Accounting Blog for Business
Posted by Gillian Vitug
Jul 5, 2016 12:30:00 PM
Managing payroll is a very meticulous task that even a minor error could cost expensive damages. While managing payroll in-house is the best way to be in control of all payroll processing, it’s never just a basic back-office task.
Here are the main payroll challenges that you have to consider and how to effectively address them.
1. Manual payroll processing
While manual payroll processing requires no upfront investment on software or any other electronic system (except for a calculator), manually keying in data and calculations make you prone to errors or duplications, which can cause even bigger payroll problems for the company. Not utilising a form of software means that employee data cannot be stored and calculations and deductions cannot be computed automatically, making all steps redundant every pay run.
Manual processing also makes it hard to produce reports and share information within an organisation. On top of this, confidential payroll figures can also be easily leaked because there is no form of security at all.
The Solution: Automation is key. A specialised payroll software solves all these dilemmas and more.
Payroll tax problems remain a major challenge for companies that do not hire the right people to do the job. Whatever the reason is for not filing taxes accurately and on time, whether it’s because of negligence or lack of knowledge, great penalties and even legal action await.
The Solution: Invest in hiring the right person to manage your payroll, with expertise on the taxation laws of your country and the years of experience to prove it.
3. Payroll fraud
According to the Association of Certified Fraud Examiners, payroll fraud happens in 27% of all businesses. It can be committed in several forms such as falsified wages and commissions, faking injuries for insurance claims, or having ghost employees. Payroll issues like these happen when employees have access to critical components of the payroll software or when there are no internal controls in place.
The Solution: Random inspection of payroll database, periodic payroll audits, and strong internal controls must be established. Another effective solution is outsourcing to a payroll service provider for an objective view on payroll processes, wherein employees do not have access to the software and critical numbers.
4. Keeping up-to-date
Not all employees in charge of doing payroll get the chance to be updated on the latest taxes and legislations or the latest payroll software. This could once again result to erroneous calculations and inaccurate tax filing.
The Solution: Hire someone who is truly a certified or accredited payroll specialist. Otherwise, enroll your staff to payroll trainings to learn the latest tax updates and best practices in payroll management and software.
Processing payroll consumes a big chunk of time, even if it is done using a software. The time spent on the fine details of checking the accuracy of recorded hours, to calculating salaries and deductions, and complying with government procedures—all these hours can be used on growing the business instead.
The Solution: Outsourcing to payroll providers is the best way to save time and not get bogged down with the details in payroll processing.
Are you ready to systematise, automate, minimise risks, and save time and resources on payroll processing? D&V’s Payroll Solutions enable you to have access to a group of payroll experts as well as top-of-the-line payroll software. Get in touch with us now!
Topics: Payroll Services