Payroll is the process of paying an organisation employees, which includes tracking hours worked, calculating employees’ pay, and distributing payments via direct deposit to employee bank accounts or by cheque. Payroll management is a way of processing employees’ salaries, bonuses, and deductions, complying with labor laws, and maintaining adequate documentation.
The major tips for effectively handling payroll are:
1. Create a payroll calendar: this helps employees understand when they will be paid and when timecards are due. Interestingly, some payroll software would automatically create a payroll calendar once you had set up your pay schedule. Creating a payroll calendar can be done by utilizing a regular calendar as your guide to help analyze certain dates that might require a lag to allow enough time for payroll processing and also using colored fonts to emphasize specific information.
2. Outline payroll policies: It is important to establish a standard payroll policy before running your first payroll, so as to ensure that everyone from the management to HR to the employees knows about how payroll works, when the payroll period is, how much they can expect to take home, and how benefits such as leave and overtime are paid.
3. Find the right software: Most payroll software systems are easy to use, cost-effective, and free up time and energy for your business to do its best. Moreover, having payroll processing, attendance management, and benefits administration under a single software can help owners streamline business processes effectively and comply with tax and other rules as well. However, while selecting a payroll software for your business, it is more preferable to go for one that is hosted on the cloud, because the cloud would make it easier for you to access all the payroll data anytime you want to and from anywhere in the world.
4. Enroll HR staff to attend payroll training: To improve your business’ payroll management process, it is important to consider organizing payroll training sessions for your HR staff. This would greatly help in improving collaboration, creating a more cohesive team, and preventing misunderstandings between the organization’s HR and payroll workers, thereby giving all employees more clarity on payroll policies.
5. Use a time-tracking system: A timekeeping system helps to manage employees’ productivity and calculate their wages. However, it is important to have a time-tracking system that is both easy to use and difficult to manipulate. This simply means that simplifying your payroll process can help keep things running smoothly, with less effort.
6. Employee categorization: It is very important that, as a business owner, you categorize their employees as either employees of the firm or independent contractors. Also, for employees, you need to pay taxes, follow the minimum wage law, and take care of overtime wages. But for independent contractors, these requirements are not essential as they pay their own taxes. However, determination requirements vary from one state to another, depending on the state. So, it is very much advisable to check with your state’s Department of Labor regarding the rules to be followed while categorizing employees, because incorrect categorization may lead to owing back taxes and wages, penalties by the Inland Revenue Service, and interest.
Handling payroll effectively would not only make paying your employees easier, but it would make it more accurate and more streamlined.