More than 33% of business owners still manage their payroll manually using spreadsheets. And more than 40% of them spend more than a week on the calculations. If that describes you, you could be interested in payroll automation to increase your payroll’s effectiveness and manageability. Automated payroll software manages employee timesheets, computes employee earnings and taxes, and maintains payroll records, freeing up your time to expand your company. This post is your crash course in payroll automation.
Payroll mistakes are not something you can afford. Why? First, improper payroll management costs money in the form of severe fines and penalties that might ultimately bankrupt a company. Payroll itself isn’t the problem; instead, it’s the myths surrounding it which cause issues and hurt businesses. Let’s look at them and the facts you need to know about payroll management.
Payroll is a one-time monthly task.
This couldn’t be further from the truth. Setting up a payroll framework is an ongoing activity that doesn’t end with installing payroll software. Periodic updates and regular evaluations of the procedure are necessary. And that’s exactly how you increase its effectiveness.
While using payroll software, you must consistently remove repetitive operations, identify areas prone to error, and pinpoint time-consuming components. Payroll is a continual process due to shifts in the workplace environment, legal requirements, and technological advancements. You must regularly examine your payroll system to ensure it aligns with your company’s evolving needs.
Payroll is simply a salary calculation.
Many people often misunderstand the definition of payroll as the practice of compensating employees for their work. But things work out differently. Not only might payroll fall under HR, but accounting procedures are also a part of it.
Salary determination following the leave policy is a part of the payroll process, but it’s not the only one. It also covers time and attendance, deducting TDS and contributions for PF, ESI, PT, and everything else that is appropriate.
There are many other aspects of payroll besides salary computation, including:
- Calculating working hours for every employee
- Adjusting work hours for PTO and holidays
- Calculating pay for overtime and garnishments.
- Reporting the payroll
- Giving pay stubs and checks to employees.
- Any mid-cycle paycheck adjustments
- Generating payroll statements
- Compensation for workers
- State, local, and federal tax filing
- Filing and distribution of employee tax forms etc.
Internally managed taxation is simpler.
Some businesses opt to handle tax administration internally to cut costs. But because they don’t delegate the process to professionals, there is a significant cost increase due to non-compliance and severe fines.
Also, some believe that taxes paid by employees are not part of the payroll, which is a misconception. Payroll taxes must be fairly withheld from employees’ gross salaries by employers. After that, the payroll department pays the government on behalf of the workers.
Tax calculations and compliance can be complicated for inexperienced managers, but engaging an expert and using a payroll management system from Boardroom can make things easier. Automated payroll keeps track of these revisions to tax law, ensures you adhere to all due dates, and determines withholding tax for specific employees. Consequently, you can be sure that your taxes are filed accurately and on time.
Payroll has no bearing on keeping staff and improving the employee experience.
Both monetary and non-monetary variables can motivate employees. And both have an impact on their experience. The truth is an effective payroll system that includes special payments, payslip issuance, and ESS interfaces can dramatically improve the employee experience. Thanks to self-service software, employees may update their information and keep track of their time without going via their manager.
Also, your employees have access to more information and receive a notification when they have been paid. They can select the preferred payment method and transfer the funds to their account without management intervention. This improves the employee experience, fosters an open culture, and lowers employee turnover.
Payroll doesn’t require any planning.
That is untrue. Transactions alone do not make up payroll, and an effective payroll process involves several strategic actions. As a payroll manager, you must carefully evaluate payroll components to guarantee that your payroll complies with industry standards, benefits employees, and gives you a competitive edge.
Finding your payroll information and manually putting up a report is not an easy task. But with some computerized assistance, it is simpler to anticipate labor expenditures or make smart payroll decisions. You can be sure that you have the latest data for your company because many automated payroll software platforms offer downloadable reports. Make sure your payroll and company goals are aligned.
Payroll processing is open to all members of the HR/Finance department.
Not everyone should manage payroll since it deals with private employee information. Payroll responsibilities should be delegated to professionals with the required expertise. Along with understanding taxation and its legal elements, make sure they know how to handle sensitive information.
The safest places to store your sensitive payroll information are not on paper or in spreadsheets. Your information is password-protected and encrypted with an automatic payroll system so that only you and the necessary staff can access it. Keep your payroll data secure by always having a confidentiality agreement in place.
Using payroll software is not worth it.
This is the biggest misconception. Some payroll management tasks include Employee hiring and training, payroll and tax administration, workers’ compensation and overtime calculations, etc. Instead of employing automated payroll processes, many payroll managers spend countless hours performing all these tasks by hand on top of their other responsibilities.
There is a high likelihood of mistakes when you perform these tasks manually, which all take more time and money. There is also the cost of fines and penalties if you make tax filing mistakes. The truth is that an automated payroll system relieves you of the payroll load and simplifies the process by eliminating repetitive tasks and the possibility of errors.
You can eliminate these misconceptions regarding payroll management by utilizing the most recent procedures and technologies, like automated payroll software.