Most small businesses do not think about their payroll management or using a Payboy Payroll Software. Their managers are always thinking about how to reach a breakeven point in sales and make more profits. Others think that hiring experts is more important than just managing payrolls. However, before a business starts hiring people, it should come up with a payroll process. This makes a payroll process much easier when the company grows.
What is payroll management?
Payroll management is defined as a process of managing financial records of employees in an organization. It contains employees’ details, such as net pay, salaries, deductions, incentives, and bonuses. Employers are supposed to keep these records as the law requires. There are various ways in which small businesses can manage their payrolls. They include manual payroll management, hiring an accountant, or using payroll management software. Manual payroll management is meant for businesses that have less than ten people. This is because salaries can easily be calculated manually. Hiring an accountant is another way in which a business can manage payrolls. The accountant should understand the businesses appropriately to do payrolls accordingly. Payroll management software is meant for big multinational companies. However, it is always challenging to find software that fits effectively into the small business
Steps for Payroll Management of Small Businesses
• Collect your employee’s documents
Once you have recruited an employee in your company, you need to request some documents from him. These documents need to be proof of identification, location, and income. Use this data to include the employee in your payroll and HR systems. It also essential for you to store this data in a manual or electronic file.
• alculate the hours an employee has worked
You need to outline how many hours the employee should work in a day. This can be in your business terms, or the employee should decide by himself. You need to record employees’ work hours. This can be recorded in a simple timesheet or in a time and attendance system, which helps in managing breaktime hours worked and employees’ schedules.
• Calculate CTC
Calculating the gross pay is usually very easy. You have to add the total hours worked and multiply them by employees’ hourly rate. You also need to calculate the employees’ overtime hours worked and multiply with the employees’ overtime pay rate. The person or software doing payroll needs to be aware of the deductions it is supposed to make. This may include taxes, insurances, benefits, and social security. All the deductions need to be subtracted from the gross pay where you will get the net pay for each employee. The employee should receive net pay in the form of a check.
• Document and store your payroll records
Payroll usually contains confidential information of an employee, such as the social security number. However, you can choose to use paper files or upload documents to a document hosting service.
In conclusion, managing payrolls in business is a hard job. The business owners or managers must ensure that the business is registered with the necessary agencies. It must also ensure that all forms that pertain to employees are all filled.