Critical attributes of payroll system any business needs

Being an employer, you need to manage and run multiple departments of the business concurrently. Finance and accounts require more consideration in comparison with other sections of management. In addition, human resource system and payroll system should also be intermingled to handle data synchronously and calculate payroll accurately. The function of payroll is estimation of employee salaries by deducting all the leaves while including reimbursement and benefits. Any payroll system you use, must fulfill all the basic to advanced features that are crucial for the smooth processing of payroll management. Automated payroll systems give you the opportunity to customize them according to the explicit necessities of the organization. If you are planning to purchase or exploit outsource payroll system, you must demand for following critical elements that will assist you in optimizing business management.

Employee information

Along with basic information about employee designation title, personal data, probationary time-frame and the holiday entitlement, payroll system should also be able to hold extensive human resource system details dynamically. Confirmation of personal details and identity card should also be accommodated by the payroll system, whereas training, courses and career information of employee must also be maintained in split sections. Reporting of leaves, long vacations and multi-pension modules must also be a part of fully functional payroll system facility.

Payroll leaves

The section of payroll system that hold the absence records, reasoning, history and analysis reporting should also be provided separately in order to categorize and filter the leaves on an hourly basis along with the duration and nature of the leaves. Employee working profiles, performance details and certifications should be maintained by recording and reporting modules. It will boost payroll along with procedures of human resource system in profound environment.

Attendance monitoring

The module that contains the attendance records of each employee for creating time-sheet is another core element of payroll system of any business. Keeping daily attendance record, data of overtime along with the details of the work and its priority level, Instructions and details of work attached to each task assigned to worker in given time, calculations and deductions of basic salary counting on the work hour record, all important tasks should be carried out with precision.

Payroll Run and Update

The section of run and update payroll system manages payroll acquisition based on departments, divisions, payment levels and frequencies including extra benefits agreed upon by the employer. It also facilitates you with employee pay assessments and reporting to keep the system up to date. Payslip generation with diverse settings and designs can also be availed through this section.

Payroll history maintenance

With all the extensive processes and complex data-calculations, its eminent to maintain all the logs, records and history of work done till the date. This part of payroll system should provide options in selecting which the features that you want to keep in history for viewing and reporting. Effective record reporting with filtration facility, analysis and formatting should also be an essential part of the system.

Issues in Human Resource System & Payroll System Integration

To manage a progressing business human resource and financial setup, it takes professionally well equipped human resource system in accordance with the payroll system. There is a lot of information that both systems need to share with each other to keep the data concurrent along with payment calculations and other relevant financial requirements. But the problem occurs when there are multiple entries against single employee record and it create confusions that leads to inconsistent database. Data should be entered and saved once to build a reliable database which can return optimized results. In general, human resource system and payroll system share data about employee name, employment number, employment date, date of birth, date of leaving job, employee department and designation, holiday, sickness or long term vacation data, benefits/allowances and the list goes on. It shows the need of integration between two systems to manage the business smoothly. But it takes extensive efforts and also needs you to pay some serious returns.

Diverse kind of Database

If you are using two separate database systems to manage HR and payroll and both belong to different vendors, it would be quite complex to integrate them for centralizing the whole setup. For example a SQL server database for HR and Oracle for payroll will not give you facility of accurate reporting due to diverse interfaces and privileges. Even if you transfer your data on a single source, e.g. ODBC it will also make duplicate entries because usage of two separate interfaces for entries and updates.

Security clashes

There are many expected security issues that will arise when you will try to integrate two existing systems. If you transfer files between systems, there will be no security protocol that will transfer the file with full security. In the same way you will face protection issues while delivering or receiving confidential files to outer source. That’s why maintaining two systems within a company together will result in data duplication.

Data manipulation and conversion

Combining stand alone payroll and HR solutions will also irritate while making data conversions and integrating existing records. Both systems hold distinct format of storing and displaying data, which will never allow them to merge the employee records appropriately. Payment estimations will also be devastating when extracting data from two different systems as it needs another interface solution.

Access privileges

As multiple staff members will use the two integrated systems simultaneously, it will require extra privilege control and monitoring of data. With the merger of the two systems it will require more interfaces to access, enter and update records that will need training of all the relevant employees. It will cost high amounts to the business, but gives no surety of accuracy of system flow.

Guideline to set up Payroll System for Fresh Company

To take fresh and motivated steps for new company needs several efforts in diverse directions to establish the business with appropriate management and organization set up. In most initial things to furnish for a business is coherent payroll system that can handle all your employee payments and associated worries in smooth way. Follow these steps to setup payroll system at your office.

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1.      Apply for Employer Identification number

The first thing to do even before hiring employees is to request IRS to allot you an employer identification number. EIN is also called Employer Tax ID to be referred for all tax related activities. It’s important to report taxes to IRS and employee record to state agencies. The ID can be requested online or directly from IRS office.

2.      Check out Local regulations

Local tax regulation information and procedure to deal with them should also be checked. Whether you need local tax ID to handle state tax issues or not? All the info should be acquired from tax professional.

3.      Distinguish between employees & contractors

It’s imperative to put a clear line between regular employees or independent contractors as their status can highly affect the level of different taxes you have to pay. Categories and follow the payroll accordingly as it will change the amount of taxes you pay in terms of medical care, social security, unemployment and income taxes.

4.      Emphasize on staff paperwork

As you hire new people in company, start keeping all their credentials and information in records. Each employee is obligated to fill up income tax form to refer for annual tax imposed on your company. Maintain these forms and reserve accurate amount of federal tax from their salary.

5.      Determine pay period

Another important aspect is to determine the pay period choosing from multiple options such as monthly or bi-monthly etc. Occasionally it is decided by state laws that which kind of pay period you should follow. Take care of their benefits and flaws that can create problems for you later.

6.      Compensations terms documentation

Setting up a payroll system will also require you to take all paid time off into account for each employee, working hours tracking approach along with overtime payment issues. With these business work payments you also need to tackle compensations and deductibles that you have to pay later such as retirement contributions, health plan percentage and other inducements.

7.      Acquire automated payroll system

After considering all required details for payroll system, you should contemplate about acquiring finest automated payroll management system that can handle all the burden of business payroll. Take reviews of other corporate fellows about reliability and usability features. Choose outsource or internal service options depending upon budget utilize most supportive system for inspirational start.