What Are The 3 Most Important Aspects Of Payroll?
July 25, 2017
Payroll is a vital aspect of any business’s financial accounting, whether it be large or small, and it can affect every aspect of a business, too, from its financial stability, to the morale of its’ employees.
Many companies deem payroll to be so important that they outsource it to a professional company, who go on to ensure that every aspect of it is carried out accurately and in a timely manner. Not only do they consider it to be a vital element of their business, but many business owners will happily hold their hands up and admit that they don’t have the relevant experience and knowledge to be certain of complying with state and federal laws and other important aspects of payroll.
Listed below are 3 of the most important aspects of payroll:
- Taxes and deductions: Recording pay and hours worked is just one element of a payroll system, other elements include recording deductions for benefits and tax purposes. There are many different deductions to be calculated, between federal and state taxes, social security, Medicare and benefit plans, and most payroll systems can be organised to accommodate the tax needs of each employee. A good payroll system should also calculate deductions obtained through pension and insurance plans. Making errors when determining which additions or deductions occur before or after calculations, can cause many problems for your employees. Outsourcing your payroll means that you’ll have a team of professionals – or an individual – who are highly knowledgeable in all these areas, and they’ll ensure that all taxes and deductions are processed accurately.
- Timesheets: While some employees may be non-exempt, others may be paid a salary or receive hourly compensation. Many companies offer web based or software systems to calculate payroll and billing time. Information regarding how many hours each employee has worked, can be recorded in a payroll system via an automated clock or manual timesheet. Keeping an accurate record of exactly how many hours each employee has worked, with an up to date payroll system, is the best way to avoid unnecessary costs and increase overall efficiency of the entire payroll system. A computer-generated timesheet will help minimize the amount of time administration staff have to spend reviewing and verifying the data.
- KPIs: KPIs or ‘key performance indicators’ are the ways in which you can recognise, measure and evaluate the success, or otherwise, of a particular activity of a business. Determining whether your business is making sufficient progress in each activity, requires a baseline to compare results with. Using such indicators to keep a check on payroll is a positive move for you, your business, your staff and your payroll team. Enhancing KPIs enables you to minimize - or even decrease – the costs associated with payroll, and makes it much easier to determine whether there are any negative trends making an appearance. Productivity and effectiveness are two key performance indicators that should be used for a payroll system.
While payroll may indeed be a time-consuming affair, it must be carried out effectively each month, and providing accurate information for the IRS is equally important. Outsourcing payroll means that the burden is removed from your shoulders, and you or your administrative team will have more time to focus on other important elements of the business.