Payroll Activities

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Payroll Activities

What are Payroll Activities?

Payroll activities are the tasks encompassing compensation to employees for a defined period on a date set. That compensation is known as the employee salary package. Payroll activities are carried on by the human resources departments of business organizations. Small business owners may get these jobs done on their own or by their accounting personnel.

When it comes to payroll activities, the key responsibility is that the employees are paid correctly as per their grades and/or scales of pay slab(s), with no errors in financials and timely payment.

While payroll processing, you or your HR or Accounting related people must be well versed in the following information:

  • Employees’ personal information updated on hand
  • Minimum wages of the workers
  • Gross pay(s) in both groups as well as at the individual level
  • Federal tax rates for the working financial year      
  • Employee benefits to be paid
  • Tax withholdings to be done
  • Net pay of your worker(s)
  • Pay period
  • Anything else as per your financial or HR need you to deem is about your payroll activities

What is a practical approach to payroll activities?

If you look through the eyeglasses of the practical approach as far as payroll activities are concerned, its practice in vogue has several steps, which are mentioned below:

Taxes - full, partial, or non-taxable allowances - in terms of employee salary

Employee salary has many aspects attached to it. The basic salary is the base pay on which all other allowances and benefits are designed as well as calculated. Moreover, taxes are the main knowledge that an employee processing payroll activities must know about so that its applicability is ensured in total letter and spirit, at your company level, abiding by the regulations of the State and Federal laws avowing negative implications impacting your organizational reputation.

Clearly defined payroll policies:

You need to put in place and clearly define your payroll policies in line with the state and federal laws. These policies must encompass the following mentioned areas:

  • Attendance
  • Leaves
  • Benefits
  • Salary budgeting
  • Increments
  • Honoraria(s) on performance-based, if any
  • Pay for performance
  • Employee recognition programs
  • Leave Salary
  • Medicare
  • Social security
  • Schedules for payment
  • Pay periods
  • Overtime payments and their limits per week / per month etc.
  • Deductions on any basis
  • Professional Tax (PT)
  • Bonuses policy and its limits defined per year or biannual etc.
  • Employee State Insurance (ESI)
  • Provident Fund (PF)
  • Beaks of lunch and dinner defined
  • Wages types
  • Methods of payment
  • Expenditures
  • Approval or rejection rules
  • Under or over-employment status management
  • Any other as per your organizational need

Needs of data for Payroll running

Needs for data for running payroll are prevalent in the form of inter-departmental coordination at an organizational level, in any organization you are in. Say it may be strict communication vertical channels of bureaucratic systems having mechanistic organizational culture and design OR the Organic designs and culture of the companies presenting characteristics of horizontal communication channels.

The communication between the departments is about the number of employees each department, division or sub-station has, the employee status, leaves of individual, disciplinary actions if any in the pay periods, number of days or hours worked, billing hours, and non-billing hours, attendance administration, etc.

Data Collection

If data is not provided timely by all the departments to pay their employees, then it is the responsibility of the payroll activities doer to get the data collected from the divisions concerned about the said reason for payments to workers timely, and their due tax and other deductions or payments, etc.

Employee Information Requirement - EIR (W-4)

Employees are needed to fill out W-4 forms in terms of information provided against tax deductions of federal income tax withholdings. This information includes employee names, addresses, and social security numbers.

Data Authentication - DA

It is mandatory, after the data collection from all the corners, that the data must be checked for its correctness. To validate the information, it is necessary that not only the data is accurate (not incorrect) and real (not fake / not forged) but is as per the approved organizational formats, or otherwise.

All the steps mentioned above are important but data authentication is pivotal and inevitably necessary to be right because a single mistake can lead to payroll inaccuracies resulting in financial errors, untimely payments, grievances of workers; legal penalties; etc.

What is meant by the Payroll Calculation?

The meaning of payroll calculation is to put all the input into the payroll process, after necessary deductions are made as per Federal and State laws, for further payment to your workers. This calculation and process results in the net pay generation being released in favor of an employee’s account or the form of issuance of paychecks.

What does the term “Post Payroll Activities” mean?

The term post payroll activities means once the payroll processing is carried on in terms of payroll information gathering and compilation of the same, onwards Employee State Insurance (ESI), Tax Deduction at Source (TDS), Employee Provident Fund (EPF), and other applicable taxes should be deducted and sent by the payroll administrator to the concerned Government agency.

What is Payout in Payroll Activities?

Payout in payroll activities means you are now transferring the salaries / paying the salaries out to workers. Moreover, make sure that your account must have enough funds to meet the salaries expenses of your employees.

Your company should get pay advice from the disbursing authority regarding the payroll activities performing the department’s record-keeping weekly, fortnightly, monthly, bi-annually, and yearly. One or all of the said may be followed, as the case may be, as per the requirements of your organization.

Reporting is the next step for payroll activities, the payroll processing division, or your payroll service provider – if any – should provide a report on the paid schedules for reporting and audit purposes.

Why it is important to carry on Payroll Activities?

There are several reasons which make it important to carry on payroll activities, of those few are mentioned below:

  • Employee Compensation Management (ECM)
  • Record-keeping purposes (RKP)
  • Audit Reasons (AR)
  • Company Reputation (CR)
  • Employee morale gets Higher (EMH)
  • Government and Legislative Regulations Compliance (GLRC)
  • Labor Laws followed
  • Tax Paying Purposes (TPP)
  • Smooth working of HR, Accounting, and Audits
  • Budgeting programs strengthen – by knowing the expenses
  • Employee retention through ECM
  • Any other per your business need

Essential Payroll Features for Payroll Activities

Which is better Payroll activities at your own or hired payroll services?

If your payroll is being practiced at your organization, then it is well and good but if you have hired some payroll services it is better for you again it is dependent upon your need and affordability, say cost versus benefit analysis.

What payroll service providers do for you, they serve your payroll management purpose by running professional payroll software encompassing the calculations relating to per month and its impact on the budget of your per year salary of workers domain, providing your employees with tax forms pertaining payroll taxes, Medicare and Social security including unemployment taxes; etc. They also remain updated on State and Federal regulations in terms of payroll activities to keep you from the legal adverse implications in the form of any penalties, impediments, etc.

These services may be offered as complete software selling, on-the-site physical services like departments, and the cloud-based software as a service – SAAS – as the best option to be updated from time to time consisting of customized options for changes you require, if any.

Also, SAAS is the better option if the enterprises need management of other tasks at the strategic level therefore these essential legally bound tasks of payroll need proper attention and legal applications, requiring specialized services with adequate cognizance. Hence investing in many people’s side to the payroll activities is not advised against the SAAS payroll services performing administration of and management for your, what it is called vitally – your mandatory, legal, and unavoidable tasks are known as your organizational payroll activities.

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