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Trusted Brand Reviews brings you expert insights to guide your payroll processes and human resource management. Discover practical strategies to optimize these systems through HRIS and software automation, freeing up time and resources and boosting productivity.
Do Small Businesses Need Payroll Software for Less Than 10 Employees?

Payroll

Do Small Businesses Need Payroll Software for Less Than 10 Employees?
Running a small business with fewer than ten employees might not seem all that difficult—until you realize that you need to calculate, manage, and execute payroll on your own. But this does not have to be a solo crusade as the latest payroll software can ensure successful uninterrupted payroll management. However, is it really necessary for a tiny company with a handful of employees? Everything from taking care of benefits to paying employees on time (and by the right amount), payroll software offers various advantages for your company. Keep reading to learn more. Advantages of Payroll Software Over Manual Processing Payroll software offers a broad array of advantages for small businesses as today's programs can run your organization easier and smoother. Here are just four distinct advantages for any company—large, small, or in between: 1. Paying Employees Relying on payroll software to issue paychecks to employees can become simplified and more efficient. Since it is critical to pay your staff on time and the right amount, the suite of digital tools can take into account a wide range of aspects, including payment method (direct deposit or physical check) and payment schedule (weekly, bi-weekly, and monthly). This is perhaps the most important aspect of payroll compliance since businesses can face fines and endure legal disputes, particularly when jurisdictions have their own tax and labor laws. 2. Automating Processes Manually operating payroll can come with a lot of headaches and many mistakes. From misclassifying employees to filling out the wrong forms, many errors can arise by relying on human input for something as crucial as payroll. Therefore, automating processes associated with payroll can be of tremendous importance since it will reduce your mistakes. Plus, automated payroll can afford you more time and energy to concentrate on ways to boost revenue and grow your outfit. The manual vs automated payroll debate is a simple one to settle. 3. Tracking Benefits At first, it might be easy enough to track employees' overall compensation packages if you only need to do so for one or two employees. However, when your staff continues to increase in number, payroll software can better track a worker's plethora of benefits, be it health care coverage or 401(k) contributions. This makes it easier to manage when more workers join your team. It also helps when you are working with a financial institution or an insurance provider. 4. Calculating Tax Calculating the necessary tax contributions and deductions can be a time-consuming task. Indeed, there are many different types of contributions, deductions, and other tax and compliance scenarios that small business owners need to keep track of to ensure they are in compliance with federal, state, or local tax laws. In addition, employees will have their own tax structures as well: Employee The company is obligated to withhold income tax, Medicare, and Social Security from wages paid.Independent Contractor The small business is not required to withhold taxes. Temp Temporary workers usually work under 1,000 hours for your business, but it is up to you to file payroll taxes and send a W-2 form.Intern If the person participating in an internship is being paid, the employer is still required to deduct federal and state taxes from his or her paycheck. » Ready to get started? Choose from one of our selected payroll services. Plan for the Future It is true that a small business can calculate, manage, and execute payroll without software. However, without the use of software, it takes more time, effort, and organization to ensure that everyone is paid on time, the right taxes are deducted, and people are classified correctly. This leaves two drawbacks: time and the possibility of mistakes. This is especially true when the business and the number of employees grows, which can make manually managing payroll efficiently no longer a feasible policy. Indeed, no matter how intimate you are with figures and how organized you may be, when you have other employees to look after, mistakes are bound to happen! By incorporating payroll software into your day-to-day activities, small businesses can feel confident the right forms are filled out and filed, paychecks are executed, and benefits are doled out to staff.
Small Business Payroll Made Easy: 7 Steps to Do It Yourself

Payroll

Small Business Payroll Made Easy: 7 Steps to Do It Yourself
The do-it-yourself (DIY) trend has made its way to small businesses, especially on the payroll processing front. But while manually completing, filing, and managing payroll information might cut operating costs and save you money, it is always best to consult a relevant professional with financial and legislative experience and knowledge of this arena. That said, with such heavy workloads and limited time, it's possible to have streamlined, simple payroll management without any headaches. Here are seven time-saving tips for doing it yourself. 1. Obtain an Employer Identification Number (EIN) An Employer Identification Number (EIN) is a nine-digit federal tax identification issued by the Internal Revenue Service (IRS) to report employment taxes. The EIN never expires and is never reissued to another company. The application process is also a straightforward task and consists of these steps: Determine your eligibility, including a valid taxpayer ID number and the business located in the United States.Gather required business information, such as the date the business was started, number of employees, first date wages, and closing month of the fiscal year.Apply for an EIN either online or by mail. 2. Determine Federal & State Business Requirements When launching and managing a small organization, owners must adhere to many federal and state business requirements. But what rules, regulations, licenses, taxes, and permits are mandated will be determined by a wide range of factors, namely: Business structure Are you a sole proprietor, corporation, Limited Liability Company, or partnership?Industry What a small business needs to operate correctly will be based on the type of industry. For example, the U.S. Department of Agriculture (USDA) will issue permits for firms specializing in agriculture. Business name Entrepreneurs must select a business name and learn if it violates another company's federally protected trademark. This will be done through the U.S. Patent and Trademark Office (USPTO).Intellectual property Should your small business possess any intellectual property, it would be best to register a copyright, patent, or trademark with the USPTO. 3. Employees vs. Independent Contractors: Understanding the Difference It's important to clarify whether your small business is hiring employees or working with independent contractors. The former is someone on a company's payroll and earns wages and benefits in exchange. The latter is a professional who maintains autonomy and flexibility without benefits and perks. It is crucial to understand the difference because misclassifying a worker can trigger fines and penalties, lead to legal disputes, and result in back taxes. 4. Decide on a Payroll Schedule A payroll schedule outlines how often employees receive their paychecks, be it weekly or monthly. This is usually one of small business owners' first steps when hiring employees. But how can a company determine the best payroll schedule? Here are some factors to think about: Are there state regulations that require a minimum number of times employees are paid in a month?How does business cash flow synchronize with the payroll schedule?Are job candidates willing to wait an entire month to receive a paycheck? 5. Calculate & Withhold Income Tax Small business owners must calculate the withholding tax to correctly determine how much money they should deduct from their employees' paychecks. They should then send it to the IRS to make the necessary tax payments. This is performed by assessing the employee's W-4 form, their gross pay for the pay period, and the agency's income withholding table. 6. Pay Payroll Tax A payroll tax is a levy imposed by federal or state governments to cover the cost of public programs, be it unemployment insurance or Medicare. Small business owners are mandated to pay all of the payroll taxes outlined by the government. Payroll taxes vary by government, so entrepreneurs should consult with a licensed tax professional if they are unsure. These are ordinary taxes small business owners can expect to pay: Federal Insurance Contribution Act (FICA) Tax: A two-part 15.3% tax that covers Social Security and Medicare.Federal Unemployment Tax Act (FUTA) Tax: A 6% levy on the first $7,000 employees make annually, paid only by employers.State Unemployment Tax Act (SUTA) Tax: A tax to cover a state's unemployment programs. (The state stipulates this rate.) Employers can then withhold the relevant federal payroll taxes from employees' wages and submit payments, other tax liabilities, and related forms and documents to the IRS. This is done using the Electronic Federal Tax Payment System (EFTPS). 7. File Employee W-2 & Tax Forms A W-2 form is a statement that small business owners must prepare and file for their employees at the end of each tax year. It summarizes an employee's total earnings, federal and state withholding tax, and Social Security or Medicare earnings. Every employee needs to receive a copy, and all forms must be sent electronically or by mail to the Social Security Administration (SSA). In addition, there is a treasure trove of other tax information you can send to the IRS. Here are some common forms to consider: Form 1040 (Also known as Schedule C): This form reports how much money your business earned or lost in a tax year.Form 8829 (Also known as Expenses for Business Use of Your Home): This form deducts eligible living costs, including rent and utilities, as business expenses.Form 4562: A document used to report the amortization or depreciation of property or automobile used for the business.Form 8283: A claim for a deduction on non-cash charitable gifts that a small business made exceeding $500.Form 7004: This form requests a deadline extension to file taxes. Again, these can be filed electronically or sent by mail. Help Is Available for Small Business Owners Manual payroll processing can be time-consuming for small business owners, and many are now considering alternatives to manual payroll systems. In a global marketplace of heightened competition, inflationary pressures, and advancing technologies, it can be challenging for entrepreneurs to take on the task of accounting. This can also result in errors since preparing and filing taxes can be challenging to complete. While every small business can manage and submit necessary tax information, other options exist, such as leveraging automated software solutions or outsourcing work to a professional and certified accountant. If you're interested in automation as an alternative, we recommend browsing these payroll software articles and reviews to get you started.
In-House Payroll Software vs. Outsourcing: Choosing the Best Approach for Your Business

Payroll

In-House Payroll Software vs. Outsourcing: Choosing the Best Approach for Your Business
Payroll processing is essential for employee satisfaction, ensuring both accurate and timely payments. There are many factors to consider when deciding whether to outsource your payroll or keep it in-house. Both models have pros and cons, so it's essential to evaluate your options carefully before making a decision. Let's dive deeper into these payroll solutions and uncover their benefits. In-House Payroll Software & Its Benefits In-house payroll refers to the process of managing employee payments within the boundaries of your company. This is usually done with the help of a software solution that automatically calculates employee compensation and delivers it to the HR team. Once you've set up the payroll software, it automatically computes all calculations for you. Streamlined payroll processes save time so the HR department can work on other projects. Here are a few of the main benefits that in-house payroll software offers: Flexibility In-house payroll systems offer more control and flexibility than outsourcing. In most cases, you can tailor the software to your company's specific needs and preferences. Additionally, you can decide when and how often employees are paid and which benefits they're entitled to without having to trust a third party with your information. Reliability Another advantage of in-house payroll software is that you control the entire process. This means you can be sure that your employees will be paid on time and that their personal information will be kept safe. Moreover, you won't have to worry about data breaches or other security issues, as all the information will be stored on your own servers. Easy Tax-Compliance In-house payroll systems can also help you comply with tax regulations more easily. This is because the software automatically calculates the correct amount of taxes that need to be withheld from each employee's paycheck. Additionally, the system can generate reports that help you keep track of your company's tax obligations. This way, you'll always keep abreast with the latest tax laws. Payroll Outsourcing & Its Benefits It's common to outsource payroll services in 2022. Payroll outsourcing refers to partnering with another company to manage your payroll responsibilities. Usually, this is a company consisting of financial experts that make the calculations and payments for you while keeping you up to date with the process. After you've partnered with a third party to manage this for you, you'll have to give them access to your company's data, like hourly rates, timesheets, tax deductions, and employee benefits. From there, they'll create a dedicated team to manage your payroll responsibilities. Let's take a look at the benefits of this payroll management model. Easy Setup and Low Maintenance Payroll outsourcing is often considered the simpler and more convenient option, especially for small businesses. This is because you won't have to invest in software or hire extra staff to manage the process. Instead, you can simply outsource the entire payroll function to a third-party provider. This way, you can focus on important aspects of running a business, like acquiring new clients and running marketing campaigns, while the provider takes care of employee payments. Timely Paid Taxes Another benefit of payroll outsourcing is that you can be sure that your taxes will be paid on time. In most cases, providers offer tax-filing services as part of their package. This means they will calculate the correct amount of taxes that need to be paid and file them with the appropriate authorities, ensuring that you remain tax-compliant. Accuracy When you outsource your payroll, you can be sure that all the calculations will be done correctly. This is because most providers use sophisticated software to calculate and track employee compensation. Additionally, they often have a team of experts who double-check the calculations before making payments. How to Select the Right Model for Your Business Outsourcing payroll can save you time and money, but it can also be less reliable than an in-house solution. On the other hand, in-house payroll software is oftentimes more complex and time-consuming to set up, but it offers much more control and flexibility. So, which is the best solution for your business? It depends on your specific needs and preferences, but oftentimes, an in-house payroll software solution is the better option. Both models offer a wealth of benefits, but in-house software never requires you to surrender your data to a third party. This is especially important, considering your company will be held accountable if a data breach happens and not the company you partnered with. What This Means for Your Company Although payroll outsourcing can be an excellent option, having an in-house software solution handling most of the difficult work for you might be better. With it, the HR and finance departments can abandon manual payroll operations, as they will be fully automated. As a result, personnel have more time available to focus on other important tasks like increasing productivity and growing the company. If you're considering investing in such software, check out our reviews of the best payroll software.
Do HR Functions Still Outsource Their Payroll Services in 2022?

Payroll

Do HR Functions Still Outsource Their Payroll Services in 2022?
Business owners are well-aware that managing a company's payroll is no easy task. After getting the job done, employees expect to be adequately compensated. However, owners know that payroll management doesn't just refer to their salaries—it also consists of other inherent responsibilities, like handling employee benefits, paying taxes, managing withholdings and deposits, and more. This makes managing and tracking worker compensation very challenging. Outsourcing and Automated Payroll Solutions For this reason, more and more companies resort to outsourcing their payroll to third parties. In the last few years, business owners have started seeing the value of outsourcing their payroll responsibilities and not having to worry about the correct compensation of their employees. In addition to payroll outsourcing, some companies are also opting for automated payroll solutions. In fact, the rise of such solutions is starting to become a problem for manual payroll systems, as automated ones are often cheaper and more precise. Now, let's dive deeper into the world of managing payrolls and see what it's all about. Value of Payroll Outsourcing in 2022 Getting your company's payroll managed by a professional brings significant value to the table. Here are some of the main benefits: Outsourcing Saves You Time One of the main advantages of outsourcing payroll services is saving companies valuable time. In 2022, running a business consists of many aspects: managing sales, running marketing campaigns, keeping clients satisfied, and developing new products. With their payroll operations outsourced, business owners can have more time to focus on these aspects without worrying about whether total payments were calculated correctly by the end of the month. Outsourcing Is More Accurate Payroll outsourcing doesn't just bring value because it saves time—it also drastically reduces the risk of errors (i.e., improperly calculating employee compensation by the end of the month). In addition to keeping employees happy, this helps you remain tax-compliant, as the right payroll solution will also calculate taxes for you. Outsourcing Can Potentially Save You Money Outsourcing your payroll responsibilities can save you more money than it costs. Most business owners try to avoid having too many subscriptions, as it costs them large sums of money in the long run. However, an outsourced payroll solution can potentially cost you less than if you were to calculate the payroll yourself. Furthermore, having to face a penalty that results from making a mistake isn't something that any business owner should face, which is why outsourcing payrolls might save you money. Disadvantages Associated With Outsourcing Payroll Although payroll solutions have positively affected the way businesses handle spending, they aren't without their flaws. These are some of the potential disadvantages of outsourcing: Lack of Accountability The first disadvantage of outsourcing services is accountability. Even though you'll leave payroll management in the hands of professionals, you won't know if they've done a good job until it's too late. Moreover, the company you outsourced your payrolls to won't be held accountable for a mistake—your company will. Vulnerability Keep in mind that you're also putting the integrity of your data at risk when using the services of a third party. This is why it's crucial to establish confidentiality when you start outsourcing payrolls, as confidentiality threats could permanently stain your company's reputation. Ultimately, this makes your company vulnerable, so it's crucial to use a payroll solution with an impeccable reputation. High Costs Involved Lastly, it's worth noting that small to medium-sized businesses might not have any cost savings using an outsourced solution. The cost of payroll outsourcing can be quite high, and businesses that aren't in the top earning brackets might not be able to handle such costs. The reality is that outsourcing your payroll operations isn't cheap, so unless you've got a complex financial structure, chances are you won't save any money. Payroll Automation as an Alternative Solution It's evident that outsourcing payrolls has both advantages and disadvantages. While it may be a great decision for larger businesses with thousands of employees, the facts say that small to medium-sized businesses probably won't benefit from payroll outsourcing. This is precisely why automated payroll solutions for your designated payroll team have been drastically growing in popularity, as they offer the same benefits of payroll outsourcing with fewer shortfalls. Should you be interested in adopting a payroll software solution, look at our articles on the best HR automated software for small businesses and our reviews of payroll software for more information. Which Solution Is Best for 2022? As of 2022, having an automated payroll service is usually a better option than outsourcing your payroll. This is because a streamlined automated solution saves you time while being much more accurate and customizable. The pandemic has shown us that we need transparent payroll processes with remote access, which are essential to keep employees engaged and loyal.
Setting up Online Payroll: 6 Top Tips for First-Time HR Managers

Payroll

Setting up Online Payroll: 6 Top Tips for First-Time HR Managers
As a first-time HR manager, setting up an online payroll system for the first time can be daunting, especially if you have numerous employees and contractors. The following tips aim to streamline this process and alleviate some of the stress of setting up a new payroll system. 1. Get a Federal, State, or Local ID Number All employers in the United States must have an Employer Identification Number (EIN), which you can apply for through the IRS. You may also need a state or local tax ID number, depending on your state and locality. Check your state's website to determine if you're required to get an EIN. These ID numbers are used to report and file employee and employer taxes with federal, state, and local governments. When signing up for an online payroll service, you'll be required to enter this information before you can pay employees. 2. Gather the Right Employee Information Before Their First Day Before you can pay any employees or contractors, you'll need to request some information. For employees, you'll want to have them fill out Form I-9 and Form W-4. The I-9 is a form to verify the employee's eligibility to work in the United States, while a W-4 provides you and the government with the employee's tax information, such as their name, address, and tax ID number. You'll want to ensure you have all this information before the employee's first day to avoid any tax withholding discrepancies and possible penalties. 3. Classify Your Employees Workers must be classified as independent contractors or employees for tax purposes. Independent contractors do not have taxes withheld, and you don't pay employment taxes on amounts earned by contractors. If you classify an employee incorrectly, you may owe the government back taxes, interest, and penalties. There must also be a classification among employees as either exempt or non-exempt. The Fair Labor Standards Act (FLSA) mandates that non-exempt employees receive a minimum wage and an overtime rate for any hours over 40 in one week. Some states have regulations for non-exempt employees in addition to the federal government's FLSA. 4. Choose a Pay Period You must pick a day to pay your workforce, but you'll want to select a day that works for everyone. When choosing a pay period, there are several considerations, like state requirements, cash flow, and employee needs. Some states have minimum frequencies for pay dates, such as monthly or bi-monthly. You will also want to ensure you have the cash to cover the payroll expense on your chosen dates. And finally, your employees may desire a biweekly rather than a monthly pay period so they won't have to wait so long between paychecks. 5. Develop And Distribute a Payroll Policy Once you have familiarized yourself with the above information, you'll need to relay that to your workers. Your payroll policy should be in writing and available for employees to reference as needed. A payroll policy includes compensation rates, paid time off, payroll tax information, pay period start and end, and pay dates. Developing a payroll policy helps reduce errors, ensure that payroll is run on time, and that you're compliant with all applicable regulations. 6. Utilize the Right Software There is no shortage of management software intended to make the lives of business owners and managers easier. Make sure you take a look at the best payroll software and the best HR software for small businesses. Bottom Line Before setting up your payroll system, you must have certain information or documentation ready. As indicated above, you'll need an EIN from the IRS and possibly from your state. You should also know your company's bank account information and the signatory's details. If you migrate from another payroll system, you'll also need historical payroll data and unpaid tax liabilities. Gathering this information prior to setting up your payroll system will streamline the process and ensure a successful experience.
9 Reasons to Ditch Manual Payroll & Adopt Software Instead (HR Approved!)

Payroll

9 Reasons to Ditch Manual Payroll & Adopt Software Instead (HR Approved!)
Employees have been utilizing payroll systems for thousands of years, but it was only within the last century that computerized payroll started to gain traction. Even then, an automated payroll system was not widely available, and many companies were still calculating payroll manually or outsourcing the task altogether. Within the last decade, cloud computing has exploded into every part of the business process, including payroll. Today, payroll software eliminates the need to process payroll manually, which has significant disadvantages. Manual payroll requires a substantial time commitment, increases the risk of calculation errors (and employee dissatisfaction), doesn't allow for real-time visibility, and increases the risk of non-compliance. Keep reading to learn more about the benefits of using automated payroll software over manual systems, and be sure to take a look at our reviews of the best payroll software available. 1. Reduced Errors Through Accurate Calculation One tiny error—like forgetting a decimal place—can snowball into something much more consequential when processing payroll manually. Payroll software provides highly accurate calculations, lessening the likelihood of errors during the payroll process and lowering the risk of employee dissatisfaction or expensive resolutions. 2. Save Valuable Time Utilizing payroll software will save your chosen payroll personnel a considerable amount of time. Wage and deduction calculations, compliance audits, payroll reports, and recordkeeping are tasks usually completed by the payroll team. A payroll software system takes over these responsibilities, saving you and your team hours of tedious work. 3. Reduced Operating Costs The monthly cost of employing payroll software generally starts at around $15 per month, plus a small fee ($4-$10) per employee or contractor. For one year of payroll processing, the total cost would be between $1,000 to $2,000 for a business with around ten employees. On the contrary, a full-time/part-time payroll clerk could charge anywhere from $35 to hundreds of dollars each month for the base fee, with an additional $3-$10 per employee. For the same ten-person company, you could expect to pay well over $2,000 for reputable payroll processing. 4. Better Data Security The very nature of the payroll process involves employees' sensitive personal information. Hard copies of your manually processed payroll and employee data are tough to secure, whereas payroll software companies use security features like encryption, password protection, and two-factor authentication to prevent unauthorized users from gaining access to this data. 5. Payroll Software Is User-Friendly Payroll software that is challenging to use will create problems rather than solutions. However, most payroll software is straightforward with simple navigation and well-organized dashboards. Some even offer training for new users and integration with your timekeeping or other HR systems. 6. Around-The-Clock Customer Support Paying for a software subscription means that you also have unlimited access to dedicated and professional support via phone, chat, and email. Some providers even offer around-the-clock support for their products and services. You can complete your payroll process much faster when you're not waiting on a CPA to get back to you on the next business day about an issue that arose during your manual process. 7. Automatically Generated Payslips In addition to generating paychecks, payroll software will create and distribute payslips to your employees. Payslips include that pay period's wage and deduction information but may contain other data such as PTO balance or retirement contributions. Compiling this data manually each pay period is tiresome without the use of automated payroll software. 8. Streamlined Tax Management One of the most stressful payroll tasks is tax management—the calculation, withholding, filing, and remittance of employer and employee payroll taxes. Taxes are complex and can vary from state to state or country to country, which becomes a nuisance when you have globally-distributed employees. Payroll software can make the calculations and file taxes on your behalf. 9. Employee Self-Service With payroll software, employees can create an account with the payroll service to update their information, view their payroll history, and view time records if equipped. Payroll software streamlines the employee onboarding process and payroll process and increases the security of personal information. Bottom Line Comparing the manual and automated payroll processes is virtually impossible. The fact of the matter is that there's no doubt about the convenience and benefits that automated payroll software will offer your HR and finance staff. Still worried about setting up payroll? Read our top tips for setting up payroll as a first-time HR manager.
Who Should Be Responsible for Your Payroll: HR or Finance?

Payroll

Who Should Be Responsible for Your Payroll: HR or Finance?
There is much debate over which function—HR or Finance—should be responsible for payroll. Some feel that, since the task is employee-related, HR should perform payroll. In contrast, others believe that Finance should handle the task because the job requires a precise understanding of accounting and taxes. But who is really responsible for payroll? Read on to find out. Overview of HR & Finance Function Responsibilities Generally, HR is responsible for recruiting new employees, organizing and training staff, managing the safety and compliance of the workplace, maintaining employee records, and mediating issues between employees and employers. Finance is responsible for the day-to-day monetary operations of the organization, preparing and analyzing financial statements, planning and forecasting budgets, and ensuring sufficient cash is available to sustain continuous operations. 4 Benefits of Payroll Processing by Your HR Department HR's primary responsibilities involve maintaining employee records and addressing employee issues, making the department highly qualified to handle payroll processing. The primary benefits of having your HR department handle your payroll processing are as follows: 1. The Majority of Payroll Data Originates From HR Activities Payroll data, such as the employee's pay rate, withholding information, and benefits entitlements, are maintained by HR. As such, it would only make sense for HR to process payroll to avoid inefficiencies. 2. Employee Relations Skills The HR department has the training to handle issues that arise with employees—whether between two employees or an employee and the company. Should a problem arise, such as a mistake in an employee's paycheck, HR would be much better suited to handle an aggravated employee than the Finance Department. 3. Expertise in Regulatory Compliance Federal, state, and local labor laws vary widely, and these specific laws are not an area of expertise for Finance. Part of the role of HR is to keep up with current regulations regarding such laws. Payroll processing time and inefficiencies would increase if HR had to communicate every update to Finance. 4. Experience Dealing With Confidential Data Processing payroll involves a substantial amount of private and confidential information. HR is already responsible for safeguarding this information; keeping payroll processing in HR limits the chance of a data breach. 4 Benefits of Payroll Processing by Your Finance Department Payroll data is vital to the Finance Department for accounting records and business planning needs. The Finance function is well-equipped with the knowledge necessary to record and track payroll-related transactions, as well as make informed business decisions. The primary benefits of having your Finance department handle your payroll processing are as follows: 1. Highly Relevant Account Expertise The Finance team has the most knowledge regarding the accounting and record-keeping process. They have the expertise necessary to record transactions accurately and to the appropriate accounts. 2. Understanding of Tax Laws Tax law is extensive and ever-changing, but the Finance team remains continuously updated with the current rules and regulations. Since processing payroll requires a detailed understanding of the tax law, the Finance Department is the preferred function to handle payroll. 3. Mitigate Risks Through Regular Audits A typical function of the Finance Department involves performing regular audits of financial information, security, and internal controls. Given that the department is already prepared to perform this task, it would be most efficient for this department to handle payroll. 4. Understanding of the Bigger Picture Often, payroll is the most significant expense for a business, requiring a complete understanding of the company's budgetary limitations and overall financial performance. Given that Finance consistently monitors these factors, assigning the payroll responsibility to them would facilitate better decision-making related to payroll. The Verdict The debate over whether the payroll should be an HR or Finance responsibility is considerably dependent on the organization's structure. For larger organizations, it's common for payroll to be a financial team responsibility because of high turnover or the volume of payroll. Smaller organizations with longer-term employees often assign the responsibility to HR when employees frequently have questions about benefits packages. A hybrid approach, where HR and Finance work collaboratively, is also worth consideration. Adopting a hybrid approach with automated payroll software may be the most efficient way to handle payroll as both departments have particular expertise in specific areas of payroll processing. Whether you are a new business owner or the CEO of a much larger company, be sure to take a look at the best payroll software and how to save time on payroll processing.
7 Time-Saving Tips for Effective, Streamlined Payroll Processing

Payroll

7 Time-Saving Tips for Effective, Streamlined Payroll Processing
Processing payroll is an immensely time-consuming task that might involve verifying timesheets, pay rates, and other employee data; entering time data; calculating gross pay and all relevant deductions; printing and issuing checks (or verifying direct deposits); and updating payroll records. Though payroll processing is exceptionally tedious, it is essential to your business's financial health. Your employees won't work if they aren't getting paid, and payroll is usually the largest expense for any business. Ensuring that your company has the cash available to pay your workforce is essential to continuous operations. That being said, below are seven fool-proof tips for processing your payroll quickly and effectively. 1. Automate Your Payroll Process Implementing payroll automation software can take over tasks such as pay and deduction calculations, direct deposits, generating payroll records, and filing taxes. Many payroll software choices either have built-in time tracking or can integrate with your time-tracking software. Some even integrate with your accounting system. Look for software with all the features you'll need: time tracking, tax filing, self-service access for employees, etc. Thankfully, finding the right software doesn't need to be an arduous process. Take a look at our reviews of the best payroll software available to help you decide. 2. Create a Payroll Schedule Setting a payroll schedule is essential, not only for your workforce but for your bank account, too. Employees want to know that they'll receive payments predictably. And, you'll want to make sure you have the cash available to cover the payroll deduction. Some states even require payments to be made with a minimum frequency such as monthly, semimonthly, etc. 3. Stay Abreast of Federal & State Tax Regulations Labor laws are constantly changing, which means that you'll need to keep up with every update pertaining to your employees and organization. You can maintain compliance and avoid costly penalties by remaining updated with current regulations. And, if you implement Tip 1, your chosen payroll software will handle some of this for you! 4. Define an Effective Payroll Policy A payroll policy refers to the rules and guidelines established by your company to govern payroll-related matters. Topics may include: Workweek definitionsTimekeeping procedures—take a look at some of the best employee time tracking software for some ideasPay period definitionsWage ratesCommissions or bonusesPayroll deductions An effective payroll policy will ensure that you're compliant with all regulations and that the payroll department can process all payments efficiently. 5. Guarantee Transparency of Payroll Processing It's essential to let your employees know how your payroll process works, how wage and deduction amounts are calculated, and the employees' tax responsibilities. Employees sometimes misunderstand the payroll process when information is not readily available, so you should consider posting information publicly and updating your employee handbook regularly. Making your payroll process transparent will reduce the number of problems arising from employee misunderstandings. 6. Audit Your Payroll Process Regularly Regularly auditing your payroll process can save your company time and money. At least annually, you will want to review information such as pay rates, tax data, employees currently in the system, and time data during the audit process. You might occasionally identify employees in your payroll system who have been terminated, timesheets that don't match, or tax withholding that does not match remitted payments. 7. Consider Outsourced Payroll Services While outsourcing payroll comes with a fee, some employers—mostly larger businesses—find that the amount of time and money saved is well worth the small investment as payroll errors can be extremely costly and time-consuming. Choosing a full-service payroll provider means you don't need to worry about calculating wages or deductions, filing taxes, ensuring compliance, or sending payments—that's all done for you. Bottom Line These seven tips are sure to save you time and create an effective, streamlined payroll process. But, you may want to consider equipping your payroll personnel with the skills and expertise required via training sessions and workshops. Educating personnel in the proper procedures rather than surrendering control to an outsourced provider allows you to have more control over your payroll process, increases data security, and limits the risk of errors during data transmission. Be sure to take a look at our top tips for setting up payroll as a first-time HR manager!