Payroll is a crucial business process when you have employees, but it can easily become overcomplicated with extra steps in it. The more steps you have, the more the chance that something goes wrong. But how do you improve your payroll process and make it as lean and efficient as possible?
Know payroll tax policies inside and out
One of the chief issues that businesses run into isn’t that people aren’t paid or they are paid incorrectly for the hours worked – it is that tax policies have changed, and the business wasn’t aware of it.
Tax regulations and policies change quite frequently. Most businesses will be aware of big changes that typically happen around the end of the tax year and start of the new one in April. But there can be other changes that come in during the year and some of these may have been set in place years before.
This means that at least one person within the payroll team needs to be up to date at all times and know payroll tax policies inside and out. This is why companies often employ a payroll specialist or outsource the task – there’s a lot to know and to track to do this. Doing payroll in this way alongside another role can be tricky and things can be missed, costing the business money.
Involve Your Employees
There are a few ways you can involve employees in the payroll process that can improve things and ensure accuracy. One of the simplest is having a simple, easy to use system for them to log the hours worked if they are paid hourly so that their wage is always accurate, and reporting becomes a part of their daily work lives.
If you are making changes to the payroll system, involve employees. If you are consolidating payroll time frames, talk to employees before you do it. Some may have financial issues that would arise during the switch – so could you advance them some of their salary to help with this during the transition period?
You may also want to involve your employees to make a change such as going paperless for payroll communications. Many businesses are now opting to send a secure email with pay notes and other payroll information so if you want to bring this in, ensure that staff can manage this and have a means to access the emails you are sending them.
Make Your Payroll Policy Simple and Transparent
Businesses need to have a clear payroll policy and ensure that staff are aware of it and even contribute to it. Things like the cut off point for reporting expenses to receive on a specific pay packet or how they request holidays should all be laid out and staff made fully aware of what is required of them for payroll.
Also, make sure that you have a simple system for queries about payroll. Ensuring that staff have a clear point of contact for things like payroll queries, holiday pay and other issues means that people know who to talk to. That way if there are queries or problems, these are addressed quickly to the right person.
It is also worth having a small amount of training on payroll requirements, especially if you have made changes to these. This doesn’t need to be anything too complex, but staff should be taught what their responsibilities are and how they need to provide the required information for payroll. It is also worth educating them on the importance of keeping all personal information up to date to ensure they are receiving any tax benefits that might apply.
Minimize Pay Cycles
When you have had employees for a while, it is easy to end up with several different pay schedules or cycles. You may have management who are paid monthly and hourly staff who are paid weekly. Or maybe some staff are paid every two weeks while the rest are on four weekly pay.
One of the key ways to improve payroll processes is to minimalize pay cycles. This means rather than doing payroll for one group of employees every two weeks then again for the monthly pay group, everyone is paid on the same schedule and there’s one payroll process. It also cuts down the chance of people not being paid for the work done by ensuring payroll teams can focus on a single pay schedule.
Conduct regular, ongoing audits
Auditing your payroll systems and processes is something that should be marked into the calendar for a regular slot and adhered to. Most experts recommend a quarterly audit to ensure that there is accuracy in the system and compliance with regulations as well as to spot potential problems. Some of the elements to include in an audit can be:
- Verify pay rates – make sure everyone is receiving the correct pay and these figures are in line with minimum wage changes where necessary
- Check time and attendance records – make certain that staff are correctly receiving overtime pay as well as being eligible for sick days and holiday pay
- Look at the status of independent contractors and vendors – if the business has these, ensure that services are being used and that contractors are under the correct classification
- Validate bank reconciliation – make sure that internal ledgers and payroll information tie-up
- Check tax submissions – ensure that tax and National Insurance is correct and up to date for all employees, including pension contributions where relevant
Outsourcing Your Payroll
Even with a host of steps taken to improve your processes, payroll can still be a big drain on resources and a constant battle. The best way to ensure this doesn’t happen to your business is to outsource your payroll to an expert.
Trace Payroll are experts in managing payroll for all types of business. We use the latest payroll systems and are always up to date with every law and regulation that applies to the industry. Our job is to make payroll for your business simple, efficient and reliable and allows you to use your in-house resources more effectively. Contact us by calling 0845 873 5619 , email, or by our contact form to find out more about our services.