Payroll management is the process of determining employee hours, calculating employee wages minus tax, and creating related financial reports. This process has many sensitive points, such as handling employee’s data and sending payments to bank accounts.
Payroll is one of the key aspects of an HR manager’s job – even one mistake can breach the trust your staff has in you and risk your business’s reputation. This means that it’s critical to do payroll processing the right way.
What does payroll processing entail?
Payroll processing is the calculation of employee pay, the filing of relevant reports and the payment of employment taxes to the government. These tasks must be completed in compliance with government regulations and within the organisation’s payment schedule.
Due to its many changing factors like promotions, terminations, pay scales and deductions, payroll processing can be complicated and difficult to manage. It’s important to manage your payroll correctly so you keep your employees’ trust and remain legally compliant.
5 Tips for Effective Payroll Management
1. Verify and secure your data
Mistakes can happen when onboarding an employee, like misclassifying them as an independent contractor. These kinds of minor or major errors impact the employee’s health insurance, benefits and taxes.
Ensure there’s a check in place to verify your employee’s personal information, their classification and their tax code, so that there are no errors before the first payroll run.
Add a checkpoint to confirm employee timesheets are free from inconsistencies in employee hours and pay rate.
You should also make sure your employees’ information is kept secure. Sensitive data like NI numbers or bank account information can be dangerous in the wrong hands
2. Record everything
It’s important to thoroughly document every point of payroll management. By keeping detailed records, you’ll be prepared in case you get audited or if an employee has a payroll query.
Payroll management software will keep your documentation automatically with no work required from you.
3. Stay up to date with payroll regulations
Payroll legislation changes regularly and keeping up with the latest laws is paramount for remaining compliant. Minimum wage rates are also legally binding and change every year.
Resources like Gov.uk can help you keep up to date with changes to legislation and what they mean for the payroll process.
4. Audit your own payroll process
It’s always best practice to keep track of your own processes to ensure they’re being done correctly and efficiently. If your tax filings are being processed incorrectly, it could lead to issues down the road.
Completing regular audits of your system will ensure you’re operating as accurately and efficiently as possible.
5. Make payroll easier with automation
Payroll management has many moving parts and can be a difficult process to handle.
That’s why payroll management software exists – to handle the most stressful parts of the payroll process on your behalf. This saves you time and money, ensures timely payments your employees, and keeps all the relevant documentation in one place. Using payroll software helps to reduce errors and maintain compliance
The bottom line
Payroll management is one of the most important processes in your business. While it’s possible to handle payroll manually – you can yourself time and effort by automating the process with software.
