7 Time-Saving Tips for Effective, Streamlined Payroll Processing
Brittany McDonaldon August 27, 2022.
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 definitions
- Timekeeping procedures—take a look at some of the best employee time tracking software for some ideas
- Pay period definitions
- Wage rates
- Commissions or bonuses
- Payroll 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.
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!