On the surface, managing the payroll process may seem like a simple, straightforward task. You provide pay checks to all your employees on time, and everyone in your company is happy. That seems easy, right? In reality, there is a lot more to the process than meets the eye – and you’re not alone if you feel stressed trying to handle all its moving parts.
When you really get down to it, payroll processing for each of your employees involves in-depth knowledge of wage laws and payroll taxes, employee deductions, your company’s internal processes, and most importantly – patience. That doesn’t sound so straightforward, after all, does it? In order to reduce your stress, here are guidelines for creating a more manageable payroll processing experience.
1. Document Everything
Payroll involves a lot of paperwork. It’s best to stay on top of it from the get-go. Start your employees off on the right foot by making sure they have the proper paperwork filled out when they begin employment.
While these forms are integral to your payroll processing, there is other information you should have readily available in some format, such as:
• Independent contractors versus employees. This matters because your independent contractors do not have employee or employer taxes withheld while employees do. And some independent contractors could very well be hired on as full-time employees between pay periods so it’s a good rule of thumb to be in constant communication with your hiring managers.
• Overtime rules and calculations. Calculations for overtime are not always as simple as time and a half for hours past 45 in a week as mandated.
• Your pay schedule (weekly, biweekly or monthly). Knowing your pay schedule in advance helps you know when to begin preparing for payroll and what public holidays might fall on or adjacent to a check date that will require you to move your processing day up. As part of your year-end process, set reminders for each processing day throughout the following year.
• The total number of hours and expense for each payroll. Again, without knowing the types and number of employees you have, this can be difficult.
2. Retain Documents
After collecting all the necessary documents on every employee in your business, it’s essential to maintain those records somewhere you can easily find them – whether it’s storing digital versions of your documents or securing them in filing cabinets
3. Keep a Calendar of Tax Payment Due Dates
You must report and pay your monthly PAYE on time to SARS. For example, if you have a large payroll, you’ll need to make payroll tax deposits based on the semiweekly rule.
4. Watch the Laws
While payroll may seem like a steady phenomenon, laws can and sometimes do, change quickly. Keep an eye on them because SARS can penalize employers who don’t withhold taxes correctly for their employees. Here are specific laws to watch closely
5. Review Your Internal Processes
While it’s vital to know local laws and practices, you must also be familiar with your internal policies that affect payroll. This includes paid time off, sick pay, benefits, commissions ect.
Every business is different in these regards. Some companies may pay for their employees’ health insurance, while others will withhold it from each employee’s paycheck depending on the plan. You may offer different levels of paid time off accruals to employees based on years of service or career level within the company. Your commission or bonus plan may have complex rules that affect who is compensated and at what level. All of these affect payroll and must be documented and monitored.
This sounds like a lot to remember, but much of your payroll stress can be reduced by remaining proactive and enlisting help from department managers to communicate changes to you and to remind employees of policies, and other payroll-related actions they may need to take.
6. Add Automation
Thanks to the digital age, online payroll and payroll software automate some of the more tedious administrative payroll tasks giving payroll professionals more time to focus on more strategic projects. These payroll services can:
• Keep track of tax changes, so you’re always withholding the correct amount.
• Handle new hire reporting and onboarding, so adding new workers is seamless. Information on the new employee enters flows to payroll and their documents remain on file in a digital format.
• Provide online and mobile time clocks so you don’t have to fuss with old-fashioned timesheets; you’ll also no longer have to ping managers to remind them to review and submit hours.
• Provide software that allows your employees to make changes to their addresses themselves, with updates being made automatically.
Payroll processing involves your employees’ personal cash flow, and the seriousness alone can create anxiety. All of the work required to stay on top of a complex function like payroll can add to the stress. But by being proactive with your schedule, managing and securing documents, and tracking withholding rates and tax laws as well as your own business practices, it can be a little less daunting. And reach out for help when you’re having trouble covering the most essential parts of the payroll process. All of these steps will help you create more stress-free payroll processing experiences throughout the year.