It has been said that people are a business’s most important asset. Given that truth, it makes absolute sense to handle your employee payroll in the best way possible. The key objectives for every payroll management system should be to process payroll accurately, on time, and in compliance with all laws and regulations.
Why Effective Payroll Management is Vital
Effective payroll management is vital because it affects employee performance. You don’t want employees to be distracted or demotivated due to payroll problems. It affects employee retention because employees won’t stay with you if you can’t pay them correctly and on time. Payroll mistakes can cause an avalanche of legal problems along with significant fines and penalties. And those penalties can have a negative impact on your business finances.
Three Ways to Manage Payroll
There are three ways to manage payroll:
Manual processing: In this instance, a business does all the payroll calculations themselves, keeps its own records, submits direct deposits, and prints its own checks. The drawbacks to this approach are the need to keep accurate records and have access to all the required information for every payroll that you process. Manual processing takes a lot of time that could be focused on other business-building activities. Most significant are the potential problems caused by making mistakes and giving incorrect payments to employees or providing incorrect information to legal authorities.
Payroll software: Utilizing payroll software can save time, be cost-efficient, and ensure correct and timely processing of the payroll functions.
Outsourced payroll service: In this instance, a third-party payroll service can handle everything for you. They will expertly comply with all current laws and regulations and will save you worry and effort, as well as deliver payroll correctly and on time. They will tailor their services for your specific needs and will free up your time for more mission-critical activities.
Tips for Payroll Management Efficiency and Compliance
- No matter which payroll management process you choose, it is important to understand all labor laws and to stay current with state and federal tax obligations.
- Develop a comprehensive payroll budget. That should include wages and salaries as well as employer-paid taxes, benefits, bonuses, and overtime pay.
- Create a payroll calendar so that employees know when they will be paid, and if timecards are used, when timecards are due.
- Make sure that your calendar includes year-end tax reporting dates.
- A best practice is to implement employee scheduling and time-tracking software.
- Make sure that all employees are correctly classified.
- Encourage employees to use direct deposit. That will simplify the process, eliminating the need to handle physical payroll checks, thus making the payroll process more environmentally friendly, more secure, and faster.
- Document your payroll processes which will make it easier to analyze and audit your payroll system. Then, regularly review and update your payroll processes.
- Standardize all employee turnover processes. That helps with onboarding new hires and handling all terminations without confusion or errors.
- Solicit feedback from employees regarding your payroll procedures.
- Examine all internal communications regarding payroll to ensure transparency, consistency, and correct understanding.
- Make sure that all payroll data is backed up.
- Be prepared for payroll audits to avoid any problems or disruptions in your business.
- Ensure data security.
The aspects of payroll management can be confusing and overwhelming, especially for new and smaller companies. Outsourcing payroll can be an excellent option because they will expertly handle all the small but critical details, making payroll management efficient and compliant. They will be current in all the legal requirements of payroll and will have multiple resources to help you including timekeeping and automated processes.
Choose an Expert Payroll Service
Choose an expert payroll service, Palmetto Payroll, to assist you with your payroll system. We have offices in Columbia and Charleston, serving over 300 business owners statewide and we offer tailored solutions to save you time and money so you can thrive and grow including payroll, tax depositing and filing, management reporting, Human Resource services, and timekeeping services.