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A payroll processing system is an accounting business whose main focus is the preparation of payroll for other businesses. The main purpose of payroll program is not only to calculate an employees basic remuneration but also any special payments, overtime payments or bonuses that must be effected for the period in question. It is used to delegate/designate department. An updated form to add or delete a designee must be submitted to payroll if the delegation changes due to separation, change in job duties or reassignment of the designee to another department. ayroll consists of the process by which a business pays its employees for wor! performed during a specific period. A payroll system allows businesses to follow a set series of processes in order to ma!e timely, correct payments in compliance with government regulations. A payroll system may be manual or computeri"ed and handled in#house or outsourced to another provider.

In a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time. ayroll plays a major role in a company for several reasons. $rom an accounting perspective, payroll is crucial because payroll and payroll ta%es considerably affect the net income of most companies and they are subject to laws and regulations &e.g. in the '( payroll is subject to federal, state and local regulations). $rom an ethics in business viewpoint payroll is a critical department as employees are responsive to payroll errors and irregularities* good employee morale requires payroll to be paid timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions, and to ensure the withholdings and deductions are remitted in a timely manner. This includes salary payments, ta% withholdings, and deductions from a paychec!. ayroll for a small firm is a simple tas! with a good one#write system. Any office supply store can show you samples of one#write systems, which most accountants recommend because they reduce errors and save time in ma!ing payroll entries. ayroll management can be quite a challenge for the new business owner. There are many federal and state laws regulating what you have to trac! related to payroll. $ailure to do so could result in heavy fines##or worse. +any business owners use outside payroll services. These companies guarantee compliance with all the applicable laws. This !eeps the business owner

out of trouble with the law and saves time that can be devoted to something else in the business. If you choose to do your own payroll, it,s recommended that you purchase an automated payroll system. -ven if the rest of your boo!s are done manually, an automated payroll system will save you time and help considerably with compliance.

The administration o the inan!ial re!ord o employees" salaries# $a%es# &on'ses# net pay# and ded'!tions( An employer, regardless of the number of wor!ers they employ, must maintain all records pertaining to payroll ta%es &income ta% withholding, (ocial (ecurity and federal unemployment ta%) for at least four years after the ta% becomes due or is paid, whichever is later. Altogether, ./ different !inds of employment records must be !ept just to satisfy federal requirements. INCOME TA) *IT++OLDING RECORD, 0ame, address, and (ocial (ecurity number of each employee Amount and date of each payment for compensation Amount of wages subject to withholding in each payment Amount of withholding ta% collected from each payment 1eason that the ta%able amount is less than the total payment (tatements relating to employees, nonresident alien status +ar!et value and date of noncash compensation Information about payments made under sic!#pay plans 2ithholding e%emption certificates Agreements regarding the voluntary withholding of e%tra cash

3ates and payments to employees for non#business services (tatements of tips received by employees 1equests for different computation of withholding ta%es ,OCIAL ,ECURITY -FICA. TA) RECORD, Amount of each payment subject to $I4A ta% Amount and date of $I4A ta% collected from each payment -%planation for any difference FEDERAL UNEMPLOYMENT TA) -FUTA. RECORD, Total amount paid during calendar year Amount subject to unemployment ta% Amount of contributions paid into the state unemployment fund 5. Any other information requested on the unemployment ta% return


The payroll process typically includes calculating employee pay, recording payroll transactions and determining and paying payroll ta%es. A company must have in place a time!eeping system that accurately reflects the hours put in by none%empt employees as well as the regular salary payments for e%empt wor!ers. -mployers typically withhold federal income ta% from employee earnings6 at the end of the year, they must report all wages, tips and other compensation paid.

4ompanies also must withhold (ocial (ecurity and +edicare contributions from employees, wages and pay a matching amount.

MANUAL A manual payroll system should be chosen after careful deliberation. This system requires the payroll person to process the entire payroll by hand6 increasing the li!elihood of errors. -mployers should go with a manual payroll system only if they have few employees. The upside of this system is that its ine%pensive to implement. -mployers can buy standard time#sheets from a stationary shop and have employees complete them. The employer can perform wage and ta% calculations on a calculator, hand#write paychec!s/pay stubs or use a typewriter and !eep hard copy payroll data in storage bo%es. (till, attempting to use this system if one is not !nowledgeable about payroll laws, or if the payroll is too large, can result in inaccurate paychec! and ta% processing. 0OO11EEPER, AND CPA, 7ou can outsource your payroll duties to a certified boo!!eeper or certified public accountant. These professionals may not provide a full scope of payroll services, such as direct deposit, alternative pay methods, or employee benefits administration. (ome boo!!eepers and 4 As offer more ta%#related and accounting options, such as filing and maintaining the companys ta% documents and financial accounts. If they offer in#depth payroll services, ensure they are

!nowledgeable in all areas of payroll processing. If you prefer, you can outsource your payroll to a more payroll#focused provider, and outsource your payroll ta% and accounting duties to a boo!!eeping or 4 A firm. EMPLOYEE LEA,ING COMPANIE, -mployee leasing companies provide comprehensive payroll and human resources services. This may include payroll processing, web#based employee self#service that lets employees view and update their payroll data online, health and insurance benefits, 81 ris! management, unemployment claims management, employee discount programs, employee support and training, and payroll ta% matters. To implement the available options, you enter into a contract with the leasing company, which becomes the official employer. Though you essentially retain management control over your employees, by leasing your employees to the leasing company, the latter ta!es control of the payroll and benefits administration aspect of your business. 7ou pay the leasing company directly to cover the costs. (ince leasing companies handle multiple clients, they tend to have substantial buying power in obtaining group discount rates on health and life insurance, which smaller companies may not qualify for. PROFE,,IONAL PAYROLL ,ER/ICE, rofessional payroll services generally offer payroll processing and payroll ta% services6 some offer employee benefits administration as well. 2ith this option, you simply outsource your payroll duties to the off#site provider, which charges a fee for its services. This may be a monthly fee or a base fee plus a per# chec! fee each time it processes your payroll. Additional charges may apply. 'nli!e with an employee leasing company, you obtain employee benefits on your

own. The payroll service generally has a full range of online options that gives clients some control over their payroll.

IN2+OU,E COMPUTERI3ED The in#house computeri"ed system is a viable alternative if an employer wants to eliminate manual payroll processing. This system involves the use of payroll software, such as 9# ay, 'ltipro and :uic!;oo!s, that can store payroll data for record#!eeping compliance. It calculates wages and deductions based on inputted data. $or instance, the payroll person would enter the employees filing status, wor! state and allowances into the payroll software. The payroll software has the federal and state withholding tables hard#coded in the system and performs the calculations. This system requires the employee to invest in, and maintain, payroll software. 3epending on the comple%ity of the software, the payroll staff may require e%tensive training. If the payroll is small, a sole payroll person can handle payroll processing. ;ut if the payroll is large, with thousands of employees, an employer would need to hire a full payroll staff, which can include payroll cler!/assistant, payroll specialist, payroll supervisor and payroll manager. This system can prove e%pensive for employers. OUT,OURCED <utsourcing the payroll to a payroll service provider is often a cost# effective and time#saving alternative for employers. ayroll services have payroll

professionals that process clients payroll, including direct deposit payments, live chec!s and 2#. processing. -mployers pay a flat fee for this service, eliminating the need to pay an on#site payroll staff salaries and benefits. $urthermore, employers do not have to deal with payroll software glitches. 'ltimately, outsourcing payroll gives an employer time to focus on other duties. +any payroll service providers offer online payroll solutions, which allow employers to access to employee payroll data and payroll registers online. $urthermore, payroll services typically offer clients different methods of transmitting payroll hours for each pay period, such as via fa%, by email or online. The downside to outsourcing is that when employees have payroll concerns, immediate help might not be available. $urthermore, when a payroll service ma!es certain payroll ta% errors, the I1( penali"es the employer, not the payroll service. 4onsequently, some employers hire an on#site payroll administrator, who wor!s as a liaison for the payroll service and the employer. COMPUTERI3ED PAYROLL4. In, computer payroll one needs to input information for each employee when he is hired, but after that, the software will calculate payroll ta%es and other deductions automatically. The advantage of this type of payroll system is numerous# fewer potential mista!es and less time spent processing payroll. The disadvantages are that you still have to input each employee,s hours manually, and the software has to be updated annually or whenever new ta% laws go into effect. There can also be additional charges if the software has to be configured specifically for your business. E)TERNAL PAYROLL ,ER/ICE4

(ome 4ompanies will process payroll including submitting all necessary ta% payments and generating year#end reports.. 2hen you are researching payroll services, chec! to see what services they offer, and if the reports that they provide to you are helpful. If not, see if they can customi"e their services to better suit your needs. Another important consideration is to find a payroll service that is bonded.

IN2+OU,E (ome smaller businesses conduct their payroll using a manual system. 2hile ine%pensive, this method may increase the chances of errors and could prove time#consuming for companies with more than a few employees. 2ith a computeri"ed system, the employer can utili"e payroll software to process its payroll on#site. (ome larger companies can afford the computer systems and staff to process payroll on their own. ;ecause they spread their costs over a large wor!force, they e%perience lower per#chec! e%penses than smaller firms. OUT,OURCED <utsourcing ta!es place when a business hires a third#party payroll service provider to process its payroll. (uch firms typically can handle all aspects of the payroll cycle as well as other reporting services. 2ith an e%ternal system, the employer sends payroll data to a service provider to process payments for the upcoming payday. This data includes hours wor!ed as well as benefits, ta%es and withholding information. <nline payroll service providers offer companies the ability to manage employee payroll accounts and create reports online. 8owever, a company that outsources its payroll to a third#party provider always should

review its output for errors to avoid punishment by regulatory agencies should a mista!e occur. The employer uses the outsourced or e%ternal payroll system when it hires a payroll service provider. The latter has a payroll staff that, for a flat fee, processes its clients=amp6rsquo6 payroll. (ervices vary by provider, but most payroll service providers perform paychec! and direct deposit processing. +any also offer payroll ta% and benefits administration. ;ecause the employer is entrusting its payroll tas!s to an off#site company, it can suffer from not having immediate help when needed. If the payroll service provider has many clients, the employer may have to wait in line to get any problems resolved. 3epending on the urgency of the situation, this can be frustrating to the employer. $urthermore, according to the Internal 1evenue (ervice, if the payroll service provider ma!es a ta% error, the employer alone incurs the penalty. 2ith the payroll being processed off#site, if there=amp6rsquo6s a problem with it, the employer may not !now about it until payday. +Y0RID (ome businesses utili"e a hybrid method that ta!es advantage of elements from both in#house and outsourced payroll systems. This allows employers to split the payroll functions between themselves and the vendor, !eeping outsourcing costs lower and allowing for more internal control over payroll data. Typically businesses using the hybrid method calculate pay and distribute paychec!s themselves while having the third#party payroll service handle ta% filings, direct deposits and the actual printing of the chec!s.


MANUAL The manual payroll system requires payroll processing to be done completely by hand. Therefore, time card, wages and payroll ta% computations6 wage garnishments6 and voluntary deductions are done manually. $urthermore, paychec!s and pay stubs are handwritten or printed on a typewriter. The main disadvantage with this system is its high room for error. The more manual computations the payroll representative has to ma!e, the more errors she=amp6rsquo6s prone to ma!e. $urthermore, it=amp6rsquo6s time#consuming because to ensure the payroll is accurate, she has to triple#chec! the data before printing chec!s. -ven then, it=amp6rsquo6s possible to miss errors. aper filing is required with this system, which can create clutter. $urthermore, if the payroll representative does not understand how to calculate payroll ta%es manually, erroneous ta% withholding, reporting and payment occur. This can result in penalties from federal and state ta% agencies. ON2,ITE COMPUTERI3ED The in#house computeri"ed system enables the employer to use an on#site payroll staff and payroll software to process its payroll. The employer must invest in and maintain the software, which can be e%pensive. 3epending on the comple%ity of the software, the employer may have to pay for training for the payroll staff. $urthermore, depending on the si"e of the payroll, the employer may have to employ a full payroll staff. This system can prove e%pensive in that may require the employer to pay salaries and benefits to the payroll staff, plus pay for technical support when software glitches occur. The employer has to also pay overtime &if wor!ed) to payroll personnel who qualify for it.



There has been a revolution in most areas of business management brought out by the increasing automation of !ey tas!s and the outsourcing of the more menial and labor intensive administrative functions. rofessionals across the board have shifted focus from tas! management to value#based contributions. The shift has coincided with the automation of their functions. $or e%ample, the early automation of accounting functions, immediate access to data and the development of financial modelling software enabled this change to ta!e place through the >?@/s and >??/s to the role of the $inance 3irector and 4hief $inancial <fficer. +ore recently, the shift of focus has been especially remar!able in the management of 8uman 1esources. (uddenly 81 is dedicating itself to attracting, recruiting, developing, managing and retaining talent, predicting s!ills shortages and developing and e%ecuting plans to address them. This represents a shift from the tactical management of a function to the development of insight and the consequent strategic contribution that can be made to the e%ecutive management of enterprises, especially multi#national enterprises. 84+ systems allow 81


professionals to remove the burden of departmental and functional management and procedural drudgery and gain their place at the top table. As business trends shift and automation is developed and proven, new business areas come under scrutiny and are subsequently made accountable for the strategic value they impart, not just the efficiency of the tactical, functional and administrative e%ercise of their duties. ayroll remains a tactical function in nearly every company. Indeed, at 4loud ay, we still refer to our clients as early adopters, those companies and individuals within companies possessing the foresight and vision to recogni"e that proper and comprehensive management of payroll enables a strategic as well as a tactical contribution. Tactically, it is essential to pay employees accurately and on#time. 3one well, the function becomes invisible and perhaps because of the professionalism and diligence of payroll managers and staff world#wide, payroll seldom comes to the attention of the e%ecutive and remains under#appreciated. And yet, payroll represents an enormous percentage and usually the greatest part of the total e%penses of an organi"ation. As such, it should be the source of a vast amount of data, chronological and geographic, demographic and functional, from which can be derived a wealth of business information, strategic insight and the trend analysis and predictive analytics that provide real competitive advantage, underwriting the best informed decisions. To !eep pace with myriad and continual changes to the rules, policies, procedures, models, allowances and rates that govern the management of payroll locally, in each separate legislature, companies have maintained payroll staff locally or outsourced the function to local payroll providers, sometimes at a

regional level or more often at the country, even at the legislature, level. This spiders web of suppliers is sometimes apparent but more usually disguised by the entire function being outsourced to an aggregator, a company that manages the networ! on behalf of its clients and runs the function but deliberately gives little or no thought to the strategic opportunity that is being missed. The approach is antiquated and the companies that have grown fat maintaining the status quo are unli!ely to want to dismantle their castle by automating the global payroll management process, assimilating comple% data sets and providing the tools for multinationals to centrally manage and analy"e their payroll while benefiting from significant efficiencies. It is in no way in the interests of the large aggregators and managed payroll outsourcers to enable or encourage payroll to become strategic. 8owever, their resistance is futile. They are just writing themselves out of the future of payroll management by failing to evolve their business models and allowing those with greater vision to disrupt the mar!et they have considered their own since the earliest days of data processing. (o what will enable payroll to become strategicA In an earlier blog, I wrote that there are two main contributory factors* $irst of all, automation is needed. 'ntil recently no company had tac!led the comple%ity of global payroll, the calculation of algorithms that vary from legislature to legislature and the continual state of flu% as ta%ation models are continually adjusted for fiscal advantage by treasury departments of governments worldwide. -ven had they done so, until the emergence of the cloud and (oftware as a (ervice &(aa() applications, the sheer administration of the application software given the rate of changes to the underlying algorithms involved proved


an insurmountable obstacle, one with which even, maybe especially, the largest suppliers of enterprise software applications refused to grapple. (econdly, and perhaps even more important is a change that is required to wor!ing practice within the departments that manage payroll in large organi"ations. The changes required might necessitate a change to the nature of functional management. After all, the s!ills to understand and manage the process will usually be different from those needed to analy"e and e%tract business intelligence from raw data. <r are theyA In an article contributed by Beith 1odgers to C ayroll rofessional,

+aurice 4heng, 4hief -%ecutive of the Institute of ayroll rofessionals, is cited as arguing that nothing beats the !nowledge that comes from wor!ing with payroll data every day to give professionals the conte%t and insight they need to fully understand it. 8e believes, it is said, that payroll professionals are better placed than anyone to provide this !ind of information service. DThere are a number of senior payrollers EsicF who do this quite effectively G you cant generali"e that all payrollers must be transaction#focused,H he is reported to have said. The e%ecutive e%pectation of the contribution that should be made by Cpayroll and the influence that global payroll managers have needs to be reviewed and a change of focus to recogni"e the strategic, not just the tactical, importance of payroll will result. The former requirement was satisfied by the advent of the cloud and (aa( application pioneered by 4loud ay. The latter is, right now, being driven by the need for global payroll data assimilation to ;ig 3ata initiatives and, of course, the professional and corporate successes being enjoyed by the early adopters. ayroll is often subjugated within 81, just as often within $inance. 7et, ayroll as a discipline, as a function and as a strategic contributor of information belongs to

neither6 it is a separate entity that is slowly developing its own voice and earning its place on the e%ecutive management committees of the worlds most far#sighted multinationals.


The employee can file a private lawsuit, or a complaint with its local '.(. 3epartment of Iabor, 2age and 8our 3ivision, if her employer does not pay her appropriately for services rendered. $urthermore, the Internal 1evenue (ervice can penali"e employers that do not withhold, report and pay employment ta%es appropriately. To ensure compliance with employment and payroll ta% regulations, the employer implements a payroll system.

The time !eeping system for a manual payroll typically requires employees to complete standard time sheets or punch a time cloc!. The payroll person computes the time card/time sheets by hand, enters all payroll data into the system manually, processes wages, pay adjustments and deductions by hand, and prints paychec!s and pay stubs manually.


ayroll software calculates wages and deductions based on the data the payroll person enters into the database. This method speeds up payroll processing and reduces errors. It also stores payroll reports and employee payroll data. $or a set fee, the payroll service provider handles the employers payroll tas!s. This can range from payroll processing only, to payroll processing and benefits and payroll ta% administration. This method eliminates paying for, and maintaining, on#site payroll staff and payroll software.

The manual system is ine%pensive to implement. Jenerally, only time sheets, a typewriter &if desired), blan! chec!s, calculator and stationary are needed. ;ut, the payroll person should have solid !nowledge of payroll ta% and payroll processing laws since all computations are done by hand. The implementation for an in#house computeri"ed system requires investing in payroll software. 3epending on the si"e of the payroll, one payroll person or an entire staff may be needed. $urthermore, if the payroll and the software are comple%, the employer may have to provide the staff with training. The outsourced system requires signing a contract with the payroll service provider6 the contract shows the latters services. The employer must give the payroll service power#of#attorney if the latter will be handling its benefits and ta%

matters. $or direct deposit purposes, the employer must provide the payroll service provider with its ban! account information.


-very year, more and more small to mid#si"ed businesses are ma!ing the switch to Advantage ayroll (ervices. 2hyA $or a number of reasons* Ease o Use K 2ith Advantage, your payroll responsibility is reduced to a simple function of communication each pay period. $rom paychec!s to ta% payments to the preparation of quarterly and annual ta% returns, your time investment remains minimal, allowing you to focus on what,s most important...managing your business. Iearn more about how payroll is processed in the Advantage system here. A!!'ra!y K Beeping trac! of the ever#changing ta% regulations can be a nightmare. 2hy botherA 2ith Advantage, you have the comfort of !nowing your


payroll is being e%pertly handled. 2e guarantee all federal, state and local ta%es will be filed and paid accurately and on time...orWE pay the penalties and interestL Con identiality K 2here earnings are concerned, a breach in confidentiality can be devastating for any business. 2ith Advantage, your payroll information is !ept strictly confidential, and can be accessed only by those authori"ed to do so, !eeping your business safe from any potential disasters. Fle5i&ility K At Advantage, we offer a variety of payroll input options, allowing you to choose what,s most convenient for you K phone, fa%, or 2eb. 2e also provide comprehensive, easy#to#read management reports. And our system features e%tensive earnings and deductions categories, so we,re fle%ible enough for virtually any business. +ost importantly, we,re prepared to grow with your company, offering a wide scope of payroll services such as direct deposit, preta% health insurance, wor!ers, compensation premium payment, and other services that can provide great value to you and your employees. The De!ision If you,re confident in your !nowledge of payroll ta% laws and requirements, are able to stay abreast of changing regulations, and can maintain and deliver payroll accurately and on time without draining your resources, then in#house payroll management is probably best for your situation. 8owever, if you,ve ever e%perienced late paychec!s, accounting mista!es, missed ta% payments and hefty penalties, then you !now how much trouble payroll can be. Add in the potential cost savings, plus substantial savings in time, energy and frustration, and it,s easy to see why Advantage ayroll (ervices is the clear choice for your business.



Apart from these numerous advantages, outsourcing payroll services does have a few downsides. $or e%ample, sometimes when a small business entrepreneur outsources small business payroll services, it becomes somewhat problematic to access the payroll figures and other employee data. This happens because your payroll services information resides on the server of a different company. +oreover, in the case of a mista!e in the payroll, such as in the payroll ta% deductions or sic! leave compensation, or employee benefits, or retirement plan deductions, it may not be possible to correct it as fast as an irate employee might


want. &:uic! resolve K give the employee a M./ cash gift right away to compensate for the problem.) 8owever, these problems do not arise frequently. And, when weighed against the advantages of outsourcing, the disadvantages seem negligible. ,MALL 0U,INE,, /, LARGE 0U,INE,, 2hat do the large businesses do after evaluating the pros and cons of outsourcingA The ones who can have a large accounting staff to handle all the accounting debits and credits in the right wayA 2ell, they have the same challenge as a small businessL They still have to constantly !eep up with the ta% laws, and how the courts interpret these laws. Iearning payroll with all its idiosyncrasies is a challengeL (o, a good majority of large businesses outsource payroll.


The payroll process requires employers to !eep careful documentation of the hours wor!ed by their personnel and to compensate them for services rendered. This can be one of the most demanding, time#consuming tas!s a business faces. It also requires employers to adhere to all current local, state and federal mandates regarding payroll ta%es, benefits and wor!er,s compensation. There are four main ways employees can be paid &cash, chec!, direct deposit or debit card). -mployers can do the payroll themselves or contract it out to accountants or payroll#service companies.


CA,+ MET+OD Temporary or one#time wor!ers are commonly paid by the cash method. The cash method is e%actly as the name states* cash paid on an hourly or per#job basis. 2hile the method may be convenient for both the employee and employer, the method is frowned upon when used by a registered business. Also !nown as Ncash under the table,N paying employees in this fashion can result in state and federal ta% fines, especially if there is an understanding that the employer will not issue a federal 2#>/?? form at the end of the year, and that the employee does not intend to pay ta%es on monies earned. -ven when paying an employee on a cash basis, an employer must issue a 2#>/?? at the end of the ta% year. PAYROLL C+EC1 MET+OD +ost companies issue all employees a payroll chec! at the end of each pay period, whether payroll is handled in#house or off#site. After a chec! is issued, the employee must ta!e it to a ban! or credit union to cash it or deposit it. The payroll chec! has the advantage of documenting an accrued statement of the employee,s earnings, benefits, paid and unpaid days off and any deductions ta!en out of the his gross pay. DIRECT DEPO,IT MET+OD (ome companies give employees the choice to have payroll monies deposited directly into their ban! accounts, while others do this as a matter of policy. This method is convenient for both the employee and employer, e%cept in the case where errors are made and an employee may have to wait a full pay period for corrections to be made. 4ompanies issuing payroll in this manner also generally provide a paper document that shows all earnings and deductions.

DE0IT CARD MET+OD Another ta!e on the direct deposit method is the use of payroll debit cards. -mployees are issued a debit card onto which their net pay is directly deposited each pay period. 2hile this method is very convenient for employees, employers must first chec! the law to see whether this method is allowed in their state.. -mployers must also go through the process of setting up the system, which can be complicated and cost some initial activation fees. MANUAL ,Y,TEM The manual system of recording and issuing payroll may be used by a very small business with only a few employees. This system involves the manual recording of all payroll information. It is time#consuming and requires !nowledge of all local, state and federal rules and regulations regarding wages. ACCOUNTANT (ome businesses prefer to contract a certified public accountant &4 A) to do boo!!eeping and manage payroll. 2hile this method is an e%penditure for the company, there is the assurance that a trained professional is handling financial documentation. A 4 A must have an education in accounting and be accredited by the state in which he wor!s. PAYROLL ,OFT*ARE There are several types of payroll software that can accurately document all wage information and issue accurate payroll disbursements. ayroll software can be somewhat e%pensive to purchase, and generally requires a one#time set#up fee, utili"ing the services of a computer specialist. ;e sure to hire a specialist who is


familiar with the software and offers training to staff who are responsible for payroll and benefit information. CONTRACTED PAYROLL COMPANIE, ayroll management can also be outsourced to a professional payroll company. These companies have the s!ills and !nowledge to handle all a company,s payroll needs, wor!ing to current local, state and federal specifications. They also provide the professional, accurate wage documentation needed when filing annual ta% forms. These companies are often contracted for a specific time period, and the employer may be liable for the full amount of the contract fee if he opts out of the service prematurely.


ayroll +anagement is e%tremely fle%ible and can help you with the different pay needs of your company. 7our company, for e%ample, may pay some of its employees wee!ly and others monthly. (ome employees may get paid in cash and others by credit transfer. To give you the fle%ibility you need, ayroll +anagement allows you to create individual units, called payrolls. 7ou can have many payrolls within the ayroll +anagement module. -ach one can be designed to be different from any other payroll and can wor! independently*


7ou can choose how you want each payroll to wor!, for e%ample, how frequently you want to run the payroll, or how you are going to pay your employees. 2hen you have decided how the payroll is going to wor! you can then decide which employees are going to join the payroll. $or e%ample, if you want some employees to be paid on a wee!ly basis, they will join a payroll that pays out wee!ly. 7ou pay employees by allocating them a number of pay elements. -ach payroll can use an unlimited number of pay elements to include in the employees, pay. In ayroll +anagement these elements are !nown as pay items* 7ou can choose how a pay item wor!s, for e%ample how it calculates pay, or whether ta% and 0ational Insurance are to be paid on the amount. 2hen ayroll +anagement calculates pay using the pay item, the deductions are automatically wor!ed out for you. 7ou can pay employees advanced holiday pay. 8owever to prevent the following year,s ta% and 0ational Insurance figures being included in the current year,s returns, you are prevented from paying advanced holiday pay over a year end. 2e recommend that you run advanced holiday pay up to and including the final period of the year. If employees are still on holiday in period /> of the new year, you will need to calculate as normal for this period. 7ou can deduct outstanding debts from employees where an official attachment of earnings order &A-<) applies or deduct student loans until you receive a stop notification from 8+ 1evenue = 4ustoms, for e%ample.


7ou can use ayroll +anagement in conjunction with other modules. 7ou can send the results of the payroll calculations to the Jeneral Iedger, 4ash +anagement, Oob 4osting and ;A4( modules. 7ou can also send sic! pay information to ayroll +anagement from the (tatutory (ic! ay module and maternity pay, paternity pay and adoption pay information to ayroll +anagement from the (tatutory +aternity ay module.

4alculating pay chec!s and ta% obligations for each employee based on variable employee rosters and time Ta% filing G for the company and for each employee 4hec! stuffing/signing, printing and delivering chec!s roviding management reports


;usiness Intelligence -mployee (elf#service $eatures ayroll rocessing and 1eporting ayroll Ta% 1eporting

Time <ff Trac!ing <nline ;enefits -nrolment

FINDING, P Findin%s


G 4urrent annual payroll operating cost of M5.Q million offers significant opportunity for improvement G Time = Iabor process is completely manual G 81/ ayroll system is R/ years old and presents considerable ris! of failure



ayroll has different aspects, so your system should be diverse enough to ensure proper payment to your employees and regulatory compliance. 7ou may, for e%ample, need a payroll system that enables human resources management, or you may need an e%ternal system that varies from the typical payroll service provider. 4arefully e%amine your payroll needs before you choose a system. Payroll and +R If you provide your employees with company#sponsored benefits such as preta% health insurance, fle%ible spending accounts and retirement plans, you must establish a plan document, !eep trac! of open enrollment dates and maintain ongoing compliance with the government. As an employer, you must also monitor your employees s!ills, wages, time, attendance and benefit days such as vacation and sic! days, plus perform wor!ers compensation and new#hire reporting. To reduce administration time and costs, use an integrated payroll, human resources and employee benefits system that enables these options. Payroll and A!!o'ntin% ayroll software with accounting features helps you to comply with federal, state and local employment ta% laws. Through the softwares embedded ta% tables, you properly withhold ta%es from your employees paychec!s. 7ou can print annual 2#.s and payroll ta% reports, trac! employee deductions and paychec! and direct deposit transactions, and record payroll e%penses in the companys financial accounts.

Man'al ,ystem

If you have only a handful of employees, you many implement a manual system, which requires that you process your entire payroll by hand. This system is ine%pensive to establish6 all you need are basic stationery, including ban! chec!s, as this system does not come with direct deposit. 7ou must calculate wages and deductions manually and perform manual accounting and record#!eeping. This system is prone to errors, so use it only if your payroll is small. Payroll ,er7i!e If you do not want to handle payroll tas!s, you may outsource your payroll duties to a payroll service provider. These companies provide a full range of services that include payroll processing and employee benefits and payroll ta% administration. 7ou decide how much control you want the provider to have over your payroll. $or e%ample, you may choose the suppliers online option that allows you to upload payroll hours in the suppliers system, print paychec!s to your own printer, and manage your payroll records online6 the supplier would help you with more comple% matters such as payroll ta% administration. <r you may have the supplier handle all of your payroll duties and send you the paychec!s and payroll reports by payday. Employee Leasin% 7ou may use an employee leasing company for all of your payroll, employee benefits, human resources and ris!#management needs. In this system, you enter into a contract with the leasing company, which becomes the official employer6 however, you retain managerial control over your employees. The leasing company has the buying power necessary to obtain competitive benefits rates, which you would not get on your own. -mployee leasing companies vary from


payroll service providers in that the latter do not become the official provider nor do they obtain benefits for your employees. Considerations ;efore you do business with a payroll service provider or an employee leasing company, chec! the companys credentials and ensure it meets federal and state regulations. <btain a clear, written agreement from the company, outlining the companys responsibilities, including penalties that may arise from payroll errors it ma!es. Others 4ontinue to run payroll as an insourced function Implement a Time = Iabor solution Transition payroll into a true (ervice 4enter model and optimi"e payroll operations 1eengineer !ey aspects of 81 transaction processing to improve speed and efficiency of transactions which affect payroll



This research study will be helpful by way of providing an insight to similar type of organi"ation to follow similar types of techniques in situations resembling the same and it will show the path for further development and will be treated as a reference model for similar !ind of analysis. It will help in s!ill and e%pertise development in the e%isting manpower inventory and as a consequence, will help in successful implementation of strategic 8uman 1esource lanning.



-very study conducted may have certain shortcomings and unfortunately ours is also a similar case. A few errors have crept in despite our best efforts to avoid them but it is e%pected that still our study and findings are very much relevant. >. The methodology used for data collection was insufficient. The use of only questionnaire made it hard to go into greater depth in the analysis of responses. .. The time duration for e%ecuting the research study was just S wee!s, so it was difficult to cover large number of samples, while the research concentrated on a smaller sample but were based on an in depth study of the organi"ation as well as individuals R. rivate <rgani"ation have their own ways of doing things. Any change is

impracticable as it will affect a large "one. 5) The differences in perception of the employees can be a major constraint. 8ence, findings due to an evaluation study have its limitations.


Today, in every organi"ation personnel planning as an activity is necessary. It is an important part of an organi"ation. 8uman resource planning is a vital ingredient for the success of the organi"ation in the long run. There are certain ways that are to be followed by every organi"ation, which ensures that it has right number and !ind of people, at the right place and right time, so that organi"ation can achieve its planned objective. The objectives of human resource department are human resource planning, pay roll and process, training and development, career planning, transfer and promotion, ris! management, performance appraisal and so on. -ach objective needs special attention and proper planning and implementation. $or every organi"ation it is important to have a right person on a right job. ayroll and processing plays a vital role in this situation. (hortage of s!ills and the use of new technology are putting considerable pressure on how employers go about pay roll ing process staff. 2ith reference to this conte%t, this project is been prepared to put a light on pay roll process. This project includes meaning and definition of payroll and process, need and purpose of pay roll, evaluation of pay roll process, recruitment tips. ay roll process is simultaneous process and is incomplete without each other. They are important components of the organi"ation and are different from each other.


A payroll processing system is an accounting business whose main focus is the preparation of payroll for other businesses. The main purpose of payroll program is not only to calculate an employees basic remuneration but also any special payments, overtime payments or bonuses that must be effected for the period in question. It is used to delegate/designate department. An updated form to add or delete a designee must be submitted to payroll if the delegation changes due to separation, change in job duties or reassignment of the designee to another department. $or every organi"ation it is important to have a right person on a right job. ayroll and processing plays a vital role in this situation. (hortage of s!ills and the use of new technology are putting considerable pressure on how employers go about pay roll ing process staff.


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