Money runs a business, not just the money coming in but also the money pouring out on the workforce. However, rolling that money is not an easy task, perhaps why, we need an accounts desk.
A payroll is a set of processes related to the calculation of monthly salaries of all the employees in a firm and their distribution.
Payroll comprises several steps such as;
- Designing a pay policy
- Recording number of paydays of every employee in a period
- Deducting taxes and other charges of the employee’s salary
- Calculating the monthly salary of the employee
- Preparing payslips
- Depositing the salary into the bank account
Payroll processing requires attention to detail and a good knowledge of the regulatory environment. This activity is ever-changing as there are frequent changes in the external and internal environments. These changes can be related to tax and labour-related environments, the creation of new departments, and the addition of new employees to the workforce.
Ensure that your payroll services are up to date by following these five tips;
Define your Payroll Policy
In this step, you should define all the inputs that go int making your payroll. Some of those inputs are;
- What should be the leave policy?
- How will the attendance be recorded?
- How can the company record the actual working hours of an employee?
These are just examples, and one can have other inputs as well.
In the next step, you calculate the actual payout of each employee. This is done after deducting taxes, contributions to the social security fund, any advances that the employee might have taken from the company, and so on.
Make sure that your calculations are right because even a small error can cause significant dissatisfaction among your employees. Also, any small errors might invite penalties from the government and other authorities.
Once all the figures have been calculated, it is time to distribute the payroll slips to all your employees. If you have their e-mail ids, you can send those electronically, else, send the hard copies. Every payslip must contain this information;
- Net salary payable to the employee
- Any taxes paid
- The number of days worked.
- The number of leaves consumed versus balance leaves.
For more tips on payroll preparation and distribution, click here.
Ask for feedback
Payroll processing requires continuous feedback from all the stakeholders, particularly the employees. After you have distributed all the payroll slips, ask for employee feedback. Check with them if there are any errors in the payslips.
This step is a crucial one because it requires depositing all the taxes and charges into the government treasury. Ensure that you make all the payments within deadlines.
All Australian companies require that employees should make their tax declarations at the beginning of the financial year. At the time of depositing taxes, payroll administrators must reconcile those declarations with actual investments made by the employees. It makes sense to cross-check with your employees mid-way about their tax-saving investments. Payroll processing is a crucial activity for any organization. While setting up this process, ask these key questions;
- What will be the payroll processing software like?
- Will this process be managed in-house or be done externally?
- How much will this activity cost? What will be its budget?
- What will be the scope of activities of the payroll service provider?
- What is his experience and what additional value can he deliver?
- How will the information be collected and stored?
- Is this software secure enough?
- Can the payroll system be scaled upward or customized further?
- How can this system be integrated with other functions like production, sales administration, marketing, finance, etc.?
Stay tuned with us for more information on payroll processing.