Running a business is hard work. There are so many things to think about like marketing, sales, operations, finances, that it can be difficult to keep track. One of the most important aspects of any business is payroll management.
However, many businesses don’t know how to use a payroll management system effectively or understand payroll regulations and laws. Even worse, some don’t even implement payroll processing at all.
In this article, we will discuss how payroll processing works and how to manage it effectively. We will also talk about the benefits of good payroll management practices.
By following these tips, you can make sure that your employees are paid on time and in accordance with all applicable laws and regulations. At the end of this article, you should understand how to manage your payroll effectively.
What Is A Payroll?
Typical payroll tasks include calculating employee hours, withholding taxes, setting up deductions and earning codes, registering states, issuing quarterly tax filings, following employee wage laws, and issuing payments.
It is time-consuming and requires cooperation from numerous departments, including HR and finance. By adopting contemporary technology, businesses, on the other hand, may effortlessly manage all of the issues.
Note: All employees expect to be paid accurately and on time. Having a strong payroll process isn’t only beneficial to large companies. Small business owners can also benefit from it.
How To Manage Payroll With A Payroll Management System
A payroll management system allows an employer to keep track of the salaries, earnings, deductions, and taxes of its employees. The salary structure includes salaries, allowances, deductions, and net payout to employees.
The payroll management system maintains employee records, creates payroll reports, calculates salaries, and generates pay stubs. Payroll also helps businesses comply with government regulations regarding payroll taxes and deductions.
Selecting the right payroll management software for your organization is critical. Selecting a payroll system that is too lean for your organization will result in several manual tasks for your payroll administrator.
However, selecting a system with more capabilities than you will use is a waste of money. All companies should find a payroll solution that can support your current size and complexity, while also supporting your growth over the next 2 to 4 years.
Benefits Of Having A Payroll Management System
The benefits of having a payroll management system are unrivaled. Whether it is a large corporate organization or a small business, payroll services must be created for the following reasons:
There are many government regulations surrounding payroll. These regulations can change often, and it can be difficult to keep up with them without a payroll management system. With a good payroll system in place, you can be sure that you are always compliant with the latest rules and regulations.
If your employees are not being paid on time, it can negatively impact their morale. This can lead to them feeling undervalued and unappreciated. A good payroll management system will ensure that your employees are always paid on time and give your employees access to information about their salary impairments. This will help to keep their morale high.
Buying the fight system is cheaper when compared to manual entry, manual tracking, and other storage applications like cloud storage. The setup cost is also low, and you don’t need to worry about data loss as the system can be backed up.
A payroll management system can save you a lot of time. With a good system in place, you can automate many of the tasks that are associated with payroll, such as calculating employee hours, withholding taxes, and issuing payments.
One of the biggest benefits of having a payroll management system is that it can help improve your payroll accuracy. There is always the potential for human error with a manual payroll. However, you can be sure that your payroll is always accurate with a good payroll management system.
A payroll management system can help you to keep track of your finances. You will see how much money you are spending on employee salaries and other benefits. This information can be very helpful when it comes to budgeting and financial planning.
There are many other benefits of having a payroll management system, but these are some of the most important ones. If you are thinking about implementing a payroll management system, be sure to consider all of its benefits.
How To Setup A Payroll Management System
Now that you know the benefits of having a payroll management system, you might be wondering how to set one up. Here are a few tips:
- Choose the right payroll software: There are many different payroll software programs. Be sure to do your research and choose the best one for your business.
- Get help from an expert: If you are unsure how to set up a payroll, it is important to get help from a payroll provider like us. They will be able to help you choose the right software and set up your system correctly.
- Train your employees: Once you have your payroll in place, it is important to train your employees to use it. This will ensure that they can use the system correctly and make the most of its features.
- Link with other departments: Linking with multiple departments is part of the payroll process. As a result, you will not miss any important information, such as attendance data, data from mid-year revisions, and others.
By following these tips, you will be well on your way to set up a payroll management system that will benefit your business.
Steps Required In The Payroll Process
Now that you have a payroll management system in place, it is important to learn the process of processing payroll:
Collect and update employee data: It is important to regularly collect and update employee data. This includes their name, address, contact details, job title, and salary. Every employee requires Social Security numbers, tax forms and withholding certificates, benefit enrollment deductions, and worker classifications.
Calculate Gross Pay: Employers must track the total number of hours worked by non-exempt or hourly employees and multiply that figure by their hourly rate to calculate gross pay. The procedure is a little easier for exempt, salaried workers. Simply divide the yearly wage by the number of pay periods to obtain the annual salary per period.
Calculate Take Home Pay: The net or take-home pay is calculated by first deducting any pretax contributions to benefits or retirement plans from gross pay. Then, withhold federal income tax, Federal Insurance Contribution Act (FICA) taxes, and any other state or local taxes and withholdings that apply. Lastly, make post-tax deductions, if necessary, for some types of benefits, retirement plans, and wage garnishments.
Determine employer payroll tax contributions: Employers are responsible for payroll taxes, including Social Security and health insurance. Social security taxes are 6.2% for employers and employees, which is equivalent to a combined 12.4%. Medicare tax is 1.45% for both employers and workers, or 2.9% total.
Keep Payroll Records: Employers must keep certain payroll records for a specified time. These include employee information such as name, address, and SSN; hours worked each day and total hours worked each week; pay rate; gross and net pay; deductions and withholdings; and leave taken.
Pay Employees and Government Benefits: After calculating payroll, employers need to choose a pay period to pay their employees. Employees can be paid by direct deposit, check, or cash. Employers also need to pay government benefits such as Social Security and Medicare taxes.
File Tax Reports: Employers must file quarterly and annual payroll tax reports. Quarterly reports show the amount of taxes that have been withheld from employee paychecks and paid to the federal and state governments. Annual reports provide a summary of the state payroll taxes that have been paid for the year.
Things To Consider When Managing Payroll
There are a few things to consider when managing payroll. Here are a few tips:
- The size of your business: Your business will determine the number of employees you have and the amount of money you will need to withhold for taxes.
- The type of business: The type of business you have will also determine the number of employees you have and the amount of money you will need to withhold for taxes.
- The location of your business: The location of your business will determine the tax laws that apply to your business.
- The type of payroll system: The type of payroll system you use will determine how easy it is to manage payroll. There are many different types of payroll systems, so it is important to choose one right for your business.
Need Help With Payroll Management? Contact Global Solutions (GSI)
Poorly handled payroll may result in dissatisfied workers, non-compliance, and inaccurate personnel records. GSI has experience managing payroll in all 50 states, Canada, and the United Kingdom. On the platform of your choosing, we run payroll. We help you remain compliant while reducing the administrative strain that payroll causes.
Our team members are experts on the majority of major payroll platforms, as well as smaller, more affordable regional payroll solutions.
By managing payroll calculations, deductions, timesheets, and employee inquiries for our clients, we save time for business owners.
What We Do:
- Conduct payroll for all W-2 employees on client selected payroll platform
- Monitor, track, and update timesheets and time keeping system
- Set up tax withholdings for employees in compliance with federal, state, and local tax laws
- Work directly with employees to ensure timesheets are submitted accurately and on time
- Act as Point of Contact for all employee payroll and timesheet questions
- Enter new hires and terminations into the payroll system
- Maintain accurate and compliant payroll files
Contact us to discuss your specific needs. Let us take the burden of payroll management off of your shoulders!