Steps in the Payroll Process

Payroll is arguably the most critical role in any company. Employees expect a paycheck within a regular cadence, and in the accurate amount. Your company’s integrity and value is dependent upon this.

 

Achieving a high understanding of the payroll process will help identify if there are any holes in your company’s systems, whether or not it would be best to outsource your company’s payroll, or even determine if no further action is needed. 

 

The Payroll Process

Upon initial glance, it might seem curious why so many payroll processors or HR team members feel as though processing payroll can be a real headache. After all, the process is only three tasks long: 

 

  1. As soon as your company’s new hire accepts their position, they move to the payroll process. 
  2. Your employee and your company engage in a formal agreement where hours worked will be exchanged for money after a certain amount of time.
  3. For each pay period, your team will multiply the hours worked by the pay rate, and then subtract benefits and withholdings (state taxes, federal taxes, insurance, and unemployment.) Once this amount is calculated, then payment is provided either via paper check, direct deposit, or payroll card. 

 

Even though the process might seem simple enough on paper, there are a few additional variables that can throw a wrench into the payroll game. Let’s take a deeper look.

 

In-house vs Outsource

Making the decision to stay in-house with your payroll versus outsourcing to a payroll provider has, like stated prior, a few varied nuances to consider. While the number of employees your company has and whether or not your company is facing the decision to grow or not can impact your company’s decision, it truly comes down to what is the most efficient method relative to your overall business objectives. 

In-House

If your company is small it might make financial sense to keep payroll in-house. But with manual entries comes the potential for error, such as:

 

  • Incorrect records of time worked
    • Calculating the correct payroll begins with an accurate record of the amount of hours worked. Depending on how many employees your company has, the time required to add up each employee’s hours can take anywhere between 10-15 minutes per employee.

  • Miscalculated earnings and deductions
    • Counting hours within a respective pay period, determining overtime, calculating gross pay and subtracting deductions to determine net pay, is a lot to do accurately, especially manually.

  • Late paychecks to employees
    • The previous two processes (accurately recording the number of hours worked and calculating withholdings) are extremely time consuming. If your payroll processor or HR team doesn’t have a firm grasp on the timing obligation associated with each task, and doesn’t start soon enough in the week, the risks can be detrimental to your business. 

Outsource

Outsourcing payroll to a payroll provider like FastPay ensures an automated process that:

  • Correctly calculates hours workedCorrectly-calculates-hours-worked
    • Have your Timekeeping tool communicate directly with your Payroll tool to ensure accuracy.

  • Correctly calculates earnings and deductions
    • Instead of manually entering this information, the only requirement of you or your team is to verify the correct deductions are set up. Once.

  • On-time paychecks to employees
    • An automated solution ensures accurate and on-time paychecks, everytime. 

 

It’s critical to remember every business is different and there is no one-size fits all method to achieving monumental success and growth. Even though the payroll process is only a few steps long, it’s important for companies (new, seasoned, small, or scaling for growth) to prioritize business needs without sacrificing payroll by way of an inefficient process.

 

Visit this blog to uncover the 6 Essential Questions to Ask When Choosing a Payroll Provider.

 

Recent Posts

Powerful Tools Every HR Department Needs

Putting the “human” back into “human resources” means empowering your team with the tools they need to succeed.   Tools lift the burden on the sheer...

Top Priorities for Small HR Departments

Whether just starting out as a green entrepreneur or having a small HR department is part of your business strategy, just because an HR team is small...