Payroll is a list of financial records that contains the details of your employees who are working under and getting paid by your company or business and it is a very important tool to have as someone involved in, owning or in charge of a business.
The Payroll system is run significantly and solely to cater to the financial needs of your employees because it makes sense that one should get paid when they render service so the Payroll system helps to ensure that the process of financial compensating your employees after they’ve effectively carried out their work is done properly without any error or hiccups.
Payroll being a system works very well in a company where the employees are several in number. It is not that you cannot use a manual system to ensure your employees get paid after working but one benefit and the beautiful thing about the Payroll system is that the software itself helps in automating your process of payment and without any external help it generates and releases the salaries of the employees as long as all the correct information about every employee has been input into the system.
Steps To Be Taken When Setting Up A Payroll System
In a business or company, various activities must be followed when using the Payroll system, it is not possible for you to just get the system and begin to implement it when the system has no information to work with or compute.
Certain stages are involved when the Payroll system is to be put to use and these are referred to as the steps involving Payroll processing and they are:
- First, you will need to get the data that involves information about your employees such as having their Payroll information on Form W-4 and you have to ensure that the information you have gotten is valid. Your employees should also be aware that they will need to withhold certain amounts that will be put aside for employee benefits and taxes (Federal and State).
- The information you have gotten of your employees is then being inputted into the Payroll system and this is where the active processing begins to take place. In this stage, the system takes up all this information and turns it into what is called net pay. The net pay is the resulting employee pay that remains after all the required deductions and taxes have been removed.
- Now, the net pay has been gotten and what is left is for it to be disbursed to your employees but do not be too hasty to do that. As a way to ensure credibility, it will be advisable for you to cross-check the values to prevent the occurrence of any errors. When this has been done, you can then disburse the net pay (salary) to your employees.
Why Knowledge Of Payroll Is Important
You must be thinking;
‘Why do I need to know and understand these things concerning Payroll?
Are they so important?’
Knowing about Payroll and everything concerning it is very important as Payroll is highly essential especially if you are interested in the growth and success of your business.
- Without any foreknowledge of Payroll, your business will be in a whole lot of trouble as the system serves as a form of management of your employees’ information which as a bonus also includes the management of their finances resulting in the result of providing the exact and correct net pay of each employee while ensuring that all the required deductions and taxes have been efficiently taken care of.
- Assessing all the functions of the Payroll system helps in ascertaining that the system itself is a huge and added benefit to an organization, it manages and saves the time and resources that it would have otherwise taken for someone in the company to begin processing all the calculations involved in disbursing the salaries to every employee.
- Using the Payroll system not only saves time and resources, but it also ensures that in the process of calculating and releasing employees’ salaries, there is not a single error and also, all government laws about salaries, taxes and deductions are closely followed to the book.
If you do not have a current Payroll system and have decided to get one, you should do some research to know the right Payroll system best suited for your business and also the price range that you can’t afford. Some Payroll systems range from having a base fee of around $30 to $120 per month and when this fee is compared to the benefits gotten from the system, it is a worthy transaction and purchase.