Making sure payroll is on time and right every time is a tremendously important part of keeping employees happy and maintaining compliance with local, state and federal laws. If you’re a small business owner wearing a lot of hats or if you have a payroll and human resource department of one, you might still be stuck in the old days of outdated software that can only manage payroll (or worse, you’re still using spreadsheets!).
What Is Payroll Management?
No doubt, the payroll management process can be repetitive and monotonous, which can easily result in mistakes. It’s a huge responsibility, with small errors having considerable consequences. It can be very time consuming, too: gathering timesheets, calculating salaries (and taxes…and liabilities…and withholdings…and…).
Let’s start with the paper. Regardless of the size of your company, when it comes to payroll management there is a boatload of records you’re required to hang on to, some for as long as four years. A payroll management system can securely (that’s important) keep all your payroll data online and in one place for the required minimum storage requirements. It’s also handy to have everything in a single location so you can access records quickly on the off chance your business is audited.
Here’s a quick list of records you’re responsible for keeping:
Income Tax Records
- Every employee’s full name, gender, home address, and Social Security number
- The date and amount of each compensation payment (including bonuses and commissions)
- Total of wages that are subject to withholding from each compensation payment
- Total of withholding tax collected from each compensation payment
- Reason for any differences in calculations
- Documentation relevant to an employee’s non-resident alien status
- The date and market value of non-cash compensation (ex. You give an employee a company laptop in lieu of a cash bonus)
- All sick pay payments
- All IRS Forms W-4 and applicable state forms (withholding exemption certificates)
- All employee-signed agreements requesting voluntary withholding (ex. Withholding for benefits premiums or 401(k) deductions)
- Statements of employee tips
- Employee requests for alternate withholding tax computation
FICA Records (Social Security Tax)
- The amount of every payment where FICA tax is applicable
- The date and amount of FICA tax that was collected from each compensation payment
- Reason for any differences in calculations
FUTA Records (Federal Unemployment Tax)
- The total amount of FUTA paid during the calendar year
- The amount subject to unemployment tax
- The amounts of contributions paid into states’ unemployment funds
- Other requested information on an unemployment tax return
How Can Automation Help with Payroll Management?
Payroll administration involves a lot more than keeping track of files, though. In addition to cutting payroll checks, you’ll also have to manage employee benefits and other required deductions, state and federal payroll tax filing (for those records up there), garnishments, and a whole host of other data entry. And then you have to cross your fingers, toes and eyes and hope you didn’t make any errors because you’ll have to do it all over again.
Surprisingly, only 45% of small business owners use a professional payroll service and 46% of those who go it alone are spending anywhere between 3 to 10 hours a month on everything involved with payroll processing (National Small Business Association). That’s a lot of time you could spend doing so many other things to support and grow your business!
So, how can a new payroll processing system help? Here’s some functionality that your next payroll software should have to automatically and seamlessly help make your life simpler.
Let’s talk time. More specifically, the time you or your payroll manager spend on repetitive data entry tasks. A good payroll administration system provides employee self-service functionality, which enables your staff to do the bulk of the heavy lifting when it comes to data entry. Plus, when they need to make changes, say at open enrollment, they can do it themselves without you having to lift a finger.
Integrated Time & Attendance
Another time-saver is integrated time and attendance that keeps track of hours worked and automatically flows them into payroll so you don’t have to. You should also have the ability to drill down into hours worked by location, department and manager so you can easily identify trends and predict expenses. And it’s even better if the system is available as an app on mobile devices so your employees can clock in wherever they are.
If you think keeping track of multiple login IDs and passwords on sticky notes all over your monitor is status quo, you should expect a new system to have single sign-on that will enable you to log in once and have access to all your people and pay information.
Multiple Options to Get Paid
And if you’re still using paper checks, payroll administration software can give you and your employees multiple options to receive their pay such as direct deposit, paycards or on-demand pay. Paycards and direct deposit are great ways to pay employees, and on-demand pay enables them to access funds as they earn them.
A high-quality system will also have reporting functionality so you can get insights into important data like turnover, headcount and overtime costs. Which department is losing the most people? Who’s spending the most on overtime? These are questions that will affect not only your payroll management, but also your company’s entire bottom line.
If you’ve set your sights on expanding your company by adding additional employees or opening new locations, you should take a long hard look at your current payroll management system. If it can’t keep up with your growth, it’s like a boat anchor tied around your neck. We really want to help you stay afloat, so take a look at how we can help.
How Paycor Helps:
Cross payroll off your to-do list and never worry about it again. Paycor Payroll’s intuitive software makes it easy to pay your employees accurately and on time. Clear reporting makes it simple to spot inaccuracies, and employee self-service reduces the time you spend answering the same questions.