Payroll management is the process of seeing that the record of wages, salaries, bonuses, deductions, net pay and every other financial dealings which the company has with its employees are efficiently administered.
Payroll management is not what you do at will, but is a requirement by government which you must fulfil.
The government expects every registered business to keep adequate financial records of their employees. It is to aid the government calculate the income tax withholding, federal unemployment tax, social security tax and so many others.
In recent times, most businesses have adopted the digital method of managing payroll. Either they get an in-house payroll system or they outsource it.
An in-house payroll management system is software that is managed by a payroll staff of a company whose duty is to manage the payment and file the taxes of employees. Good payroll systems have helped in keeping many employers out of jail in the sense that, it gives no room for incorrect filing of taxes, which could have resulted to fines or jail sentences.
This payroll system sees to it that proper tracking of work hours, accurate wage calculations, deductions and income tax withholding and paying every related tax to government is done. This software does not require much effort from the employer in order for it to function optimally. But requires the employer to input the necessary wage information of employees and the working hours.
The system will automatically calculate the information and as well as withholding’s. You operate your payroll according to the tax law in vogue, and when there is a change in these laws, you certainly need to keep your system updated to suit every tax law.
When you are able to answer the question, “what is payroll management?” and understand all that it entails, it becomes easier to choose a payroll system that best suits your business. This isn’t always a walk in the park, because of the plethora of options available to us.
The size of your business should be the first factor to look at before determining which system that best suits your business. Ask yourself if your business has gotten to the level where annual payroll management is putting your business at a point of lower efficiency and higher risk.
Subsequently, analyse how much you are to budget for it, if your company is small, say less than 20 employees, then you may want to consider sticking with a manual payroll management method.
One great reason to manage your payroll online is that it helps you to pay tax accurately. You cannot afford to be on the governments’ debtors list. Calculating taxes can be cumbersome most especially when you have a large number of employees. Payroll systems do not just help in paying taxes accurately, but also helps to save you a lot of time – and time is money.
In comparing manual payroll management to digital payroll systems, you will notice that you are not the only one benefitting from the unique features the latter has to offer; your employees benefit too. It gives your employees a platform for accessing their information with ease. Without interrupting your accounting officers by asking time consuming questions. They get to see how much they are being charged for taxes, statement of their financial position with the company when they really need it and reasons for the deductions. Payroll system software’s unlike manual payroll management, saves you and your employees’ time and helps them see your company as financially transparent and accountable.
Having a payroll representative manage your payroll system puts you at an advantage and rids you of underpaying and overpaying your staff. You don’t have to feel bad leaving an employee out of pay or for not meeting the deadline to submit payroll for direct deposits. These are all taken care of with a good payroll system that is managed by a smart and dedicated payroll representative.
Since your payroll system is online, it will be easy to integrate any accounting software used by your business. With this integration you get to track your financial records and still have much time at your disposal. It also enables you to compile reports, print and send them out whenever the need arises. These among others are the reasons for dumping paper payroll management for payroll management systems.
Say you decide to entrust payroll management to an external payroll service provider. This is a company that handles other companies’ payroll issues and most of these companies offer paycheck, payroll tax and process direct deposits.
These companies will lessen your company’s responsibilities, but they can also put you at risk because you are entrusting pertinent employee information and business functions to an external entity. Performance and productivity may also be slowed down because these companies work for so many others and may not be at your disposal at all times.
The most dangerous part of employing an external payroll management company is that when an error on tax is made, you usually get to bear the brunt alone. Therefore, it goes without saying that you need to do some serious research when outsourcing your payroll management to make sure that you pick a company that is right for you.