The heart of every business is its employees, and these employees need to be paid their wages on a regular basis. Whether a monthly, bi-weekly, or weekly pay schedule, payroll is typically done via a payroll system. But too often, it ends up being something that takes up a great deal of time and resources. If that’s how payroll currently operates in your organization, why not make 2022 the year to make a change?
In this article, we’ll explore some best practices that can take the pain out of payroll in your business.
Payroll management is the process of compensating employees for the services they’ve rendered to a business, in line with their contract and their attendance. It typically involves the calculation of wages, deductions, and net pay.
Payroll management also encompasses the timely payment of these wages and the filing of any relevant taxes and employee benefits. Efficient payroll management ensures compliance with the law, and it also helps foster a positive working relationship between employer and employee.
Errors in the payroll system can have serious implications. If you fail to pay your employees what’s due to them on time, it could lead to conflict, low morale, or even legal problems.
A good payroll management system will allow you to accurately store and manage all your employee information in one place.
Businesses must adhere to tax and legal frameworks regarding their payroll processes and payment records for all their employees.
Deciding how to manage payroll within your organization is an incredibly important decision that should be given thorough consideration. We’ve selected our top 10 payroll best practices to ensure your payroll function runs like a well-oiled machine this year and beyond. Let’s dive in.
The first step to streamlined and efficient payroll management is developing a handbook or manual that sets out all elements of the payroll process. This is important because unless the mechanics of the payroll process are documented, they may only be stored in people’s minds. This can cause problems if payroll administrators leave the organization. A well-documented payroll process also helps new hires joining the payroll department get up to speed quickly.
The Department of Labor has strict rules about when companies should submit their employees’ payroll documents (which include pay stubs, employee retirement statements, and tax forms like employee W2s and W4s.). If you miss these deadlines, you could face hefty fines. So, be sure to keep track of all important submission dates. These should all be easy to get from the relevant authorities, so make sure you put them into your payroll calendar well in advance to avoid a last-minute rush or the unpleasant realization that you’ve missed an important deadline.
Payroll software can “automate away” much of the effort involved in managing your payroll. It can reduce the manual data input involved in a range of payroll activities, including running, tracking, and updating payroll data, tracking employees’ time and overtime, calculating tax withholdings, filing taxes, and generating payroll reports. This can save payroll administrators time and effort that can be spent on other business-critical tasks.
As we mentioned earlier, it’s important to keep track of all important payroll dates and deadlines, but you can take this a step further by setting up automatic reminders and notifications in your payroll management system rather than relying on your personal calendar. The best payroll management systems will automatically alert you of the most important government submission dates and send automatic reminders well in advance.
In most organizations, it’s common for employees to submit their claims for expenses and overtime towards the end of the month. This can leave your payroll team struggling to process all the incoming documentation before month-end. A good payroll management system can help avoid this scenario by automatically gathering and processing this information in real-time.
Incorrect classification of employees happens more often than you might think, and it can cause problems for you with the IRS. It’s important to understand the differences between full-time employees, independent contractors, and exempt versus non-exempt employees. Be sure to file their details separately and understand the various payroll taxes you need to pay.
An important part of payroll management is accurate record-keeping. The IRS requires companies to retain payroll records for several years. A payroll solution with a robust and secure storage system will help you keep records organized and available while eliminating the need to file reams of paperwork the old-fashioned way.
Many payroll software solutions are available to help you streamline your payroll management processes, but online software offers an additional degree of flexibility. For many organizations, the value of opting into an online payroll software solution is that it allows payroll administrators to log on from anywhere to complete their tasks – even from a mobile device.
Direct deposit is a smart way to avoid hours of manual payroll effort. This model also makes your end-of-year payroll reporting faster and easier for your payroll team as they don’t need to sort through physical files – everything is already captured electronically.
Like any corporate system that contains confidential and personally identifiable information, payroll platforms require an additional layer of security to ensure they’re only accessible by authorized parties. Data loss prevention also needs to be a priority. System failures and data loss can result from unforeseen events such as natural disasters, equipment breakdowns, or even human error.
The best cloud-based payroll solutions come with an in-built layer of extra security protection, making the event of a data breach or data loss less likely. They’ll also send you immediate alerts should any suspicious or fraudulent activity be detected.
Employers are beginning to see the value in giving people greater choice as to when and how they’re paid. If people prefer monthly direct deposits (or even paper checks), they should still be able to get them. However, the growing sector of the workforce who prefer on-demand pay should also be recognized and supported.
That’s why Earned Wage Access (EWA) is an option to consider as you look to optimize your business’s payroll processes. Essentially, EWA allows people to access the cash they’ve already earned but not yet collected. It’s a great way for people who have an emergency or experience cash droughts to get access to cash quickly.
EWA isn’t a personal loan, and the service won’t affect people’s credit scores or lead to bad debt, as is often the case when people turn to high-cost lenders when they’re in a tight spot financially. Some payday lenders will deduct what’s owed to them from employees’ bank accounts, which could leave them unable to pay for necessities such as food, transport, and childcare. EWA offers the flexibility employees need without the stress of loans because it’s money they’ve already earned.
Payactiv’s EWA service is offered as a benefit by employers to their employees, and there’s no associated cost to employers. Employee onboarding to Payactiv is quick and easy. We offer simple one-click methods using SMS, our mobile app, or our website.
Funds can be loaded onto a debit or prepaid card, transferred to employees’ bank accounts, or even picked up as cash at Walmart. Alternatively, Payactiv allows employees to use their earned wages to pay for services like Uber and Amazon and pay their bills directly in the app.
We also offer additional perks like discounts and special offers and handy features like budgeting and savings tools and free bill management.
We offer a turnkey solution, leveraging employers’ existing payroll and time/attendance systems. The highest security standards are also followed.
Learn more about Payactiv’s Service, or book your demo now.
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