The intricacies of tax compliance, employee benefits, and the ever-changing state and federal tax regulations can destroy the precision and scheduling ability of even the most sophisticated payroll system. A recent survey showed that the major hurdles companies regularly encounter in payroll management include:
- Manual procedures (23% of companies)
- The precision and timing of inputs (21%)
- Atypical or complicated processes (17%)
Ultimately, these issues can impact any business, so continual improvement of payroll processes is essential in today’s complex business environment. The following are some useful tips that can help overwhelmed payroll departments to streamline their payroll procedures and provide an enhanced pay experience for their workforce.
- Stay educated about the most recent state and federal payroll tax policies
- Conduct regular audits of your payroll activities and payroll software
- Make your payroll policy as simple and comprehensible as possible
- Go paperless with your payroll procedures
- Combine or synchronize your various pay schedules
- Outsource your payroll processes and management
Stay educated about the most recent state and federal payroll tax policies
Every inaccurately calculated payroll can have costly consequences for your organization. The inability to act in accordance with current IRS payroll regulations usually results in stiff penalties, and companies are required to correct their mistakes while at the same time sending any payments they owe to the IRS together with the penalties.
In order to avoid receiving such penalties, it is important to keep abreast of changing state and federal tax regulations and integrate them regularly into your company’s payroll procedures. With every pay cycle, you need to verify that your payroll is in compliance with the most recent tax laws. Your payroll department team has to be retrained frequently to ensure that they are always up to date on these changeable and complex laws.
Conduct regular audits of your payroll activities and payroll software
If your workers are experiencing delayed or inaccurate payrolls, you need to perform regular audits, beginning with a workflow analysis in which every step is examined from start to finish. Errors occur not only with manual time card systems but also with highly automated payroll procedures.
Some payroll issues may involve incorrect classification of employee type, which can lead to providing erroneous tax status and withholding taxes or failing to factor in pay increases after they have already been given to workers. Auditing activities can include the following:
- Examining each step in the payroll procedure for correctness
- Checking add-ons to ensure that the software solution for preparing payroll is incorporated into your time and attendance procedures
- Initiating an automated attendance system through the use of swipe cards
- Holding regular training seminars and communicating with employees as new tax regulations emerge.
Make your payroll policy as simple and comprehensible as possible
Errors in payroll information often occur because of a poor understanding of payroll policies on the part of employees. For this reason, it’s important to make sure your payroll procedure is easy to comprehend and is accepted by all of your team members.
Establish unambiguous and concise policies in areas such as job attendance, reimbursement for expenses, and leaves of absence. Clarity on these issues will help to overcome vague areas in your policy before they become troublesome and potentially costly for your bottom line.
Several payroll issues, such as underpaid taxes and employee misclassifications, can be handled by putting an understandable and transparent payroll policy in place. Your payroll policy materials need to include information on the mechanisms of the payroll process, the employee classification system, the way in which salary levels are established, methods for correcting payroll errors, and the process by which job promotions and overtime pay are computed.
All of this data has to be made accessible to your workers by detailing it in written form and posting it at strategic locations in the workplace. In doing so, you encourage team members to refer to your company’s official written policies and guidelines before asking any questions of management.
Go paperless with your payroll procedures
Another practical idea for upgrading your payroll system is to go digital in all of its functions. Going paperless is more environmentally friendly and easier to manage for both your company and your employees. It eliminates the need to maintain huge archives of paperwork.
In addition, gaining access to the company’s payroll data online is much more effortless and efficient than having to handle huge quantities of paper documents and payslips on a regular basis. Since many other aspects of your company are managed digitally, why should your payroll system be any different?
Amazingly, even in today’s highly digitized business environment, many companies continue to cut paper checks and mail them out to employees. Printing and sending out paper checks consumes a huge amount of a payroll department’s time and energy. Instead of mailing out paper checks, urge your employees to make the change to direct deposit, thus eliminating paper waste and lightening the load on your payroll team.
In this way, you not only save precious time and energy on administrative tasks but also take a step toward making your organization “greener” by reducing paper consumption.
Combine or synchronize your various pay schedules
Many companies maintain a variety of different payment schedules for different categories of employees, for example, monthly paydays for their executives, managers, and supervisors, and weekly or bi-weekly paydays for their hourly workers.
Although this policy may seem reasonable on the surface, in fact, it can easily cause errors to arise in the pay distribution process. As an alternative, you can maximize your payroll team’s efficiency and reduce unnecessary payroll errors by combining all pay cycles into one schedule, thus helping to avoid the duplication of processes and giving the team more time to pursue other tasks.
Using this approach, each category of employee is paid on the same timetable—once a week, bi-weekly, semi-monthly, or once a month. Having only one payroll system to deal with instead of several enhances your payroll department’s productivity and makes life a lot simpler for everyone.
Outsourced payroll services from Employer Advantage
It can be very difficult for both large and small business owners alike to manage their company’s payroll. It can be an overwhelming process, and it can also be expensive to have multiple employees in place whose only duties are to manage payroll and the like. If you have already tried the aforementioned payroll process improvement ideas and are still struggling, it may be time to enlist the help of an outsourced payroll service provider.
At Employer Advantage, our mission is to free our clients from hassles like payroll and human resources management so that they can focus on their own missions and the things that are more important to them. If you are interested in our services and require help, please contact us at simplifyyourHR@employeradvantage.com or give us a call at 1 (877) 737-4408.