Accurate controls over payroll are one of the most important responsibilities for business owners. Payroll processing can be a complex task, but luckily there are payroll professionals that can assist you. Passing the baton off to a professional can not only give you peace of mind on pay dates but can also ensure you are in compliance with federal and state payroll tax filings.
What is a Payroll Management System?
A payroll management system is exactly what it sounds like, a system that manages your payroll. Payroll includes the money paid to employees during a specified period. A payroll management system is much more than just processing payroll. It demonstrates your commitment to your employees through accurate and timely pay. A payroll management system also highlights your ability to fulfill your obligations to federal, and state government agencies. Moreover, employee management, HR practices, tax filings, and timekeeping are just a few of the services a payroll management system or company can offer you. Keep in mind that a payroll management system does not have to be run by you. In fact, there are experts out there willing to take this burden off you so you can focus on other key areas of your business.
Pre-Payroll Services
Let’s take a closer look at what’s found in a payroll management system. Most processors offer pre-payroll services. This includes the setup of employee information, pay schedules, and deductions. Employee information like their social security number, address, legal name, and start date are all kept in an employee profile by the payroll management system. This allows the data to be accessed easily with no sorting through stacks of papers. This information is required to be on the paystubs and the year-end payroll forms, so having accurate records is essential. The payroll manager can enter all of this information for you, leaving no work to be done on your end.
Another pre-payroll service is setting up payment schedules and employee deductions. Once your initial pay period is determined, your payroll processor will remind you of upcoming dates to ensure no payrolls are missed. Having someone to keep you on track is critical, especially when running a business. Moreover, employing the help of a payroll management system will assist you in setting up correct payroll deductions. Payroll deductions, like social security, medicare, federal and state taxes, are closely monitored by the IRS, making accurate reporting critical. The IRS does not mess around when it comes to payroll tax errors, so be sure you are correctly withholding deductions. Other deductions, like health insurance and retirement accounts, also need to be reported accurately since some are pre-tax deductions. All of these specific requirements can be alleviated from your burden with the help of a payroll management company.
Payroll Processing
After all the back-end payroll information is figured out, the payroll can be processed by the payroll management system. Most payrolls are automatically calculated by the system once you enter the hours. The wage amount should have been previously entered when the employee was set up. Even though the payroll calculation is usually done automatically, someone still needs to check over the figures to be sure employees are getting paid correctly.
The payroll will then be distributed to employees in two ways: direct deposit or paper checks. Direct depositing paychecks take a two-day lead time. If you miss the submittal, your employees will not get paid on time. However, if you hire a payroll management company, they will keep you on track and get your employees paid on time, keeping everyone happy. If you choose to have your employees paid by paper check, the payroll processor has the ability to sign the checks for you. This makes the whole payroll process easy and worry-free.
Post-Payroll Services
Even though the payroll has already been processed, the payroll management company is not done with its job. The payroll management company continues to assist your business with all the payroll functions, from timekeeping to required tax filings. Most payroll management companies utilize timekeeping software to track your employees’ time. This can come in the form of a time clock or an app on your employees’ phone that they will clock in and out of. If you do not want a timekeeping system, you can just provide the processor with the hours.
One of the major benefits of a payroll management system is that it keeps track of all the payrolls you’ve had to make filing quarterly and annual reports a breeze. Quarterly federal reports are required to be filed for all businesses. The 941s, unemployment reports, and state withholding all have required deadlines shortly after the quarter ends, leaving minimal turnaround time. When everything is prepared accurately right away, your payroll provider can easily pull data and get the necessary reports filed, saving you an IRS or state letter for a late submission.
Benefits
A payroll management system has many benefits. Having accurate payroll each pay period will help keep employee retention high since no one wants to feel like they are being taken advantage of by their employer. Constant mistakes can also take a toll on employee happiness at your company. Furthermore, you can be sure you are receiving top-notch service from your provider since they are knowledgeable about all things payroll and have the necessary technology to accurately process your payroll. Additionally, peace of mind when it comes to payroll is one of the top benefits that a payroll management system can provide you with. You don’t want to constantly be worrying about the next payroll. Instead, take the burden off yourself and leave the professionals to handle it. Your time working on other areas of the company is more valuable.
Summary
Payroll management systems are becoming more popular, especially with constant technological advancements. Payroll processing can be an intricate and complex process if you have no background in it. Skip the hassle and employ a professional to handle all things payroll. Your stress levels will thank you!