Thursday, May 15, 2008

Introduction to payroll administration

• What is payroll administration?

A term that takes under its jurisdiction every procedure directly and/or remotely connected to paying the employees in an organization, payroll administration also tracks the working hours of the employees (individually and collectively) so that no one stays underpaid. The other responsibilities payroll administration takes up are:

• Calculating properly all the payable taxes and social security.

• Ensuring the withholding and processing of all the payable taxes and social security correctly.

• Calculating and processing other related deductions, e.g. incentives, commissions, bonuses, overtimes and anything else stated by the employment or the labor laws.

• At times, processing of payments to outsourced work and handling all the problematic issues that might show up while processing, tax filing being a major one.

Does that sound a tough job? Not exactly, when it is about a few employees; the problem shows up when it comes to process the data for a large number of workers. While in the first case, the input of the owner of a company or the accountant proves somewhat sufficient; payroll administration shows its hairy and scary face when it requires keeping track for a large sized establishment. Only a well-planned and efficient payroll administration system shall then allow maintaining the pace.

But then again, it requires creating an altogether separate department run by payroll accountants and headed by the HR, which is again a recurring cost for the owner. There is software alright to get the task accomplished; but often, it required creating an unique payroll system tailored to a company’s unique requirements. Now, that’s again the precious dollars flowing out!

This is where the payroll service outsourcing concept comes into play; outsourcing payroll administration to companies specializing in this job also solves problems like providing management consultancies as well as HR (human resource) assistance – often tailored to meet the needs of the service buyer.

• Procedure of outsourced payroll service

Everything in this world follows a procedure and outsourced payroll administration is no exception either; to help streamlining and running efficiently a business, to free-up tangles related to employee accounts and most of all, to offer peace of mind to the hirer, a company specializing in payroll administration shall:

- Scrutinize if a business needs the payroll service to be outsourced at all.

- Understand and revise the hirer’s needs regarding payroll service if the results are affirmative.

- Check if the service can be provided online and whether a direct deposit is required.

But if such a payroll administration service provider seems like an Utopian concept, a visit to Respond may well bring you back into reality; not only that, you shall find a lot more of them to help you out regarding the HR issues, getting you the professional payroll accountants, tons of info regarding tax filing as well as every intricate detail on handling the employee accounts. At least, it proved so for the lucky three million or so.


CJ Coolidge said...

Great content.

My experience is that many business operators simply chunk the entire set of significant activities and involvements into one oversimplified task: Running payroll.

With that, they mentally minimize the associated role into something they can presume to be of such low value that, basically, anyone can do it. Once that is done, they can pretend that there could be no value in outsourcing it.

The truth is that payroll processing is one area of business where perfect performance is absolutely required. The IRS requires it, federal and state agencies require it, and employees require it.

And, with ever increasing, non-business related regulations to keep up with, a company that continues to process payrolls in-house is just wasting money.

With myriads of more significant issues to address, it is also a waste of valuable, strategic resources.

Firebug4u said...

The concept of focused business has metamorphosed the operation concept, it is true the industries are relying on third parties for outsourced payroll and accounting services, not because it is secondary but the have started thinking HR, accounting and Payroll as specialized services.

Firebug4u said...

Thanks Kim for the valuable Information.