Payroll Best Practices

In the changing world of payroll, there are several best practices to follow to ensure you and your company stay compliant while making sure you are taking care of your most valuable asset: your employees. Proper payroll requires careful planning and proper tools to get the job done so your employees can expect their pay checks to arrive on time, without any errors.

 

Create a payroll calendar for each year noting important payroll dates and deadlines.

Being prepared for deadlines and submission dates is critical to effective payroll management. Missing a deadline can result in fees, penalties, or unnecessary interest payments. This should include tax submission deadlines, bank holidays, and payroll submission deadlines.

 

Ensure your payroll records are up to date and easy to access.

We no longer live in a world of printing and filing records. Most Human Resources Information Systems (HRIS) collect and store historical data for each employee so that payroll information can be found at the touch of a button. One thing to keep in mind when storing your payroll information on an outsourced HRIS system is that you have easy access to retrieve the needed history should you decide to change providers.

 

Audit your payroll system on a regular basis.

Schedule regular audits of your payroll system to ensure it is doing the best job possible for your business. Take into consideration the parts of processing that are taking the most time and reevaluate to determine if an improvement can be made that would make the process more efficient. Identify what is working and what isn’t and explore proper solutions that suit your needs.

 

Audit each payroll before submission.

Having a series of checks and balances for any changes made during the pay period, such as benefits deductions, rate of pay, 401k deferral changes, comparing the current payroll to the previous payroll, is a good way to find any unexpected changes. Doing this before submission can ensure that you are catching an error before the checks go out to employees.

 

Be sure all involved know their roles.

This not only includes those processing and submitting the payroll but also the employees clocking in and out and the managers editing and approving timesheets. Even companies that take a more flexible approach to payroll processing should establish clear lines of responsibility. For example, if an employee forgets to clock out for the day, who is responsible for updating the timesheet to ensure the employee is paid accurately? If a manager is not aware, this can create unnecessary work for the payroll processor.

 

Different companies handle payroll in different ways and the organization’s goals and culture, as well as industry practices, should be considered when deciding the best way to approach it. Some may outsource to ensure an expert is handling the process, others have a more flexible approach that caters to their employees. Whichever way you go, the accuracy, efficiency and effectiveness of your payroll is of the utmost importance.