For HR’s one of the major time-consuming processes is payroll management, as it can take minutes to days, depending on the different methods. The payroll management process is a crucial business function as it plays an important role in shaping employees’ experience. It is one of the essential steps to building confidence across the organization.

This beginner’s guidebook will cover all the essentials of payroll management, such as payroll basics, its benefits, and what you require to process payroll etc. Whether you are a new business owner or HR, this guidebook will help you get to grips with the basics of payroll management and how you can run payroll accurately and efficiently, etc. 

If​‍​‌‍​‍‌​‍​‌‍​‍‌ you want to make your payroll work even easier, then QuickBooks Tool Hub is the perfect tool for you. It is a great utility that fixes frequently occurring QuickBooks issues and speeds up the system. you can always get in touch with a QuickBooks ProAdvisor who will help you with the installation, providing support, and making your payroll process more ​‍​‌‍​‍‌​‍​‌‍​‍‌efficient.

What is Payroll 101

Payroll 101 is a guide that covers all the fundamental processes of paying employees, such as calculating the gross pay, withholding various taxes, deductions, and net pay. This type of guide is mainly presented in a webinar or an educational series, such as Payroll 101 QuickBooks.

Basic Requirement for Payroll

For most US-based organizations, setting and processing payroll follow the same process. IT starts with getting hold of the employer identification number (EIN) and finishes with arriving paychecks in employees’ hands or bank accounts.

These are the basic things you need first for payroll.

• EIN: Employer identification number (EIN) is a unique number that is used by the federal government to identify an organization for tax purposes.
• State-level and local ID numbers: similar to EIN but at the local or state level.
• Employee tax information: for full-time employees W-4 forms, and for contract employees W-9s.
• Payroll budget and schedule date: You need to decide how much and how often you want to pay the employees.
• Tax schedule: This is when you will pay tax for the organization.

Steps to Process Payroll

Here are the core steps to process the payroll, once you set your records and schedules. Follow the given steps.

• Calculate gross pay: This is done for hourly employees. In this, you combine regular hours with overtime and multiply by the standard overtime payment rates. This is one of the time-consuming processes with the traditional timesheet, as it needs to be submitted, checked for errors, and approved manually. You can fast-track it with the help of time tracking software.  
• Calculate net pay: In this, you calculate the federal tax, state, and local tax for each employee, add insurance, retirement, and other deductions, and subtract it from their gross pay to get the net amount that is payable to the employee.
• Reserve/distribute deduction: various taxes, and other deductions must be placed in either for later payment to the related entities or paid immediately according to the schedule..
• Issue paychecks: issue checks or directly deposit the amount to the employee’s bank accounts.

Some Additional Strategies to Simplify the Payroll Process

Automate the payroll process: Automating your payroll process can save you significant time by reducing the time and effort. Consider eliminating the old timesheet method, as it can not only save time but also reduce the chances of error.

Proper categorization of employees: categorize your employees properly, as it is crucial for an accurate payroll process. Misclassification can cause overpayment and penalties.

Create a digital filing system: The digital filing system will further simplify the payroll process, as it is less prone to loss and provides security against employee time theft. It also saves time while searching for the information compared to normal timesheets.

Direct debit payment: Deposit paychecks directly into your employee’s bank account, as it eliminates the risks of loss or damaged checks. It also saves the time and effort of signing multiple checks.

Outsourcing payroll: Outsourcing the payroll to a dedicated provider is also a very good option. This will allow you to focus on the core activities of the business. It reduces the risk of compliance issues and errors.

Benefits of Payroll Outsourcing

Outsourcing payroll can be beneficial, especially for small businesses. Some advantages are:

• Time saving: Outsourcing the payroll process allows you to focus on other important tasks.
• Cost reduction: Outsourcing the payroll process may reduce your fixed payroll costs as you don’t have to bear the salaries, benefits, and costs for a payroll clerk.
• Accuracy: Outsourcing the payroll process to a professional payroll service provider may reduce the risks of errors and increase the accuracy.
• Compliance and risk management: Now your service provider will have to manage with changing tax laws and regulations. This will reduce the risks of penalties/audits.

Conclusion

For beginners, checklists and guides can be a great way to gain information. But nothing can beat learning from an expert. You can also get payroll certifications from Payroll 101 online courses, such as a fundamental payroll certification (FPC). A certified payroll professional (CPP) as it is recognized across industries and can help you to gain confidence and build credibility.