The last few years have seen businesses of all shapes and sizes start taking payroll management seriously. They have realized that managing salaries, deductions, bonuses and increments for employees are essential for the smooth functioning of a business organization.
In terms of legality and taxation structures, payroll management offers significant help to businesses. They are able to ensure compliance with all the rules and regulations and work within the frameworks of legality. Any mistake in this regard can prove to be costly.
Most countries the world over have in place specific Labour Laws that need to be adhered to when payroll management is concerned. This means aspects like minimum wages need to be factored into the process. All the above show that payroll management is an important function.
When it comes to Payroll Management, there are two departments in a business that often find overlaps- Finance and Human Resources or HR. In this article, we look to offer top tips from leading experts at Success Human Resource Centre on optimizing Payroll Management.
What is Payroll Management: Meaning and Definition
Payroll is a broad term that encompasses several different meanings and functions. In simple words, it refers to the administration of an employee’s financial records right from the time he or she joins an organization to the time they leave.
The following are some of the things that standard payroll management refers to-
- The onboarding process of an employee into a new organization. This can include details on the salary, buyback from the earlier company (notice period), joining bonus, perks, and other benefits.
- Determining financial details and records of monthly salaries, tax deductions, bonus amounts, increments, incentives, and anything else related to remuneration from the company.
- Maintaining records and submitting the same to the Labour Department, Internal Revenue Service (IRS), and other governmental authorities as the case may be. These are all legal and taxable information.
- Distributing payslips to the employees. This also includes working with lenders if the employee has taken a new home loan, personal loan, or car loan. These are all parts of payroll management.
As you can see from the list above, payroll management is not as easy as it is made out to be. In the following section, we are going to look at some tips that can help improve your payroll management process.
List of 5 Top Tips to Help Businesses Handle Payroll Management
1. Better Training and Coordination between Finance and HR Teams
Both the finance and HR teams need to work in tandem to ensure effective payroll management. This is because HR teams are more closely connected with the employees. On the other hand, finance teams have a better idea and knowledge about areas like taxation and deductibles. Companies need to be promoted better coordination and training between these two teams.
2. Using a Payroll Management Software
Handling so much paperwork can become complex and confusing. Not only will you have to maintain so much physical documentation, but accessing them when required can become a headache. Using efficient and credible payroll management software such as this Payboy payroll Management Software can help streamline the process and make sure no files are being forgotten. This helps with improvements.
3. Being Transparent with the Employees
Many businesses feel divulging too much financial information can be harmful to their commercial health. This is a wrong feeling. Employees need to be given access to their financial data and records in the most transparent fashion. They need to see whether the business is being honest in terms of the deductions or not. This helps boost trust and credibility.
4. Using a Payroll Calendar for Effective Management
We often see the HR and finance teams scrambling at the end of every month. This is because they start the entire process of payroll management very late. One major reason for the same is that businesses are unable to stick to and maintain a monthly payroll calendar. Using a calendar can help in multiple will ensure that the salaries will roll out on time.
5. Auditing and Documenting the Payroll Process
Even the slightest mistake on payroll management might lead to an employee of yours receiving a letter from the IRS. Financial auditing and documentation of the payroll are critical to ensuring long-term sustainability and accountability. Businesses can get into trouble if they are not serious about payroll management. This is most important in tax assessments.
The Bottom Line
Payroll Management is an important part of any business organization. It does not matter whether your company size is big or small. Maintaining financial records can help you steer clear of any present and future problems. Automating the payroll management process, using technology, and training your teams can go a long way in this regard. If you wish to know more, please reach out to us in the comments below.
