Getting the payroll process right is important for any business. In addition to being the primary driving process behind how employees receive their salary for their work, a correctly executed payroll process can help protect your business against any labor or payroll compliance problems or issues.
According to Fit Small Business, the payroll process, “consists of the steps needed to pay employees each period, and involves tracking hours worked, deducting money for employee benefits, and remitting payroll taxes. Establishing a solid payroll process helps employers avoid penalties for breaking Department of Labor laws (minimum wage, unpaid overtime), and payroll software make it easy.”
Business owners need to ensure that whoever is handling payroll – whether it’s themselves or an HR rep – are capable of handling the process and are knowledgeable about what rules, regulations, and other facets need to be considered.
What’s involved in the payroll process in HR?
The payroll process in HR has several steps that are similar across businesses.
1. Collect time records
One of the most important steps in calculating and distributing payroll is to collect time worked by employees in order to calculate how much they’re owed by the business. Some businesses calculate this by using paper cards or electronic timesheets, but both are valid methods for ensuring that HR teams have what they need to accurately assess payroll. For non-hourly employees, HR teams need to know the salary pay as well as any PTO time that needs to be deducted. Hourly employees need to have any overtime, time and a half, or other non-regular hours calculated.
2. Calculate pay and deductions
Every individual employee will have their information calculated to include hours worked, salary owed, and deductions. Deductions, such as benefits, taxes, and insurance that need to be taken out of every employee’s paycheck, are almost as crucial as the pay itself, as they play a big role in employer compliance.
3. Pay employees
When hours, rate of pay, deductions, and other elements have been tracked and accounted for, employers can successfully pay their employees through whatever method required by the state or business – physical check or direct deposit is being the most common.
Additionally, keeping payroll records is an important part of the entire payroll process in HR, from the timecards to the employee exemption records to tax deductions and payroll stubs.
One way to handle the payroll process and avoid any compliance issues is to invest in an HR or payroll process software.
Benefits of software solution for the payroll process in HR
Some of the benefits of using an automated software solution for the payroll process in HR include:
#1. Reduced risk of costly compliance issues
Using a software program can help streamline the payroll process for all business owners and HR teams, making sure that there aren’t any process steps left undone.
#2. Greater employee satisfaction
A payroll processing system can ensure that your employees are always on time, deductions are correct, and direct deposits are in accounts in a timely, consistent manner.
#3. Automatic updates to account for any tax code or deduction changes
If there are changes to healthcare laws or tax laws, a software system can handle updates automatically and apply any changes that are needed for payroll
#4. Easier employee onboarding
There is a good amount of paperwork involved with getting employees up and running in payroll and automated systems help employees fill out the paperwork with fewer steps.
#5. Better reporting and employee self-service
HR and payroll process systems can give employees better access to their records, including past paychecks and tax records.
#6. Easier timekeeping
As timekeeping is a crucial first step to ensuring accurate payroll, having a system that incorporates timekeeping into the process can be helpful for businesses looking to streamline operations.
#7. Better business unit communication
The payroll process software can help accounting, finance, and HR teams work together more effectively and add to better, more accurate recordkeeping.
#8. Time and money savings
A final benefit of a payroll solution is that it can help to save HR personnel time and money. By reducing manual input and operations, companies can save time, save money, and reduce errors.
Whether or not your business chooses to employ a payroll software to help run your payroll process in HR, it is still a crucial operation that can affect the budget, bottom line, and even reputation of your business. Understanding the process and finding the right method that works for you to run it is critical in ensuring the best payroll process experience for your HR team and your employees alike.