Payroll is part of the business accounting process that deals with paying remuneration to employees for the services they render to the company. Payroll management takes into consideration all the accounting regulations that dictate how and when to pay the employees.
The payroll team is responsible for defining pay components, collection of payroll inputs, calculation of gross and net salary, distribution of pay slips, and reporting. As a business function, payroll is also involved in developing the organizational pay policy. An important part of their tasks include validation of the input data and ensuring adherence to government laws, regulations, and company policy.
Teams that take care of accounting and bookkeeping need to understand the following regulations on payroll to carry out the process correctly.
- Payroll is only for the people employed with your company. It does not include contractors or freelance workers.
- Four main components of payroll are gross wages, benefits, social security and medicare, and tax withholdings.
- Payroll taxes must be withheld from an employee’s monthly payment and paid to the government.
- Employers must provide for retirement plans and healthcare benefits to their employees.
- A fixed amount from the employee’s salary and employer contribution is kept aside for health insurance purposes.
- Non-payment of payroll taxes can result in fines and payments for employers.
- Monthly and annual tax reports must be submitted to employees and government agencies.
- Important payroll reports include wage and tax summary, tax liability, tax payment, employee details, deductions, and contributions.
When small and medium businesses choose to handle this function in-house, payroll software is a necessity. It is used to generate pay slips, calculate deductions easily, generate timely reports, ensure compliance, and follow tax rules properly. There are cloud-based accounting and payroll software which helps the team to access and manage information anywhere, anytime. Some of the other important features of payroll software include direct deposit management, timesheet handling, integrations, scalability, security, etc.
Handling payroll in-house has its set of challenges, which can be time-consuming and frustrating for SMBs. Leveraging on the expertise of an experienced partner can enable SMBs to reduce overhead costs, and avoid late fees and penalties. Moreover, there is no need to worry about losing the accounting employee or stalling timely payroll processing. The biggest plus points from partnering with an external provider are reliability and continuity of operations.
SmartFin is a leading accounting and bookkeeping service provider with over 10 years of expertise, providing end-to-end services for a wide range of customers across the globe. We cover all daily, fortnightly, monthly, quarterly, and annual accounting tasks to relieve you of the hassles of daily follow-up and tracking. Your payroll process is completely streamlined, which helps free up your staff time so they can pursue other value-added or revenue-generating activities.
If you’d like to explore working with us, send us a line and our experts will get back to you.