Business owners and HR managers know that payroll is an important function in any company. Unfortunately, it’s also one that demands a significant amount of time and resources. But what if you could streamline the process to make it simpler on your staff and more secure for your employees? Well, with a paperless payroll system that is completely possible. Companies small and large alike can benefit by moving away from check printing and into the digital age of payroll.
Obviously employees care a lot about getting paid on time and correctly. It’s the reason they show up every day to contribute to your business. You don’t want to mess up their paycheck or you risk an unhappy workforce that isn’t motivated to do their best.
It can be challenging however to understand all the factors that go in to paying your employees. By taking a deeper look at what’s involved, we can see how the process can be simplified by a paperless payroll system.
Paying your employees requires more than just writing them a check. When you factor in payroll taxes, benefit deductions, direct deposit, and paystubs, it can become quite a complicated process.
For many small business owners, this can be overwhelming. It’s one reason why outsourcing payroll processing services has become so popular in recent years.
To process payroll, whether for your own company or with a third party payroll service, the first step is to determine your company’s pay period. Different pay schedules have different benefits, and a payroll company can help advise you on the best option for your unique business.
The next step is to collect records of the time your employees have actually worked during the pay period. Although this may be simple for salaried employees who are set to a 40 hour work week, it can be trickier for the businesses that pay their employees hourly.
A time clock can help make managing time and attendance easier. In fact, many payroll processing companies have the option to tie time punches directly into the payroll software. Talk about a huge time saver!
Once you’ve determined the hours your employees have worked, you’ll need to calculate earnings and deductions. Some examples of deductions include Social Security and Medicare (FICA), Federal Unemployment Tax (FUTA), state income taxes, deductions based on benefits like health insurance or 401(k) contribution, or deductions based on tips and bonuses.
Our free calculators let you input deductions as separate line items, so you don’t have to do the math yourself. Or, if you partner with a payroll company, they will help you calculate the deductions based on the settings you give them.
The next step is actually paying employees. During a typical payday week, many businesses calculate time cards on Monday or Tuesday, input hours and deductions on Wednesday to determine gross pay, then check their account balance on Thursday to ensure there’s enough money for payday on Friday.
If you’re paying employees through check printing, you would have to factor in that time. Otherwise, employees can receive their money through direct deposit or preloaded debit cards.
Cutting checks or check printing is the most traditional form of distributing payroll. In addition to paper checks that your employees can take to the bank, most employers also include pay stubs for employees to hang on to for their own records.
While not federally required to provide pay stubs, businesses are accountable for maintaining accurate records of employees’ hours worked, wages, and payment records. Pay Stubs are an easy way to manage this because all the information is printed clearly and updated each pay period.
When it comes to the payroll checks themselves, some small businesses hand-write out the checks from the business account. Others use payroll computer software to digitally print out the checks.
These days, most employees prefer electronic options for receiving their payroll because it’s faster and requires no effort on their end to stop by the bank.
Direct deposit is often the first example of paperless payroll for businesses of all sizes. Direct deposit simply means an employee’s wages are sent directly to their checking or savings account.
To set up an employee’s direct deposit , you’ll need either a canceled check or their bank’s routing number and account number. You then enter this information into your payroll processing software to ensure direct deposits on payday.
Another form of paperless payroll is preloaded debit cards. It’s not as common, but it is an alternative method of payroll disbursement for employees who may not have a bank account.
One major benefit of paperless payroll is the fact that it’s easy to keep track and document employees’ earnings and deductions. When all the information is stored electronically, it’s much easier to run reports during tax time or look up any potential issues for correction.
Even with paperless payroll, most companies still issue pay stubs to their employees. Businesses can choose whether to deliver these electronically or print them out and distribute to employees by hand or through the mail.
Tools to help streamline the payroll processes are massively valuable for business owners and HR professionals alike. Moving from a paper to an electronic payroll method improves efficiency and accuracy – who wouldn’t want that?
Many companies find it’s easiest to receive help from a third party service. A great answer to the question of, “Why outsource payroll processing services?” is simply time management. If your company is small enough where you as the business owner cannot fill all the roles necessary for HR functions, it’s smarter to outsource. This reduces the risk of you being weak in certain payroll functions and helps you avoid facing any compliance issues.
PayTech is an Arizona-based payroll solutions provider that helps small and large businesses nationwide save time and money, while enjoying peace-of-mind knowing their payroll is done on time and accurately.
Contact us today to get started!