There aren’t many positions in a company that are as vital as a CEO. Payroll management, however, ranks up there. This position is crucial to your company in many ways and it is important to have this department running at optimal levels.
The perfect payroll management team will have years of experience in the areas of financial accounting, payroll, outsourcing partners, software support in accounting and preliminary work on financial statements. Other services available are things like balance sheet accounting, payroll accounting, personnel management control, business advice in payroll, creating business plans on a budget, audits, billing/invoicing, payments and cash management.
It takes a lot to get an efficient and effective payroll department going. There are some processes, however, that can often be simplified and improved to make the department more efficient. If you are looking for a few ways to streamline your payroll, take a look at these ideas:
- Try to Update Payroll Records. Basic info is the key but it isn’t everything. Make sure you keep your systems updated to keep everything in order and tell your employees to come to you if there are any changes to their life that you should be aware of.
- If you need Help, Get it. If there is a chance that you could be wrong about a deduction, find a specialist that will know the answer.
- Accountants Know Payroll Systems. Banks and CPA’s love to crunch numbers and they love to manage payroll – it is what they do. You can always lighten your workload by using Peachtree or QuickBooks or any other accounting software.
- Keep Your Deadlines in Mind. Corporations have the same deadlines every year. March 15th is when taxes are due and by Jan.31st, businesses should have all W2’s and any other documentation to their employees.
- Payroll System Functions Should Be kept up with. Payroll is more that just handing out checks after counting up hours. You have to tally up lost hours, deal with garnishments, work out health care costs and deal with tons of other issues. A time clock can help with hour calculations and can reduce errors, so be sure you look into whether time and attendance software can be working toward your advantage.
- Always keep a Separate Account for Your Payroll. Your payroll account should have its own account from all other business accounts.
- If Your Company Grows, Your Payroll System Should Grow. Whether this means adding in additional workers, updating systems, or using new software, grow accordingly to accommodate the new challenge that a bigger business brings.
- Know the Rules of the Game. This can be a very serious issue because it deals with local, state and federal agencies, but you also need to lead by example. Get your own time cards in on time, just as your employees are required to.
- Fix Issues Fast. If the time clock breaks get someone in as soon as possible to fix it. Or if your systems crash start talking to payroll or your manager about what to do. Don’t leave problems until the last minute as they will often cause more issues down the line.
- Hire Appropriately. It’s better to hire someone specifically for payroll than to try to master a system you aren’t comfortable with. This maximizes your time for something else while also ensuring payroll goes out on time.
HMRC will advise the new tax code change from 543 to 603 which was announced in May 2008 and the date the new tax code to be applied which is expected to be September 2008. The amended tax code is entered as a new tax code on the employee details tax amendments section of the payroll file and the tax reduction is then automated at the date the new tax code is applied.
The income tax deduction calculated by the DIY Accounting payroll package is different to the inland revenue CD Rom.
Small differences can occur because the DIY Accounting payroll system has in the past used the revenue manual tax tables whereas the inland revenue employers CD Rom use a percentage calculation. In fact the manual tables jump in pounds and tax tables can increase by four pounds between different look up rates which can create small differences.
In the current financial year many of the financial income tax and national insurance calculations have been changed in the DIY Accounting payroll calculations to a mathematical percentage basis. Differences can still occur where the subject of the calculation is rounded to ignore the pence.
All these differences are minor and immaterial and adjust themselves since tax is calculated on a cumulative basis. HMRC percentage calculations also differ from the calculations using paye look up tables for similar reasons.
Employee gross pay was entered and no national insurance contribution was calculated.
The national insurance contribution table applied is shown in the column to the left of the employees name on the payroll sheet and you will probably see the letter C when because this employee is of working age and not a second employment the national insurance table letter should be A. Check the date for both for this employee which may have been omitted or entered wrongly.
Income tax deducted for my employee who is on a normal tax code was much higher than normal.
The income tax code column to the left of the employees name on the payroll sheet may appear as zero which should show the tax code. To resolve the tax code check the employee starting date has been entered and the numerical value of the tax code in the employees details and the date that tax code should be applied.
When I try to enter wages on the payslips a dialogue box appears with the message that the payslip spreadsheet is protected.
No entries are required to the payslips file. All entries are automated from the payroll file and the protection prevents corruption of the formulae in the payslip file. The entry on the payslip file can be changed by entering the required gross pay on the payroll workbook and the payslip will automatically update itself from there as part of the paye system.
The most important fact about accounting payroll is that it involves financial statements and not filing tax returns. It requires a detailed description of fringe benefits and payroll for employees which is necessary in the management of employee time. Employer paid benefits, taxes and costs as well as wages, salaries, bonuses and commissions are only a few of the items included on a business´s balance sheet and income statement. If you only have a couple of employees, using a general ledger will be sufficient to record all such information, but if you have more than just 1 or 2 employees or expect to have many more in the future, automating your payroll system can make your it simple and efficient.
When keeping track of it using journals, there are two journals that are used in this system. A Payroll Journal records it that is due to be paid to employees. When it is time to disburse payments, a Payroll Disbursement Journal records amounts when it is finally paid to employees. Journals must be kept with detailed information on hours worked, amounts to be paid, dates and to which employees. Automating this process makes data entry very simple, and any errors can be caught early rather than searching paper journals to catch mistakes.
Computerized one allows for the printing of hard copy journals as well as payroll ledgers and calculates employee taxes to be withheld automatically with a few simple settings. Paying attention to detail is crucially important, as errors can cause problems for the accounting of your business. Keep individual files for your employees with their time and payroll information in them to make pulling information later an easy task. Be sure to keep a list of your employees and employee numbers handy if you choose to list employees by their number in your accounting payroll.
Employee time sheets are also called payroll source documents, and are required for audit use when accounting payroll. These documents should be put into a document source folder for easy access when requested. The Labor Department is one organization that requests these source documents on an audit basis. It is important to keep documents well organized, whether they are in paper form or computer form. Use software which will allow you to customize your fields to accommodate your particular needs, as well as software that will make it easy for you to transfer your information to other accounting programs.
Executive level pay is based upon company performance. If the performance of a company is not reported in a proper manner, executives make money that far exceeds what the business is capable of and creates a false picture of a company’s performance. This false reporting causes the stock market to balloon by rewarding stock to companies who do not deserve it, and these methods have a bad effect on our economy. Business accounting that honor the GAAP (Generally Accepted Accounting Practices) creates a transparent persona, an air of trust and respect, from the users of their financial statements.
In the traditional setup one area which has been seen as the most ill performing at most organizations is often the payroll section. The accounting payroll services are often credited for improving the payroll process immensely and saving money at the same time. Here are some benefits and some areas which might be considered as cons of using them.
The most important benefit of payroll services is often its ability to handle verity of tasks in systematic approach without making errors. The result is often the improvement of payroll calculation and delivery of it even in light of few changes that might have happened during the last month.
The time-saving of using these services is huge as well. Even if you opt to do most of work in-house, with simple training your old staff can start to interact and perform with the help of extensive guide in light of updated legal requirements such as tax rates and associated benefits.
Security is often the key area for the management to address during the record keeping decisions; this however is quite easily managed with security features such as VeriSign® to improve the protection of your data. The data is often scrutinized for any changes and each change is fully investigated and justified, this gives you the chance to have the confidentiality of your records yet have the access to fast processing at the same time.
The real-time access is such valuable thing that your records get updated 24/7. The same effects can be applied from the offices even from the other side of the world quite easily here as well, which makes the whole reporting more reflective too. Similarly you are provided on-screen periodic reports on daily basis as well.
The only con that might be seen by using these accounting payroll services is the need of training to staff to start utilizing the benefits fully and understand the system. The cost is often a disadvantage as with these services you are actually doing the job of ten people with one or two staff members.
There are two kinds of taxes that a business conducting accounting payroll has to be concerned with to run payroll effectively. There are withholding taxes which are also known as Pay-As-You-Go/ Earn (PAYG/ PAYE) held from an employee’s pay, or the employer pays from their own funds. The later form can be in fixed amounts, or linked by proportion to the pay a worker takes home.
The calculation of payroll deductions requires a detail-oriented approach and accurate work on the part of the payroll accountant. Payroll is reported through calculating various payroll deductions as well as gross pay in order to come up with a net pay amount. Withheld amounts from employees net pay include Federal, Medicare and Social Security.
FICA are both the company’s and worker’s share of Medicare and Social Security taxes. These are withheld by ½ and federal income tax is withheld from a workers pay as well. A company can be required to pay federal and state unemployment amounts, and withholding county, state and city income tax may also be a requirement in some areas. Worker’s and independent contractors need to be differentiated when amounts are to be withheld, as hiring companies are not required to withhold from independent contractors.
A Trust Fund Recovery Penalty is charged on employers who do not pay the U.S. Government withheld taxes and is enforced by the IRS. Individuals who willfully do not pay, account for or collect the amounts and are determined as responsible for the payout by a 4180 Interview, are assessed the Trust Fund Recovery Penalty which is 100% of what is owed in addition to interest accrued. Whether nonpayment is intentional or accidental, the Trust Fund Recovery Penalty is a substantial hit to an employer’s funds, and it is important for employers to keep records of when withheld payroll taxes are due to be paid.
Unemployment taxes are both state and federal (FUTA and SUTA). Hiring companies are allowed credits of up to 5.4% on State unemployment amounts if they have gained eligibility for the maximum credit, and usually net 0.8% of gross compensation. State rates differ for FUTA based on the base of minimum wage, and companies are only liable for the first $7,000 in an employee’s calendar year of compensation.
Be sure that a detail-oriented approach is used when calculating payroll deductions, and use additional care when scheduling the payment of amounts withheld to avoid unnecessary penalties.