Let’s try to understand payroll administration.
This is the compensation for a company’s employees for their work hours. It includes tracking how many hours one has worked, calculating the employee’s pay, and distributing the payments, which may consist of direct deposit to the employee’s bank account or via a cheque.
And that brings us on to the basis of this article…
The payroll administration process is the steps taken to prepare employees’ pay at the end of an agreed payroll period. It involves calculating employee wages, tax deductions, tracking the number of hours the employee has worked, and company benefits, among others.
Companies should also perform accounting functions to record payroll, deducted taxes, sick time, bonuses, and overtime pay.
Many companies use software solutions to manage their payrolls.
However, most medium and large-size companies usually outsource services from payroll administration consultants to streamline the payroll process.
It can be necessary to leverage professional assistance to ensure compliance without the pressure of having to handle a payroll directly, and an added benefit of this is that it allows a company to understand the steps involved in a payroll process from the side lines.
Should such a firm choose to perform their payroll administration in-house at a later date, they’ll be fully equipped to handle the demands of payroll procedures which will ensure accurate payment of employees on time.
Now, there are seven steps to processing a payroll…
The first step is to gather the necessary tax information from your employee.
For this process, the employee must provide proper identification and tax registration documents to the employer before starting the new role.
This helps get the accounts to which the deducted taxes will be accounted.
This serves as a source of truth for the sake of pay rates and deductions.
Wrong information from the employee’s record can lead to an inaccurate paycheck.
It’s therefore essential to ensure the employee provides the correct information.
The payment records should be appropriately stored and managed to keep track of the employee’s progress and payments.
Once you have the correct legal and payment information to set up a payroll, you can determine the pay frequency you want to offer your workforce.
You can opt for four main schedules:
It would be best if you shared your payment schedule with your employees and the due dates for them to know when to expect payment.
Now you can start processing your first payroll.
To do this, you need to calculate the total number of hours an employee has worked in a given pay period the multiply it by hourly rates.
The pay also includes all the allowances and benefits the employees enjoy to provide the gross income for each employee.
This, however, is determined by the company policies on hourly rates and deductions on absenteeism and lateness.
To do this, you need to understand each employee’s different types of conclusions, including statutory deductions, insurance, and loan deductions.
The amount left after subtracting each employee’s deductions from the gross pay is the employee’s net pay.
This is the amount you will pay each employee.
The next step is using the set channels to pay the employees.
These channels can be directly deposited, cheque, or bank transfers to personal accounts.
The payroll administrator also sends the pay slips to the employees, highlighting all activities from gross pay to deductions and the net income.
It’s essential to keep records of your transactions for tax and compliance purposes, and in case an employee disputes a paycheck.
No matter the company’s size, all businesses must process employee payroll.
Note that the payroll process can look different from organization to organization.
It’s therefore essential for one to understand how to process payroll and determine the best way to create a simple workflow for your company.
Payroll administration in organizations may require skills and experience in payroll and tax administration.
If you would like to hire a firm that can assist you in perfectly administering the payroll in your company, reach out to Flexi Personnel through our payroll administration consultancy service page.
We offer payroll management services without interfering with your organization’s human resource management.
Our services are meant to take care of all the payroll administration processes and payroll tax remittances for the organization.
Our expertise is not limited to local management; we also assist in expatriate payroll management.
You can also get in touch with us here
Alternatively, if you just want to have more of a read over on our blog, then check out some related pieces of content such as: