What important place does payroll play in our business structure and functions of life?
Payroll is where all your money goes. If you don't have enough money coming in, you won't have enough money going out.
Payroll management is absolutely critical to business success. Without proper payroll management, your company could fail due to a lack of funds or even legal issues.
There are many different reasons why payroll may not be done correctly.
A company may have a payroll system that doesn't work properly. In addition, payroll data may be lost, stolen, or corrupted.
You may need to update the pay rates in the system. Finally, mistakes happen and employees may get paid less than they should.
These are some of the reasons why a payroll system is important
Employee records and information -
If you do not have access to accurate employee records, you cannot pay them accurately.
Your payroll software must always keep track of all employment details about each worker.
This includes things like their full name, social security number, date of birth, address, phone numbers, salary, hours worked per week, overtime hours, tips, deductions (including taxes), vacation days, sick leave days, etc.
Taxes and Federal regulations -
Federal law requires employers to withhold Social Security, Medicare, and state income taxes from wages before paying an employee.
Employers must file withholding tax forms at the end of every year. These forms show how much in federal income taxes and what amount of FICA (Social Security) taxes were withheld from each paycheck.
It's also illegal for employers to deduct unemployment insurance contributions from workers' paychecks without authorization.
Payment processing -
If you use paper checks instead of electronic payments, you need to make sure that the checks are processed on time.
Paper checks take longer to clear and have higher fees associated with them. Most payroll systems have built-in options for electronic payments.
Electronic payments save time and reduce errors.
Financial reporting -
Reporting is the act of sending periodic financial reports to various parties including shareholders, banks, vendors, and investors. Reporting helps everyone involved understand your organization's finances.
Reports help you stay informed about your costs, sales, inventory levels, profits, and losses.
Reporting also gives you the opportunity to see trends and anomalies.
You need to budget for your payroll so that you know exactly how much you'll spend each month.
Budgeting helps you plan your spending wisely and ensures you're not overspending.
Your budget should indicate any changes that need to occur in order to fulfill your monthly goals.
Time tracking -
Time tracking software lets you monitor the time spent on tasks and projects.
Time tracking helps determine if you're being productive. If you're spending way too much time working on
something that you could be doing something else, it's time to consider changing jobs.
Retention of records -
Keeping good records is extremely important to payroll. All records should be kept secure so no one can steal them or destroy them. Records are also necessary to ensure that employees receive correct salaries, including any applicable bonuses and commissions.
Benefits of automated payroll system
1. Payroll systems track employee hours worked per week, paychecks, vacation days, sick time and any deductions taken out of each paycheck.
2. A payroll system helps employees manage their own money and keeps them accountable for how they spend it. By keeping track of how much they have spent, an individual can make decisions about what’s best for them.
3. Employees love being able to keep tabs on their earnings. Keeping records of how much you've earned shows your dedication and commitment to the company.
4. A good payroll system saves companies time and money. If an employee works 40 hours a week, a simple payroll calculation would take around 10 minutes. Instead, using a payroll software solution could take anywhere between 30 seconds and 5 minutes on average.
5. A good payroll system makes things easier for both employers and employees. The employer doesn't need to worry about calculating wages or deductions, leaving him free to concentrate on his business. And the employee is less likely to miss work if the system goes down at some point during the day.
6. Payroll systems help employees get paid properly, accurately, and efficiently. These systems allow employees to access their information at any time and anywhere they have an internet connection, including while working out of town. Employees can easily track hours worked, pay rates, and vacation days, and even submit payments online. And with software options that integrate seamlessly with QuickBooks Online, users can complete their entire payroll process with just a few clicks.
7. A good payroll system helps keep employees organized and accountable for their work. By tracking how much money each employee is making and who owes what back to whom, employers can ensure that taxes are being withheld and that employees are not shorting themselves or the company.
8. Payroll systems save businesses time and money by automating certain processes. Instead of having to manually enter data from invoices and receipts into a spreadsheet, your business can set schedules for those tasks using a computerized system.
9. Most systems today offer features that automate payroll processing and reporting—even when your office isn't open. If you’re out of the office, employees can still enter their hours remotely, and then you can receive reports about them automatically without needing to log in over the phone.
10. There are many different types of payroll systems on the market today, so choosing the right one for your business is key. You want a system that offers customizable functionality, accurate estimates, and fast, secure transactions.
Source: QuickHR HR Payroll Software