most advanced and best technology available. This simple thing will support your employees and help to create a thriving, positive work place.