View in PDF format. Payroll processing refers to the task of managing the payment of wages by a company to its employees. Most companies use either a payroll software system for payroll, or else a third-party payroll processing service.
While the summary of payroll processing sounds quite simple, there are many behind-the-scenes steps that need to take place, before the actual processing work begins. First, it can refer to a company in a database that processes its own payroll and issues its own payroll reports to tax entities and other parties.
Advantages and disadvantages of a manual vs computerized payroll system
Some companies who have multiple entities for which to process payroll set up multiple companies for a single employer, though it is much more common for each company to be a separate employer. Payroll information is accumulated at the employer level.
For example, an employee working in two different companies with the same database can receive one W-2 form. Having decided the best option on how to set up the employer structure, the next step is to choose the federal and state and local taxes for each company. As for unemployment, each employer is assigned its own unemployment rate, which is provided by the state.
Employer setup also involves telling the payroll system how many regular hours are in a week and in a day, how long a break is, etc.
Set up minimum wage information that relates to your business.
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Again if you are unsure, contact your accountant. Also determine how overtime is calculated, i. Next, move on to the setup of the earnings, deductions and benefits your company offers.
How to make salary sheet -- Payroll or Payslip in excel 2016
You will then choose pay information, and define how each employee will be paid, such as weekly, bi-weekly, monthly, etc. When it comes to payroll, paying employees is the number one task, but filing payroll taxes is an extremely important measure that must be accurate and filed on time, or an employer can incur expensive penalties.
1. Human error
There are a variety of ways to accomplish tax filing and make the process efficient. Some companies opt to use a payroll service, in which case, the filing is completely done for them, and the burden of remembering to file on time is taken off their shoulders.
If filing is done internally, an employer may choose to purchase forms and print on the forms, or they may simply print the forms on plain paper, if the payroll system allows. Some systems may also allow for online payroll tax filing, which is becoming required by many states.
Find Out More about CenterPoint Payroll!
Once payroll is all set up, the job of processing payroll becomes a straightforward process. The process itself varies greatly among software systems and services, but the core of payroll processing involves collecting time information for applicable employees, selecting the employees to be paid, and printing checks or distributing direct deposit payments.
Maintaining employee information, processing payroll, paying employees and tax filing become easy to manage in CenterPoint Payroll. Sign up for a demo today.
Payroll is one of the most crucial and critical functions of any company.
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