Payroll management includes more than simply calculating what employees are owed, applying deductions, and delivering payments. It also ensures that your company complies with changing payroll tax rules and regulations.
Employees rely on getting paid accurately and promptly, so mistakes can lead to dissatisfaction and distrust that can have serious consequences for the business. Fortunately, many best practices and tools can help ensure accuracy and compliance in payroll processing.
Keeping Records
Payroll processing involves more than just collecting the right timekeeping data, calculating payments, and submitting the proper tax withholdings. It also includes complying with local, state, and federal labor laws, ensuring that all employees receive fair wages and that companies avoid non-compliance penalties.
For example, states often require that businesses maintain payroll records on employee classifications, minimum wage rates, overtime, pay periods, deductions, and other information. In addition, the Fair Labor Standards Act and the Equal Pay Act require that employers keep records of reasoning for differences in wages between men and women.
To pass an audit, you need easy access to the payroll documents that prove your compliance with applicable labor and tax regulations. This requires a dedicated filing system that makes finding and organizing your documents easy. You’ll also want a reliable backup plan for electronic files and a dedicated space to store physical records.
Payroll management accuracy can benefit your business greatly, including higher employee satisfaction, easier tax filings, more manageable legal situations, and effective financial planning. By taking the time to verify data, set up a system that alerts team members of upcoming deadlines, and keep accurate, long-term payroll records, you can be confident that you’re meeting all requirements for your company.
Payroll Checklists
Payroll is a complex, multifaceted process with many moving parts. Using a payroll checklist helps ensure you complete all required steps and that your system complies with federal, state, and local employability laws.
A basic payroll checklist verifies all employee information before processing payments. This includes names, legal addresses, contact information, and Social Security numbers. It also includes reviewing exempt/non-exempt status and wage rate classifications to ensure accuracy.
Another essential step in payroll accuracy is accurately recording and coding hours worked by employees. This can be done using a time tracking system that captures employee clock-in and clock-out times and calculates overtime. A well-established system can also help streamline the processing of deductions and payroll taxes, ensuring compliance with labor laws.
You should also regularly review and reconcile payroll tax payments and deposits to ensure accuracy. This will also help you spot discrepancies and resolve problems before they become costly.
Tax Deadlines
There are many different tax deadlines to remember when processing payroll. These include filing and payment deadlines, withholdings, reports, and other requirements that vary by state. Keep track of these dates to ensure all employees are correctly paid and taxes are properly deposited. Incorrect tax payments can result in substantial fines.
One of the biggest deadlines affecting payroll is the end-of-year tax reporting due date, known as “tax day.”
Other significant federal tax deadlines in 2023 include the first quarter filing deadline of April 30 and the due date of the second quarterly estimated tax payment, which the employer typically collects by August 15. For self-employed workers who receive tips, the reporting deadline is September 10. The final deadline for military personnel or others living abroad to file their taxes is November 13.
Keeping track of these deadlines can be challenging, especially when multiple staff members ensure that payroll processes and documents are accurate and up-to-date. That’s why it’s important to have a central calendar where all team members can easily locate deadlines and other key information related to their duties.
Requirements for Time Tracking
Time tracking isn’t a new idea, but it’s still a difficult process to introduce for some teams. Some employees see it as a form of surveillance or struggle to fill out timesheets accurately. Getting your team on board starts with organizing the procedure properly and clearly explaining its purpose for everyone involved.
Hourly workers must be paid for the exact number of hours they work in a pay period, which requires proper time tracking. It’s possible to record start and end times down to five minutes, one-tenth, or a quarter of an hour. However, rounding practices can lead to discrepancies between clock records and actual hours worked. Employees may receive incorrect paychecks unless the time tracking system tallies these up.
A good time-tracking solution aligns with payroll and avoids human error, which saves your HR and payroll teams valuable time. Moreover, it helps you comply with labor laws by providing accurate data for reporting purposes.
A time-tracking tool can also help you optimize your work processes, eliminate manual labor, and make basic work procedures more transparent and clear for individuals and teams. In addition, it can empower people by empowering them to improve their workflows. For example, some employees might realize they are switching contexts too often and need more time for deep focus.