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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.
PayrollSetting up Online Payroll: 6 Top Tips for First-Time HR ManagersAs 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.
Hr functionHow to Manage & Track Workers' Compensation (6 Simple Steps & Tips)Workers' compensation will pay employees' medical costs and wages lost due to a workplace injury. Mismanagement of workers' comp claims can result in a great deal of financial and legal trouble for your organization. Effective management and tracking of workers' compensation claims can save your company considerable amounts of time and money.
That being said, read on to learn exactly how to manage and track your workers' compensation claims with these easy steps and some expert tips.
6-Step Workers' Compensation Guideline for Your HR Department
Your HR manager should take the following steps for every workers' compensation claim:
1. Employee Reports Work-Related Injury
Should an employee injury occur, the employee must report the incident to the employer as soon as possible. Immediate reports facilitate faster claim resolution and limit legal risk and potential fraud.
2. HR Manager Files First Report of Injury (FROI)
The employer should complete and file the First Report of Injury (FROI) to the workers' compensation insurance carrier. OSHA regulations mandate that certain injuries are reported within a specific period, and many states charge fines and penalties for reporting delays.
3. Insurance Claim Is Filed & Incident Investigated
Once the insurance carrier has received the report, the insurance company will perform its own investigation of the incident. The company will look at medical records and collect statements from the employee, witnesses, and the person who received the incident's initial report, looking for any indication of fraud.
4. Claim Is Accepted or Denied
With the evidence gathered during the insurance carrier's investigation, the insurer will decide to accept or deny the workers' compensation claim.
5. Development of Return to Work Plan
The insurance claims adjuster and the employer's HR department work together to develop a plan for the employee to return to work based on the report provided by the employee's physician regarding their capabilities. If possible, the employer may make accommodations for the employee to return to work.
6. Settlement of Claim With Employee Return
The claim is closed when the employee has healed from their injury, has been released from their physician's care, and has fully returned to work.
Tracking the Workers' Compensation Claim Once Filed
Your HR department can efficiently track workers' compensation claims after filing with the help of automation. Workers' comp software can assist with filing injury reports, document management, compliance, and claims workflow management. Some even offer injury and claims cost analytics to help you identify areas that may require safety or process improvements.
When comparing workers' compensation tracking software, consider the following features:
Payroll integration
Workers' comp tracking software that integrates with your automated payroll software means less data entry and fewer errors. Organization and reporting tools
The software should be able to be filtered by various factors such as department or claim status to create detailed reports. Ability to accommodate complex scenarios
It may be necessary to manage workers' comp claims across different states or worksites. The software you choose should be able to handle this complexity. Ability to produce high return on investment
The investment in the software should not be more than the amount of money saved through reduced claims or time spent managing workers' comp.
Understanding Experience Modification Factor
Your workers' compensation premiums are based on your organization's MOD, or experience modification factor.
MOD is a formula used by your insurance carrier to determine the amount of premiums they'll charge your organization. The formula takes into account the amount of actual workers' comp losses your company has incurred, based on your company size and industry, and expected future losses.
The MOD formula outputs a factor around 1.0. If your MOD is less than 1.0, your losses are better than expected, and you'll get a discount on your workers' comp premiums. A MOD above 1.0 indicates losses are worse than expected, and you'll pay more for insurance.
Extra Tips for Effective Workers' Compensation Management
Promote Workplace Safety
You can promote workplace safety by providing your employees with the proper training, keeping a clean workspace, posting signs, and regularly reviewing safety procedures with your team. Reminding your employees to work safely will reduce the risk and number of injuries.
Act Immediately After Injury
If an injury occurs, acting immediately can save money on fines and penalties for delayed reporting and eliminate the possibility of fraudulent claims.
Conduct a Thorough Investigation
A thorough investigation of the accident as soon as it occurs will identify any immediate dangers to others. Documenting the situation can help with filing workers' comp claims and protect you from false claims.
Control Drug Costs (If Possible)
One of the most effective ways to reduce drug costs is to replace brand-name drugs with generic drugs. A pharmacy benefits management program can help negotiate better prescription drug costs.
Evaluate Post-claim Expenses
Continually assess for ongoing medical expenses for injuries, such as costs of physical therapy or specialty physician visits. Remember that certain injuries may have latent effects on the body, which may not appear until months or years after the original injury.
Beware of Claims Fraud
You can combat the likelihood of claims fraud by implementing a zero-tolerance policy for false claims, establishing ways for employees to report fraud anonymously, and installing video surveillance in work areas.
Bottom Line: Take Control of Your MOD Factor
Even though you cannot determine your own MOD score, you should take the necessary steps to influence it. Since MOD is basically a safety score for your company, improving your safety programs to lower the number and severity of workers' comp claims will, in turn, lower your MOD factor, thus reducing workers' comp losses and insurance premiums.
Hr functionThe Fundamental Differences Between HCM & HRM ExplainedHuman Capital Management (HCM) and Human Resource Management (HRM) share many similarities, yet the two are very different. Both support the HR function in the daily responsibilities of managing the workforce to create a more effective organization. For example, HCM and HRM are both interested in hiring, training, and retaining the best talent, but they differ in the way they approach the task.
Keep reading to learn more about the difference between HRM and HCM in order to make the best choice for your organization.
What Is Human Resource Management?
The notion of HRM emerged before HCM.
As personnel challenges, such as compliance and employee relations, increased, so did the need for a more effective management process. HRM predominantly focuses on the organization's immediate needs—the day-to-day administration of employee-related tasks such as the following:
HiringOnboardingTrainingTime and attendancePayrollBenefits administrationRecords managementCompliance
HRM aims to hire and retain employees with the skills necessary to help the organization succeed. An organization can achieve this goal by developing recruiting and training practices that equip the right people with the right skills and through proper management of the employee-employer relationship to maximize employee productivity.
What Is Human Capital Management?
The term HCM appeared after HRM but is much broader and encompasses all aspects of HRM.
HCM's primary focus is the organization's long-term needs—how to utilize its human resources in a way that provides the organization with a return on its investment.
HCM uses data provided by HRM activities to guide top-level management in strategic business decisions. HCM may involve responsibilities such as the following:
Assessing the organization's skills needsDeveloping new roles in the organizationCreating an employee/team structureDesigning compensation and benefits plans that will support the retention of employees
Key Differences Between HCM & HRM
While HCM and HRM both focus on managing human resources, they differ notably in their objective.
Goals
The goal of HCM is economic: to maximize the efficiency of the organization's workforce in order to provide a return on investment of that capital.
In contrast, HRM's objective is administrative: to hire and retain an efficient workforce.
Roles
HCM and HRM are involved in the process of recruiting, hiring, and onboarding, each with different roles. The role of HCM is to assess the organization's needs—creating a new position, if necessary—and recruit talent with the desired skills and abilities.
HRM's role is to design and manage an efficient hiring and onboarding process for the recruited talent.
Training
Training is another HR responsibility where HCM and HRM have roles, yet they approach the task differently. HCM broadly defines the required skills employees need to benefit the organization.
HRM, on the other hand, designs and manages suitable training plans for the workforce and then measures the success of that training.
Choosing the Right Approach for Your Business
There is no right or wrong approach to the management of human resources as each provides its own unique value to your organization. It would help if you began by identifying your organization's current challenges and expected future needs. Some smaller companies find that their main challenges are in the daily management of their workforce, while larger organizations' needs are much broader.
Regardless of which approach you choose to implement, everyone in your organization should agree and understand what is expected of them to ensure success.
HCM and HRM are not mutually exclusive; both are employee-centric and focus on maintaining a workforce that benefits the organization. Additionally, there's nothing stopping you from combining the two approaches within your organization to produce fantastic results. They are simply established management approaches that aim to help organizations identify and implement the goals they need and are not infallible.
Payroll9 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.
PayrollWho 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.
Payroll7 Time-Saving Tips for Effective, Streamlined Payroll ProcessingProcessing 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!
