Payroll management encompasses a variety of processes relating to the administration and management of staff financial reports, such as salaries, wages, bonuses, deductions and similar records. Regardless of the number of employees a business has, it is the responsibility of the employer to maintain all records pertaining to payroll for a minimum of four years after taxes become due or paid. Due to the complexity of payroll management, many businesses rely on payroll management companies to provide payroll solutions. Businesses that spend too much time handling administrative tasks can greatly benefit from moving their payroll to the cloud with help from an experienced PEO consultant.
Here is a look at some of the top benefits of payroll management and how you can save money by investing in innovative payroll management solutions.
Leave it to a dedicated payroll management team to handle employee compensation. A payroll company’s basic services include the calculation of payroll for each employee, including printing and delivering checks and creating management reports. Paychecks may be issued on a weekly, bi-weekly, monthly, semi-monthly, or annual basis depending on the preferences of the employer.
Payroll management companies may also offer other key services, such as automatic check signatures, direct deposit of checks, and envelope stuffing. Some payroll management companies will also issue W-2 forms to employees for an additional fee. Online payroll software systems make it easy for employers to keep track of employee compensation and track employee benefits-related information that may be administered along with regular payroll. The right provider can help ensure that businesses fully understand the online system and how to access important information.
Efficiently Managing Taxes To Save You Time & Money
Taxes are an essential component of payroll management. Once employees have been paid, employers are responsible for calculating local, state and federal payroll taxes. They must also create and submit tax forms to stay in compliance with the U.S. government. For each employee hired, an employer must fill out Form W4, as well as a Form 1-9, Employment Eligibility Verification. Both of these forms are required to process payroll. Employees who opt-in for direct deposit must also have a direct deposit form completed.
Local and state tax laws can vary from state to state. Payroll companies are knowledgeable about the tax laws in their area and can provide local businesses with the payroll management services they need to remain in compliance. Just one payroll or tax mistake can result in costly fines for a business. Payroll management services can help prevent such errors while also relieving some burdens from employers.
Payroll recordkeeping is not an easy task and the more employees on the payroll, the more challenging the process becomes for employers. Business owners are required to maintain certain payroll-related records for a specified amount of time. According to the Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) Wage and Hour Division, employers must maintain the following payroll records:
- Hiring Documents – This includes documents like an offer letter that consists of employee data like job title, pay rate, and residential address. Hiring documents must be kept for a minimum of three years.
- Time Cards – Employee time cards show the total number of hours worked, including overtime pay and unpaid lunch breaks. Time cards must also be kept for at least three years.
- I-9 Documents – I-9 documents include information regarding an employee’s eligibility to work legally in the U.S. and may contain information like the employee’s name and social security number. I-9 documents should be kept for a minimum of three years.
- Pay Stubs – Pay Stubs show payment dates and wages for each work period and should be kept for four years.
- Tax Forms – The IRS requires tax documents like W-2s, W-3s and W-4s. Employers should also keep payroll tax payments and all tax forms must be kept for at least four years.
In addition to the payroll records mentioned above, payroll management companies may also be in charge of managing other records. Examples include retirement income, leave documentation, termination information, compensation philosophy, and the employee handbook.
Staying Up-To-Date With Law And Mitigating Risks
Employers have many responsibilities with their day-to-day operations and it can be challenging to stay up-to-date with applicable payroll laws. Failure to adhere to these laws could result in certain risks that could lead to hefty fines and penalties. An experienced payroll management company can help businesses stay current with payroll laws and mitigate certain risks.
Consider Payroll Management Consulting With BenefitCorp
Managing employee payroll, along with other operational tasks like benefits, can be highly time-consuming and complicated. For businesses that lack the manpower, time or resources to complete important payroll tasks, consider payroll management solutions. For more information or to speak with a PEO consultant about payroll management services, contact BenefitCorp.