Without an effective payroll processing plan, no organization will be able to meet its financial obligation to workers and employees. These financial obligations are not optional, they are compulsory since they are an integral part of the contract signed. Usually, every worker should go home with his/her net income on payday and this is a reflection of the amount left after removing tax, levies, and fines. Also, employees are only going to be paid for hours worked.
The whole process isn’t as straightforward as it looks. There are lots of hurdles to cross and challenges to overcome especially if you are into payroll processing for a company with quite a lot of employees. The more the number of workers involved, the harder it is to strive for accuracy in payroll figures. This is not to say it is not possible to get accurate numbers. In fact, people do it and that should be the aim. The more inaccurate a payroll processor is, the lesser the trust imposed on such an individual. The consequences of not getting correct figures are numerous especially in the areas of tax where the Internal Revenue Service (IRS) are always willing to impose sanctions on defaulters who are non-compliant or remit the incorrect amount.
A good payroll process should have the following features:
- Accuracy: The importance of accuracy cannot be over flogged. The level of accuracy of a payroll depends on the technique or method used. Usually, most of the payroll processors prefer to use payroll processing software instead of the manual method. The manual computation technique is more prone to error. The payroll processing software usually captures all details on the timesheet and uses this to compute the amount due to each employee based on the number of hours worked and wage rate. An accurate payroll processor will certainly help you avoid tax liability. Also, if there is a shortfall in the amount paid to any employee as a result of a fine, debt, or levy, this should be well and truly stated and with a conspicuous narration. In other words, the reason for every shortfall in wage or salary should be made known to the worker involved.
- Consistence: The meaning of consistency here means choosing a payment plan and sticking to it. In other words, there should be no fluctuation in payday. For example, if as a payroll processor, you have proposed that payments will be made bi-weekly or on a weekly basis or even on a specific day of the month, it is best to stick to the plan or arrangement. If there would be a change to this, all workers should be communicated about the development early enough. The reason for this is so that everybody will be able to make plans and come up with a budget for their individual finances. Every person has a financial plan and calendar.
- Convenience: If you are a payroll processor and the convenience or needs of employees is not part of your plan, it is wise for you to think and rethink about it. The primary aim of looking for a job is to have some financial assurance. Hence, if your payroll plan doesn’t give workers this assurance, come up with another method.