Various Functions Of Payroll Management

Quickbooks Training

Quickbooks TrainingPayroll is an extremely important function of any business – whether you have one employee or an entire workforce. But payroll is a complicated process and involves much more than simply ensuring that each employee is paid on time. Payroll management involves various functions to ensure employees are paid correctly in compliance with government regulations.

1. Processing Paychecks

Processing paychecks is the primary function of payroll management. Make the smallest error in one paycheck and it will quickly become apparent just how negatively this can affect the entire workforce and operation of a business. A payroll manager therefore needs to ensure that each employee’s compensation is calculated correctly in accordance with their employment contract.

Aspects of compensation that need to be verified include:

– The net salary of an employee.
– Their hourly work rate.
– Compensation for overtime
– Commission
– Incentives
– Any other amount that is a form of income

Additional factors that need to be taken into account include:

– Vacation time
– Sick leave
– Maternity leave
– Compassionate leave
– Holiday pay

Common deductions that need to be factored in include”

– Federal income tax
– Health or dental insurance contributions.
– Pension fund contributions
– Repayment of a company loan
– Any other deductions or contributions that have been agreed upon between employer and employee.

Additional Bonuses And Perks

– A car allowance
– Housing allowance
– Mobile phone allowance
– Clothing allowance
– Entertainment allowance
– Any other perk or added incentive offered to the employee by the company.

2. Payroll Taxes

It’s not just your employees who are going to be seriously unhappy when your payroll is not processed correctly. The IRS receives 70% of its annual revenue from payroll taxes. Your company can face severe penalties that could be very costly for failure to pay payroll taxes or by paying erroneous taxes. The IRS penalizes businesses with billions of dollars every year.

A payroll manager needs to be aware of the different tax rates that apply to different regions in the country and make the correct deductions from an employee’s income. They also need to fill in various forms to record and document payroll taxes including W-2’s for every employee by the end of January each year. Form 941 also needs to be completed and submitted every quarter detailing employment taxes that are withheld for contributions. These documents need to be completed accurately and on time to avoid penalties. Training, skills and experience are therefore critical in a payroll manager.

3. Record Keeping

The Fair Labor Act requires that an employer keep accurate records for each employee that is not exempt. The following information in employee and payroll records are required:

– Full name and surname of employee and social security number
– Physical or residential address including the zip code
– Date of birth for employees under the age of 19 years
– Gender and occupation
– The day of the week and time when an employee’s work week starts
– The hours that are worked every day
– Total work hours that are completed each workweek
– Rate at which the employee is paid – hourly, daily, weekly or monthly including the amount.
– The regular pay rate per hour
– The total weekly or daily straight-time earnings.
– The total overtime income for each workweek.
– All deductions from and additions to employee’s wages or income.
– The total wages that are paid over each pay period.
– The date when payment is made and the pay period that is covered by that payment.

The FLSA regulations also require that all payroll records should be kept for a period of at least three years. Records showing wage calculations need to be held for two years – for example, work timetables, time cards and other relevant documents. The payroll manager should ensure that these documents are stored electronically and backed up to be inspected by the Department of Labor at any time.

4. Employee Accessibility

While it is a legal requirement for payroll records to be made available to the DOL, employees should also be granted access to their personal payroll information upon request. A secure online portal provides a means for employees to access their personal information including:

– Summary of benefits
– Summary of pension fund or 401(k)
– Summary of deductions and history
– Details of direct payments
– Time clocks
– Paid leave or time off work

UptoDate Bookkeeping solutions also provides employees with the ability to download and print documents such as W-2s, make changes to tax settings and make online payroll inquiries. This empowers your employees with the knowledge that they need when tax season arrives.

5. Simplifying Payroll Management

Payroll is complicated and a dedicated HR department to handle all the responsibilities that come with payroll simply isn’t in the budget for every company. Outsourcing payroll management and administration with UptoDate Bookkeeping is a convenient and affordable solution to provide business owners with the peace of mind that every aspect of their payroll is being handled expertly and in compliance with the required regulations.

Leave a Reply

Your email address will not be published. Required fields are marked *