Payroll
Often, new
employers call and ask us general payroll questions. Sometimes these business owners are looking for
basic information in order to understand why payroll has to be
done and how the payroll process is accomplished.
We've provided
some basic information about Payroll below:
What is Payroll?
Payroll is the sum of all of the financial transactions related
to an employers' hired staff. Payroll includes salaries,
wages, bonuses, taxes, and employee deductions.
Payroll should be important to any business because payroll
accounts for the majority of a businesses overhead.
Accurate, timely payment of wages is generally expected from
employees. Furthermore, payroll in the U.S. is subject to
state and federal employee and employer matching taxes.
See payroll tax.
The main goal of a payroll department or in-house processor is
to ensure that employees are paid accurately and deductions are
correct during each payroll processing cycle. Once the
employees are paid correctly, the next important step is to make
sure that all employee tax deductions, employer matching taxes,
and other deductions are remitted to the proper vendors, and
state and federal tax authorities.
Payroll Cycles and Pay Frequencies
Most employer process payroll at regular intervals and it is not
uncommon for one employer to have separate cycles for hourly
versus salaried employees. Pay frequencies include daily,
weekly, bi-weekly (every other week- 26 payrolls), semi-monthly
(twice a month- 24 payrolls), monthly, quarterly, or yearly.
The most common payroll frequencies are weekly and bi-weekly
when hourly employees are employed, and semi-monthly when
employees are all receiving a salary.
Payroll Checks
Payroll has traditionally been processed with paper checks being
handed out to employees. While this traditional methods
still works well, many employers have opted for other employee
payment methods including direct deposits (with or without
voided pay stubs) and payroll cards that are loaded at the end
of each pay cycle and operate as a debit card. Today it is
possible for payroll to be processed in a paperless manner with
the advent of
online payroll portals for both employers to process payroll
and employees to view pay stubs and prior w-2's.
Outsource Payroll?
Employers often choose to outsource payroll functions to a
payroll bureau like PaySmart. Typically, these services
can reduce the costs associated with hiring trained payroll
personnel as well as maintaining payroll software, check stock,
tax updates, and related payroll expenses.
A bigger reason employers tend to outsource their payroll is due
to the ever increasing legislative changes to payroll and tax
codes. Most employers simply do not have the expertise and
resources to maintain compliance and ensure quality payroll for
their business.
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