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- 27 Feb 2023Zenefits Review
Payroll activities include the stages where the company prepares to provide its employees with the payments that they deserve for their work. The HR department or the accountant employed is usually responsible for the payroll activities, which consist of the following stages:
The activities may vary according to the size of a company or business. However, the basic stages are mentioned below.
Regardless of how you process your payroll activities (automated or manual) as a business owner or employee, ensure it doesn’t cost you more money and that the record-keeping goes as smoothly as possible.
Pre-payroll activities, payroll, and post-payroll activities make up the three primary stages of the process. Payroll activities typically include salaries, bonuses, deductions, net pay, and wages. Employees are paid through the process using checks or direct deposits.
The term "pre-payroll" describes the time spent before payments are made. Steps following pre-payroll processing include establishing salary structures, establishing a payroll cycle, collecting data for the entire month, confirming the data, and utilizing the same data to complete the actual process.
Pre-payroll activities are as follows:
The first and most important part of payroll is integrating new employees into the organization. A structured employee onboarding procedure is required to gather employee information for payroll.
For instance, you might only deliver an employee's salary if your employee onboarding process is organized.
A company's payroll process can be described by its payroll policy, which details the administrative aspects of salaries, attendance management, confirmation and rejection processes, payroll schedules, and employee payment options.
To begin, you must formulate guidelines for handling payroll processing. Allowances and benefits may be taxable, partially taxable, or tax-exempt, depending on the circumstances under which they are received. The administration must accept the policies.
One or more of the following policies could be in place:
The information used to determine an employee's salary for a given pay period includes the employee's title, work time, timesheets, non-billable hours, wage revision data, attendance management data, and other information. There will be a significant time investment in data collection if a company has many workers.
You'll need to get some employee data before processing payroll. All employees must fill out Form W-4. Each worker's address, name, and Social Security number will be included on this form, in addition to details regarding how much money was withheld from each paycheck to pay their federal income tax. All of this data is essential for accurate payroll processing and distribution.
In addition to ensuring that all data follows the appropriate formats, corporate regulations, authorization, and approval, it also helps maintain your payroll process on schedule.
Therefore, once you have collected all the necessary data, you must check its accuracy. Because if something goes wrong here, it might affect the whole payroll system.
It is crucial to avoid legal ramifications, employee complaints, and financial losses caused by payroll blunders.
As for the actual payroll process, it consists of only one direct action, which is as follows:
Each employee's pay should be calculated using data from the payroll management system that has been verified to be accurate. After all required deductions and taxes have been accounted for, the remaining amount is the employee's net salary payout.
The standard practice calculates employees' net income by subtracting mandatory deductions from their gross pay. Payroll is typically calculated with the help of software or spreadsheets.
After distributing the paychecks, the next step is to input some documentation and reports. The post-payroll activities are as follows:
The accountant needs to review the list and generate or contact the bank for pay slips to check if there are any errors or information missing from the system. The tags will be used to prepare the cash reports and TDS reports.
In some cases, storing the bank reports by financial year, batch, frequency, and period is better for keeping the data organized.
As a post-payroll activity, you can gather the following documentation as well.
