A lot has changed since the early days when payroll processing meant manual calculations on ledgers and workers paid in cash. When paychecks were first introduced, it could take up to a month for an employee to receive their pay—and to add to the complexities, federal withholding tax was brought into the picture. Ever since, payroll processing complexities and regulations have unrelentingly piled on to the point where we are today—dealing with a professional discipline where errors and inefficiency can cost an organization big in penalties and wasted time.
There are all of the laborious reporting and record-keeping requirements that federal, state and local jurisdictions present. There are also the myriad of ever-changing tax regulations making timeliness and accuracy a critical demand today for any payroll system.
Today, payroll professionals wear many hats. They are the stewards of tax law and reporting regulations that are critical to a business. So it’s important that your company has best practices in place to ensure payroll management professionals remain in compliance in order to keep hefty fines at bay.
Here are 4 best practices every payroll department should think about:
- Evaluate Timekeeping Procedures on a Regular Basis
Recent overtime pay requirements for white collar employees make proper employee classification more critical than ever. This starts with assigning the proper job classification to each active position including temporary employees, independent contractors or consultants. Job classifications drive payroll management, reporting and tax requirements and affect how federal overtime rules are applied in your company. If your organization were to get audited, for example, and it’s later found that employee jobs were not classified properly or have been underpaid or incorrectly deemed as ineligible for overtime, it could create an accounting nightmare with steep financial penalties.
Evaluating how your employees account for time on a regular basis is a best practice to ensure that changes in job duties or circumstances haven’t warranted a change in job classification. The best way to maintain accuracy in timekeeping is to take advantage of workforce management technology that simplifies the entire process. From online time tracking to card readers and time clocks, today’s time and attendance technology provides reliability that reduces fraud, ensures compliance with overtime rules and regulations and automates the process of feeding hours into payroll software for processing.
- Outsource Payroll to a Technology Provider
Outsourcing payroll processing provides time savings for companies as well as money savings due to economies of scale. When left to providers whose sole expertise is payroll and HR, you have effectively offloaded: the processing of pay period data; printing and signing of paychecks; and report generation and tax remittance to government agencies. Government rules and regulations involved in payroll processing are ever-changing, making it difficult for companies to keep up. Payroll providers stay current with regulatory changes so you don’t have to.
- Consider Going Completely Paperless for Payroll
Improved technology helps organizations become increasingly paperless. Payroll technology is no exception. Payroll and integrated HR software provide an opportunity to do away with paper timesheets and timecards, physical paychecks and pay stubs, and other forms of paper-based transactions. This technology also provides information to employees the way they are accustomed to getting all of their information today: quickly, easily and via mobile device.
Let’s not forget the cost savings involved in paperless payroll too. Organizations save money on every payroll transaction that is done electronically instead of on paper. They save on every direct deposit versus a paper check. These cost savings add up. It is also much more reliable to receive payroll data electronically, as bad weather may stop your paycheck from reaching your mailbox but won’t necessarily stop your direct deposit from hitting the bank. Creating a path to a paper-free environment is possible with integrated payroll, HR and time tracking software.
- Streamline Your Systems
The most slick and modern payroll system is great up until the point that it cannot speak to your accounting system. Having multiple high-tech systems for receiving, tracking and processing data also means there are multiple stop points that increase errors or chances for lost data.
Streamlining your human capital management software is a best practice in payroll management to improve your overall payroll operation. Evaluating your current procedures on a regular basis is critical to understanding what areas can be optimized to increase efficiencies. Many organizations today realize that disparate systems are difficult to maintain and difficult to keep talking with each other. Having one fully integrated system for all of your HR needs (applicant tracking, onboarding, HRIS, benefits, time and attendance, payroll, performance management, etc.) means you only have one system of record that management can leverage for analytics, giving them the information they need to make decisions on pay increases, promotions and organizational management.
Applying these best practices can offer your organization a huge return in investment in terms of time, cost and efficiency. Learn how EPAY’s seamless human capital management system can help ease your payroll processing burden. Schedule a live demonstration today.