Choosing to outsource employee payroll duties to an accounting firm or other payroll system is a good decision for small businesses looking to make doing the payroll easier.
Using a payroll system, employers no longer need to struggle with tax rules, data recording, and other frustrating tasks that take time away from them actually doing business.
As easy as all of this can be, many business owners have questions about how the process works when outsourcing employee payroll to a payroll service.
This brief description of how accounting firms handle employee payroll services and what role a business owner has in it should help.
- Submission of Employee Details - To start the employee payroll process, employers must submit to their payroll service relevant employee details such as personal information, pay rate, and information about whatever trackable benefits the employee is entitled to if benefits will be tracked by the service. It is essential that small business owners keep meticulous employee records and update them immediately when details are changed. Information for new employees should be immediately submitted and any terminations should be correctly recorded as well.
- Time Tracking and Reporting - Next, business owners must track employee work time and report it on time to the payroll service. Time should include all hours worked, with any sick or vacation time subtracted and overtime added in. If the payroll system is also tracking benefits, specific sick and vacation hours taken should also be reported so they can be recorded into the payroll system.
- Taxes, Benefits, and Other Calculations - Once actual pay amounts are configured, accounting firms handling employee payroll will determine specific tax amounts based on local and federal tax laws, then arrange for the employee’s taxes to be submitted as required to the IRS. Any changes in an employee’s tax status, insurance costs, or benefits entitlement must be modified in the payroll system immediately to keep all records and transactions accurate.
- Issuing of Payroll Checks - After all taxes and benefits deductions are calculated and withdrawn from the gross pay amount, the payroll service will cut a check for the remaining amount and disperse company checks however it is arranged beforehand. Payroll system checks can be mailed to the employee or to the business owner, services may offer direct deposit into the employee’s bank, and some payroll systems even allow employees to print their own checks for bank deposit.
Payroll systems make taking care of the detail-oriented task of employee payroll much faster and easier for any business owner.
Their main responsibility is simply providing and updating employee details as required to ensure correct and accurate payroll deductions and payroll issuance.
The rest will be expertly handled by the payroll service!