Learn about fintech and accounting, payroll process, and methods. Find out the best solutions to speed up payroll with this step-by-step tutorial.

1. PAYROLL MANAGEMENT
PROCESS:
Importance, Payroll Methods & Solutions

2. What is Payroll Management
Payroll is an important document that is used by organizations and companies to perform
day to day staff management activities. It is a document that contains a list of all the
employees of a company who receive remuneration of work carried out or services
offered to that company. It provides a summary of the entire money paid to staff by a
company within a specific time.

3. Importance of Payroll
ManagementMaintaining a payroll by a company is extremely important for day-to-day
activities and also for adherence to jurisdictional requirements. In most cases,
companies maintain a payroll database via a payroll application software that is
usually semi-automated and easy to use.

4. Payroll Management Process
The payroll management process is what a company does in the process of administrating and
implementing payroll functions. In this process, the business uses software applications to
record employee details and manage salaries, track hours, manage to leave, bonuses, and
deductions among other functions of payroll management.

5. Payroll Management Process
 The process also includes complying with legal requirements related to employee payments,
including income tax.
 The payroll management process also includes putting in place a mechanism and system to
redress employee grievances.
 The payroll process is integral to companies establishing integrity and financial stability.
Where there is poor payroll management, organizations open themselves to potential fraud.

6. Payroll Management Process
Stages
The process of payroll management requires careful and meticulous planning. Continuous review
and monitoring of changes to details relating to specific employees concerning payments,
deductions, and other financial payments. This payroll management process consists of three
distinct phases, which are before, during, and after the payroll management activity.

7. Payroll Management Process
Stages1. Before payroll processing
Various factors are considered, which include bonuses, leaves, and other benefits. The
determination of these factors is based on the approval of the decision-makers of the
company. Payroll generated in small companies is affected by fewer factors. With more
prominent companies, the payrolls usually require software applications that ease the entire
process. In both cases, all data processed must abide by company policy and procedure.

8. Payroll Management Process
Stages
2. During payroll processing
Verified data is used. This stage involves calculations, taxes, bonuses, and deductions.
Validation and verification of all amounts are done to ensure accuracy and avoid mistakes.

9. Payroll Management Process
Stages
3. After payroll processing
All deductions are made here. The total funds budgeted on the payroll
are disbursed through the relevant payment channels.

10. Methods of Payroll
ManagementThere are three basic payroll methods which are Excel-based, outsourced, and payroll management software.
1. Excel
This is the cheapest option for payroll management. Start-ups and smaller companies mostly
use this approach. This method involves developing a payroll management template, which
allows for calculations and the use of mathematical formulae on Excel spreadsheets. The
downside of this method is that it is challenging to manage and prone to errors.

11. Methods of Payroll
Management2. Outsourced
This is an option for companies that have the resources. A company contracts a third-party payroll
management service provider. For every cycle of payment, the company compiles and sends out an
updated payment schedule to the payroll consultant for processing. The payroll consultant is
responsible for reviewing and updating all payments and deductions due to each employee. Although
this option simplifies the work of the company, however, the need for confidentiality may prevent it from
outsourcing its payroll management.

12. Methods of Payroll
Management3. Payroll management software
This provides a simplified option for a company. There are several reliable applications
for payroll management to choose from. Such software applications usually provide a
template for the input of the employee details and relevant input factors. The size and
composition of the company determine the best type of payroll software that is suitable
for day-to-day operations.

13. Methods of Payroll
ManagementOther payroll methods
There are different types of payroll methods available to businesses – direct deposits,
checks (written or printed) cash, or payroll cards. While businesses can choose from
these types of payroll methods, employees get paid on three specific pay rates:
 Hourly wages
 Base salaries
 Commission pay

14. Payroll Management System
A payroll management system is a software tool that provides for the automation of payroll
management. The software helps a business or organization to manage the salaries, wages,
tax deductions, insurance premiums, and other aspects of remuneration of employees.
Companies also use payroll management software to track employee time off or accrual of
vacation leaves. You can access the software as standalone apps or as part of the HR
software package.

15. Benefits of payroll management
software Payroll software is useful for compliance purposes- staying up to date with state and federal laws
 Automation helps speed up payroll processing and makes it easy to generate reports e.g. for tax
filing purposes. Payroll software will generate 1099-MISCs, 1099, and W2s among others that are
very vital for filing taxes.
 Privacy of employee and company financial data, which will likely not be the case when you
outsource to third party providers
 Portals can offer employees access to their payroll data and for self-service processing

16. Payroll Applications
Most businesses across the globe have integrated
payroll management software, streamlining payroll
processes, for compliance, and improving tax filing as
well as securing the payroll system.
Payroll applications or Payroll management solutions
allow many small and medium-sized companies to
handle their payroll management needs without having
to outsource to a third-party.
Here are the leading payroll management
solutions vendors in the US.
 ADP
 Gusto
 Paychex
 Sage 50cloud
 Paycor
 EPAY Systems
 OnPay
 Patriot Software
 Xero
 Toast Payroll
 Zoho Payroll

17. What to consider when
choosing payroll
management software
Ideally, every business should have a payroll management system.
However, each business needs will determine the kind of payroll software
that best serves it. The following are guiding principles when you want to
choose payroll management software.

18. What to consider when
choosing payroll
management software
Reputation and trustworthiness
This is the cheapest option for payroll management. Start-ups and smaller
companies mostly use this approach. This method involves developing a payroll
management template, which allows for calculations and the use of
mathematical formulae on Excel spreadsheets. The downside of this method is
that it is challenging to manage and prone to errors.

19. What to consider when
choosing payroll
management software
Security
A companies’ payroll management system contains very sensitive information about
employees and the company. This data should be protected and handled by trustworthy
persons only. When choosing a payroll software vendor, make sure it has not had security
issues before and that the vendors are fully responsible for any security breaches.

20. What to consider when
choosing payroll
management software
Your business size
Small and mid-sized businesses may need a payroll system that performs basic
functions as compared to large companies that need a detailed one. Moreover,
budgeting for the ideal system is key in your business. If you are a small business,
budget for affordable software. A large company needs to invest heavily in good
and secure software.

21. What to consider when
choosing payroll
management software
Software reports and back up
As a company, you need to have access to the payroll reports when need be. Tye
system should be able to provide manual update options in case you need to
correct some errors. Systems at times fail and this requires proper back up of all
payroll information in the system.

22. What to consider when
choosing payroll
management software
Compatibility
You need to purchase software that can work together with the other systems in
your business. The software should also be flexible enough to accommodate
growth changes in your business. It should be easy to integrate into the other
financial software you might be using.

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