There is no question about the impact of automation technologies on transforming the key area in business management. While automation technologies including artificial intelligence, machine learning, data science, and big data are revolutionizing the business world, payroll management solutions have made finance operations much simpler and more robust for startups and enterprises.
With an increase in adoption and a positive shift to integrate software and applications, business owners and managers have focused their sights on making essential tasks more valuable while constantly enhancing their in-house systems and streamlining the business structures.
Why Managing Payroll Is Vital For Businesses
Paying employees is impossible if payroll cannot be processed. Businesses can’t run without staff. Employees want to be paid on time, and if the firm fails to manage payroll effectively, businesses can risk losing valuable team members and perhaps running into legal issues.
The following are the main justifications for why businesses must correctly manage payroll:
- Legal Requirements: Payroll tax filing is subject to specific federal and state rules and regulations. Businesses can risk receiving significant fines or penalties if they don't file on time. Again, the firm is responsible if it makes a mistake with a worker's pay and fails to correct it.
- Employee Retention: the bright star or important team members are unlikely to remain on the team if businesses fail to pay them accurately within the time frame. Strong workers are transferable, thus it's crucial for retaining the workforce by ensuring that their salaries are processed appropriately and on time.
- Employee Performance: Besides retaining employees, businesses also need that they perform well and help firms to grow in a fast-moving & unstable economy. However, if companies retain their employees but fail to pay them on time can reduce their performance as they may become disinterested or even look for new work opportunities.
However, if these procedures are conducted properly, they will largely go unnoticed, but if there are loopholes within the system it can cause businesses to experience negative consequences.
Payroll Management Options - 3 Ways of Processing Payroll
Managing business payroll can be done in several ways. The entire process involves gathering employee data and then inputting it into the company’s database. Businesses need to ensure that each and every paycheck is calculated precisely while filing the
taxes before deadlines. In the end, businesses just need to make sure that each and every employee along with government organizations are being paid on time accurately.
1) Manual Processing
This is where startups and small-sized businesses handle their payroll function and deposit funds or print checks all on their own. To manage payroll manually, businesses need to have a system for calculating every single payment through an in-house team of accountants.
Here are some of the drawbacks of manual processing:
- Amount of information: businesses need to be utmost sure that they have access to essential information at every stage of payroll processing
- Incorrect payments: Manual payroll processes are full of mistakes and human error resulting in incorrect payments to employees. This can shatter the trust of the workforce and raises several questions about the company’s credibility.
- Time: Processing payroll of every employee manual is a hectic task and requires more time that can be utilized in performing more important business development tasks.
However, the biggest advantage of manual processing is that it's cost-effective, businesses don't need to buy software or business finance applications to run payroll.
2) Payroll Software
There are heaps of payroll software circulating in the market that is capable of automating payroll functions and handling tasks without requiring human intervention. As technological advancements are automating business operations, there are many payroll software out in the market that is capable of handling hectic payroll procedures automatedly. Such applications save precious time, are cost-effective, and ensure that everyone gets paid on time while ensuring high-quality results. Following are some of the key aspects of payroll management software that businesses might need to know to embrace digitization.
- Calculate Paycheck Amounts: businesses need to input the employee's personally identifiable information into the software for processing, as long as the data provided is accurate the results generated will be error-free. Adding the correct data in the software will calculate all the required payroll functions in real time.
- Pay Taxes: Payroll software automatically calculates and pays the taxes on behalf of businesses. Company owners don't need to worry about managing corporate tax solutions on their own. Instead, payroll management software can withdraw tax money while meeting deadlines.
- Pay Employees Automatically: Payroll management software automatically calculates and deposits money into employees' accounts as per the decided payments scheduled by the business owners. The software automatically processes payrolls and deposits the decided amount to the employee's bank accounts.
3) Outsourced Payroll Service
The final and most appropriate option is outsourcing payroll management services from a third-party accounting firm. By onboarding an outsource payroll service provider, businesses never have to worry about adding or removing employees' information or not need to make sure whether the payroll is processed or not, everything is being handled by the third-party vendor. In many cases, businesses need to contact firms for a quote, as they will tailor their services as per the company’s requirements. This option is considered the easiest way of managing payroll without making generous efforts, just need to notify the outsourcing service providers about new enrollments and then make sure that business accounts have enough funds to pay them. This is also known as the hands-off approach, giving business owners ample time to spend on other major business tasks to scale operations.
Top 3 Tips for Businesses To Master the Art of Payroll
Whether businesses choose to process payroll manually or decide to manage it with automated applications, there are similar things that can enhance the overall effectiveness of the process.
1) Payroll Training Sessions
It's crucial for businesses to hire trained professionals or get their in-house team up to the mark through various approaches. Whether businesses arrange training sessions or have a third-party vendor train the in-house teams, it's important to conduct training sessions. Everyone needs to be on the same page to streamline the payroll procedures. In addition to this, it's also a good idea to brief new employees during onboarding regarding payroll, so they know what to expect and to whom they can get connected if they have questions.
2) Document Everything
Businesses need to document every detail of their payroll procedures from the overall process to every single pay period. Thus, experts suggest that it's good to have documentation for everything in the first place.
In case businesses miss payroll tax deadlines or undergo company audits, not having proper documentation can put businesses at stake. However, integrating automated payroll software can help businesses to maintain the records of payroll without requiring business owners to keep track of anything.
3) Keep All Data Secure
In the tech-savvy world, where data breaches and identity theft cases are rising, businesses need to make sure all of their employee records are secure and no external entity can get access to them, except the third-party vendors who are handling the payroll functions.