Payroll is a familiar term in the business context that is both essential and complex. In essence, payroll is one of the company’s salary payment systems. Every company aims to run its business as efficiently as possible. However, mistakes can happen, and they can carry a serious impact.
Payroll errors might happen somewhat a lot of faster than you expect. Errors in the processing and execution of salary may have a negative impact on employee performance. As a result, this also will affect company productivity.
Paying salaries promptly and accurately is just as important as adhering to applicable laws. Non-compliance with these laws may lead to serious financial and legal consequences. To guarantee that your business is in line with the laws and regulations, and your employees feel satisfied with the payroll process, you must first understand what payroll is and how to handle it efficiently.
What is Payroll?
Payroll is the process of paying a company’s employees for a specified period of time or on a certain schedule. It involves monitoring employee hours worked, calculating compensation, and delivering payments via direct deposit to employee bank accounts. All of these aspects are mostly handled by the company’s accounting or human resources departments.
However, the company must also accomplish an accounting function in order to record payments. This includes things like withholding tax, overtime pay, sick time, and vacation pay. As a result, payroll may change from one payment period to another.
Employers keep track of how many hours each employee works and report this to the payroll service. On payday, the payment service computes due to the amount of hours or weeks worked during the pay period and the pay rate.
One of the main benefits of payroll services is their ability to generate a variety of reports that optimize accounting procedures and help the company. These services can also keep a record of how much vacation or personal time employees spend.
Unlike the manual salary computation, these systems use technology to calculate all employee salaries automatically. As a result, accurate salary estimates may already be achieved without taking a long time. In addition, it helps a company’s administration or human resources department in distributing salaries to all employees on a monthly basis. Especially, for large-scale enterprises with hundreds or even thousands of employees.
Steps for Processing Payroll
Create a payroll policy
Before you create the regulations, you have to review your local employment laws, state overtime rules, and national employment laws. Here are some other things to consider include in your payments policy:
- Pay dates, as well as the duration of each pay period, and when you pay employees after that.
- How you’ll pay employees—by direct deposit or paper check.
- Payroll deductions and withholdings, as well as how the benefits you provide will affect the employee’s compensation.
Collect employee data
The first stage in payroll processing is collecting the relevant information from your employees. These documents will provide you with personal information, Social Security numbers, and tax reporting status for each employee.
If your payroll includes items such as employee health insurance or retirement savings, you will need confirmation that the employee has allowed such deductions. Lastly, if you intend to provide direct deposit, you have to obtain employee approval and banking information.
Calculate net pay
In this stage, the approved inputs are sent into the system for processing payments. The net payment calculation of an employee is their gross pay minus the amount tax withholdings and benefit payments. You’ll also compute withholdings for Medicare, Social Security, and any relevant local taxes.
These calculations are done using spreadsheets. As a result, reconciling and confirming the values to avoid any errors becomes challenging. On the other hand, automated payroll software might have reduced the risk of mathematical errors.
Now it’s time to start processing payroll after the net pay calculations. Employees can choose between direct deposit, pay cards, mobile wallets, and printed checks. It’s critical to make sure employees’ payment is accurate and on time. Regardless of the system your company uses, make sure you pay employees on a regular basis.
If you’re handling it manually, consider the effect of national non-banking holidays on employee salaries. Direct deposit payments are delayed due to the holidays. If you’re printing checks, make sure you keep the required materials on hand at all times. The most essential thing is to plan properly so that you can pay your employees regardless of the situation.
Withhold and tax payments
All tax and benefit payments must be forwarded to the appropriate taxation authorities, retirement plan companies, and other benefit providers. Employers are responsible for refunding withheld payroll taxes to the proper government agencies.
Depending on where your organization company works, you may also have to submit local payment taxes and other payments. Employees have the option of having money deducted from their paychecks to finance retirement programs and insurance costs. Each of them need its own permission form. Sometimes, you must also excluded deductions for law garnish wages, such as child support and alimony.
Best Payroll Software in Singapore
HashMicro is one of the leading human resources management (HRM) systems in Singapore. This software ensures your salary calculations based on working hours, overtime, and attendance automatically and accurately. HashMico provides some features, such as:
- Employee Database including personal and financial info in a secured and centralized platform.
- Expense Management to manage cash advance, allowance, and other expenses easily and generate its reports accurately.
- Attendance Management to track employee attendance with the attendance record machine and analyze it automatically.
- Employee contract management to manage employee contracts in real-time from anywhere and get an automated alert if the contracts are about to expire.
- Leaves management to update leave balance automatically, and adjust to leaves policy easily.
Also Read: 5 Best ERP Program for Startups in Singapore
Payboy is a Payroll and HR Management Software which automates the essential HR processes through a seamless ecosystem, so that businesses can focus on the HR work. These modules can help you to tailor a solution that solves the unique challenges faced by your business. Its salient features are Payroll, ATS, Attendance tracking, Claims management, Employee onboarding, Leave management, Scheduling, Projects, Inventories, and Training.
The software unifies global payroll management and administration on a single platform for more accurate and compliant processing. Software at SAP not only manages core payroll functionality, but it also manages global legal compliance, integrates with enterprise processes such as HR and finance to provide real-time insights, and supports localised tax compliance management. With timely, SAP software increases employee improves the user experience for managers and employees.
Xero is a specially software for small business owners who can perform their payroll process with a click of a button. This software works on a simple and user-friendly interface that takes very little time to learn without any training. It helps users to check their cash flow in real-time with online accounting, invoicing, payroll, billing & banking.
Talenox is a cloud-based Payroll software from TalenoxPayroll company in 2014. The software supports several functions such as creating and importing a spreadsheet, one-click payments to banks, and automatically emailing the paychecks after confirming a payroll batch. It allows the user to view and edit information of the company and employee anytime and from any central dashboard.
As we can see from the explanation above, using a payroll system will significantly assist a business in overcoming the challenges in every payroll process. The payroll system not only saves time when calculating employee compensation, but it also helps businesses to save money on HRD or finance staff salaries.
Since it has a complex system, you can use HRM software from HashMicro to manage employee salaries effectively and efficiently. With a payroll system, your company will have an easier time processing payroll. Even if the amount of employees reaches thousands, the calculation is done automatically and precisely.