So you now hire your first employee for your business , as your business grows and you further go on to hire more members in your team . Soon you realize that the task of maintaining accounts and employee payroll is getting a headache for you .
In this post, we will explore the complete payroll process and the best payroll processing companies for you . So sit back and read further to understand what exactly happens in any complex payroll processing software .
Payroll processing is a critical task of maintaining a productive environment in any business model. Any error can cause you a havoc , and maintaining every payroll error-free is indeed a tedious job .
There are many tax regulations and compliance to be adhered with , while disbursing the employee payroll. All this together makes this overall payroll process a complex activity altogether .
What Is Payroll Processing Meaning ? (How does payroll processing work ?)
Payroll basically means the process of paying a company’s employees, which can include the tracking of hours worked, the calculation of employee’s pay, and the distribution of payments via direct deposit directly to their account or by check .
The payroll process mainly involves the below-mentioned stages :
1. Initially, the process starts by putting inputs into the payroll software regarding the details of the payment schedule, payroll policy, and payroll duration (weekly/biweekly/ monthly / semi monthly) .
2. Getting information about the tax deductions and withholding policies (as decided from the time of joining) , and finally, decide the payout amount to be paid to the employee.
3. Finally the payroll process ends by writing checks or the process will be automated by scheduling the payroll process schedule, and pay the tax dues if any to IRS to end the payroll process .
So a payroll processing software basically a software application, which is used to manage , schedule, and report all your accounting and payroll requirements efficiently . So an ideal payroll process typically should deliver all the above-mentioned points flawlessly based on the inputs provided by the business owners respectively .
What Is Payroll Processing System – A Brief Overview !! (Stages In Payroll Management Process)
Any payroll system (payroll management process) mainly involves three basic stages as mentioned below :
1. Gathering Inputs (new employee addition and payroll policy inputs)
The first stage in any payroll process involves the gathering of inputs regarding the payroll schedule , payment calculations based on various company policies precisely .
The most important policy includes the method of calculating the employee gross salary by computing the paid leaves , paid hours , timesheet filling etc .
The first stage also involves the interaction between various departments (HR , admin etc) to collect the inputs regarding the salary structure , promotions, other miscellaneous income for any regular employee in the team.
The final step in this includes consolidating all the input data together to decide the total amount to be paid to any employee . Data validation also plays an important role in this step . The payment should be in line with the laid company policy and salary structure as decided by the HR team .
2. Payroll Computation
After consolidating all the necessary inputs regarding the payroll amount to be paid to any employee , the complete input data is then fed into the Payroll software to process the data and execute the required payroll computation to provide the desired net amount .
In this stage, the payroll software plays an important role by seamlessly processing the input data and then calculate the net pay of any employee by deducting the tax and other miscellaneous deductions as applicable in line with the company policy .
3. Payroll Disbursement
This is the final stage of the payroll process , where the usage of a good payroll service comes into effect. Before disbursing the payroll amount to the respective employee, the local tax and federal taxes have to be deducted along with the other various employee contributions fund (if any) .
Also the payroll info has to be maintained securely in the accounts of the respective company for future records . Employees on staff must fill out a Form W-4 and independent contractors must complete a Form W-9, so that the IRS can calculate their tax liability. You aren’t required to withhold any taxes for independent contractors .
There are many other deductions that employee might opt out such as insurance premium or any retirement plans , so according to the amount set to be deducted , the required amount will not be disbursed and will be used to fund other employee savings funds (Medicare and the social security funds) .
As an employer, you are responsible for calculating and withholding money for federal, state, and local taxes from every employee’s paycheck. The amount you withhold is determined by W-4 forms and current tax rates .
Tax filing on time is a real burden for any individual business owner , so this can be wiped out by giving this responsibility to some renowned payroll processing software to carry out all the taxation on time without any unwanted penalties and fines .
Payout of salaries is another major task in this stage where the funds will be disbursed either by the means of paychecks, electronic funds transfer, or direct bank transfer respectively . After successful disbursement , the payroll software should able to generate reports to be maintained for the transaction proof of the salary disbursement .
Best 5 Payroll Processing Companies For You !!
With the exponential growth of the small business and startups , there is also an inception of large number of payroll processing companies . These are cloud-hosted services that provide full access to your business’s payroll from anywhere anytime . You can log in from any web browser and check your payroll reports, input payroll and employee information, and complete payroll.
The list is as follows :
- Quickbooks payroll software
- Gusto payroll processing service
- Onpay payroll processing service
- Paychex payroll software
- Payroll4Free payroll processing software (free service)
Each of the above listed payroll software we have already seen in detail in our previous post . you may click on each of them to read their complete detail .
Future Of These Payroll Processing Software – The Conclusion !!
With the sudden upsurge of many small and mid-sized companies , it is indeed evident that the demand for more advanced and innovative comprehensive payroll processing software will go on increasing .
Payroll services will strive to create systems that manage other human resource services . As the competition increases , payroll automation will certainly be the need of hour .
With the advent of these cloud based AI-backed accounting and payroll management services, tax violations will decrease hopefully thereby meeting various compliance and regulatory requirements .
The move from manual payroll system to automated one can save a lot of time. It not only helps in faster and accurate payroll processing , but also decrease the fines and penalties from tax regulators .
These payroll management services offers a large amount of scalability and provides an adequate ease of operation altogether .
When it comes to small business payroll, these online services typically have a monthly or per-payroll cost structure. With monthly plans, you pay a base fee and a per-employee fee .
Hope this really helps you providing the resourceful insights related to the payroll process management in detail . Stay tuned for more interesting stuff in this series .
Aric is a tech enthusiast , who love to write about the tech related products and ‘How To’ blogs . IT Engineer by profession , right now working in the Automation field in a Software product company . The other hobbies includes singing , trekking and writing blogs .