HR Payroll | 4 mins read

An Overview of HR Payroll

an overview of hr payroll
Lauren Christiansen

By Lauren Christiansen

Businesses who fail to pay their employees correctly can find themselves in violation of different federal/state tax laws and regulations. Unfortunately, navigating complex laws and tax codes can be challenging and time-consuming for those trying to run and maintain a business.

Utilizing an efficient payroll software system prevents businesses from making costly and unnecessary mistakes, according to some case studies. Here is an overview of human resource payroll and why utilizing an optimized payroll system is essential for every business.

What is Payroll Processing?

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Payroll is the process by which a company pays employees according to the amount of work they have completed. Effective payroll processes ensure that hr professionals are paying their employees accurately and on time. Managing payroll properly is essential for complying with state/federal labor laws and tax codes.

Conducting payroll can be complicated because of the different tax deductions that vary by state and federal law. Payroll clerks must understand how much money to withhold from each paycheck, and then send the correct amount of taxes to the proper government entity. Further considerations include depositing funds into employee retirement accounts, contributing to Medicare, and paying premiums to insurance providers.

Consequences for missed deadlines or incorrect filings include jail time or fines. Utilizing an optimized payroll software system can help businesses avoid making these costly mistakes.

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What Does Payroll Software Do?

HR software organizes and performs all of the various tasks associated with employee payment and tax filing. These tasks include-

  • Tracking employee hours
  • Calculating wages
  • Tracking attendance
  • Withholding taxes and deductions
  • Printing and delivering checks
  • Performing direct deposits
  • Paying insurance premiums
  • Paying employee taxes to the state/federal government
By utilizing payroll software, the HR resource center only input employee wage information along with their hours worked. The system automatically completes payroll on its own.

Why Should Businesses Use a Payroll Software System?

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Performing payroll manually wastes valuable time and resources. The human resource department has to spend an inordinate amount of time verifying employee pay rates, deductions, and hours worked. Then they have to perform calculations to determine how much the company owes to each employee, while taking into consideration OT hours, sick leave, and PTO.

Implementing a full-service payroll software system can help mitigate errors, save time, and improve operational efficiency. Intuitive and user-friendly, payroll software helps businesses control the payroll process without outsourcing the work to an external payroll service.

How to Choose a Payroll System

Some best practices when choosing a payroll software system include-

1. Review Company Budget HR services should analyze the size of the business and how much it is willing to spend on a payroll software system

2. Research Vendors Compare viable vendors and read reviews to see which system works best for the company's needs

3. Research Security Features Choose a vendor that offers password-protected software to prevent data breaches or tampering

4. Consider Software Compatibility Look for a software system that is compatible, flexible, and able to integrate with HR or financial software that is currently used

5. Research Reporting Capabilities Choose a payroll processing system that allows the company to view reports and see historical information

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Benefits of Payroll Software System for Large & Small Businesses

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Some benefits of utilizing a large or small business payroll software include-

1. Protects Businesses
Software is regularly updated so businesses always know if there are any changes in payroll benefits or updates in tax laws when it's time for payroll. Some software can generate reports and file taxes automatically, requiring employers to only verify the information before finalizing.

2. Calculate Deductions & Net Income
Payroll software automatically determines the employee's gross income, or the individual's total pay before any deductions, then calculates deductions, such as retirement savings, taxes, payroll tax, insurance, worker's compensation payments, and Medicare. The system subtracts the deductions from the gross income, and then sends out a check or completes a direct-deposit into the employee's bank account.

3. HR Solutions- Prepare Tax Forms
Payroll software can automatically generate tax forms that are needed during tax time. Some of these include 1099s, W2s, 1099-MISCs, and W3s. Businesses that operate in several states have many different tax codes and regulations to follow.

4. Maintains Records
It can be difficult to manually organize and maintain the many different tax forms and employee information necessary for payroll. Payroll systems store files electronically, and old records can be accessed immediately. This allows the human resource department to stay organized.

5. Self-Service Options
Many payroll software systems allow employees to access personal information regarding payment history, time attendance records, time-off requests, and a list of employee benefits. The employee can automatically review their information or request changes, rather than relying solely on HR for all payroll services.

Self-service options allow businesses to focus on other tasks, such as improving customer service or increasing their revenue stream. There are also terms use and privacy agreements for employees to sign, ensuring their private information and company information is secure within the software.

6. Alerts HR Staff of Discrepancies
Payroll software systems can send an alert to the human resource department if there is any type of error or discrepancy. Examples include incorrect hours worked or incorrectly inputted dollar amounts. This helps businesses take care of problems and avoid costly mistakes.

7. Ensures Timely Payments
The software can send out a reminder to HR staff when it's time to perform payroll. It can also automatically send out direct deposit checks to employees, ensuring timely payments.

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