Payroll

If your business has employees, you’ll have to do payroll. There’s no way to avoid it, but what is payroll? Well, payroll can mean a few different things:  Payroll refers to the employees you pay, along with employee information.  Payroll is also the amount you pay employees during each pay period.  Or payroll can refer to the process of actually calculating and distributing wages and taxes.payroll

Payroll processing consist of calculation of payments to employees for their work in the company – whether it is based on time or productivity, calculation of benefits, and statutory deductions. Payroll is for the most part an action that is performed by companies with employees. It's the process the company goes through to pay the employees.

Payroll is an integral part of all organisations. The payroll department is not only responsible for employees’ salary compensation, but it also plays a vital role in protecting the company’s reputation by ensuring compliance with various legislations. Too often, many view the payroll as merely a processing function. They fail to recognise the importance of payroll and the mammoth effect it has on businesses. Payroll affects every aspect of the organisation, from the reputation of the company right down to the morale of its employees.

A critical aspect of payroll is its impact on the morale of the employees. Employees need to feel assured that they can be paid on a consistent and timely basis. A late and inaccurate payroll might cause employees to question the financial stability of the organisation. This might compromise on the work climate within the organisation, resulting in underperformance and ignorant behaviour towards the organisation. Given that employees form the base in all organisations, the importance of a reliable and accurate payroll cannot be overstated.

One of the challenges payroll professionals face is in meeting multistate payroll compliance requirements. The main reason for this difficulty is the existence of several kinds of taxes at the state and federal levels. True, a few taxes are levied by the federal government, but many others vary from state to state. Payroll professionals who do not meet the multistate taxation compliance requirements end up causing problems with the system, leading to wrong deductions.

Why is multistate payroll compliance difficult? It is because there are at least three important situations of multistate taxation where there are different rules for different states:  An employee could live in one state and work in another state, or work in two or more states simultaneously  Organizations could have businesses or business operations in more than one state  There are different reporting requirements for all the states in which the company’s employees work or live. In such instances, multistate payroll compliance rules require a company to withhold the income tax that applies in that state and pay its payroll taxes.

The payroll professional has to be aware of several aspects of multistate taxation. These are spelt out in Nexus, the Federal program of the Multistate Tax Commission that seeks to be a bridge between the taxpayer and the tax authority. Nexus is aimed at smoothening multistate taxation norms. Multistate payroll compliance essentially means taking cognizance of the following factors:

The ways by which an employer’s liability is determined Whether disability insurance of the State is done through an insurance company or in the form of a payroll deduction Whether the state is in compliance with the IRS Code for taxing Section 125 plans A clear idea of what differences exist between different states of various items like Form W-4 equivalents, resident and non- resident taxation, and state unemployment insurance and other related matters An understanding of which state to pay the State Unemployment Insurance (SUI) tax to and to which state to pay the income tax for a non-resident who is working in the state.

While payroll deals with compensating employees, human resources takes care of employee relations. Although the two departments have distinct roles in an organization, they also share functions that are crucial for the organization’s success. As a business owner, you need to recognize the difference in terms of their functions but also harmonize the tasks of the two areas. Payroll mostly lies between an organisation’s HR and finance department because it also includes as well as recruitment and vacation leaves as well as an increase of salaries.HR

"Write, write and write down" should be the mantra of payroll procedures. A non-written payroll procedure is as good as a non- existent one.payroll procedure If there is one central, indispensable element to getting the payroll procedure right, it is writing. This is something most organizations abhor, given the magnitude of their tasks, but not writing down has far greater consequences than sparing a few minutes can afford.

Keeping payroll procedures updated every time an event happens is the easiest way to getting the whole procedure right. Writing down  Streamlines payroll-related operations;  Prevents employees from doing the same tasks repeatedly;  Ensures that each task is done completely, accurately, and uniformly each time it is performed  Makes it easy to discover how every employee performs each process