Payroll processing is a very important company function that entails far more than simply salary calculations. The entire process can sometimes be quite intimidating, which is why this helpful guide will walk you through all the ins and outs of payroll processing so that you can get your job done efficiently and effectively. Many companies have resorted to outsourcing in order to cut down on costs, but this has proven to be quite an expensive proposition in the long run. If you’re looking for ways to cut back on the budget and increase productivity, then you should definitely take a close look at outsourcing.
Alternatively, you can use human resources software solutions like the ones offered by Factorial, which enable you to spend less time on administrative tasks and focus on what really matters: your team. Furthermore, by shifting your processes to digital and focusing more resources on improving employer branding, you can create a dream team, all of which aids in generating the highest return on investment.
The first thing you need to do before you start outsourcing is to understand the federal and state labor laws. These laws regulate the amount of time and work that employees are allowed to be given in addition to the minimum wage and other employee-related benefits. The most common law that governs payroll is the Fair Labor Standards Act, or FLSA, which was enacted by the FLSA amendments – otherwise known as the Obama Jobs Act – in July 2021. Among the new laws that were introduced by the Obama Jobs Act is the Minimum Wage Order, or MOU, which dictates how much an employer must pay an employee for each hour of work.
After knowing all the laws governing the payment of wages, it’s time to find out what payroll processing system is acceptable in your state. There are different accounting systems that are used to compute employees’ salaries, such as the Time Clock and Hourly Rate Method, or the Current Wages Method. Another method used is the Automated Multiple Cause Plan (ACCP), which calculates bonuses and deductions based on the total wages and deductions. There are also software programs that calculate taxes and health insurance for you, and a whole lot more. If you are planning to outsource your payroll processing needs to another location, make sure that the company you choose complies with all the laws and regulations imposed by your state.
Another area of concern is the calculation of statutory bonuses and deductions. Your state may already have specific regulations that spell out the computation of these bonuses and deductions. Before you hire a payroll processing company, do some research and find out if your state has similar laws. Most companies will be able to explain all the pertinent points in detail, but you still need to be made aware of the details.
One important thing that most people are not familiar with is the meaning of net pay and gross salary. Net pay is what you get minus what you actually pay out. Gross salary, on the other hand, refers to the total amount of money that goes out as salaries, benefits, and other payments. Some states require companies to use the net pay method, while others prefer to calculate gross salaries first and then include any net contributions by the employees. This means that there may be deductions made at the end of the year that aren’t shown in your net pay statement, and you might not be aware of them.
In addition to the things mentioned above, you should also be made aware of other things like mandatory and voluntary payroll policy additions. For instance, some states require businesses to submit an annual employee absence report. This report lists the number of absences that were reported for the last half year, along with the number of hours the employees spent working outside their regular scope of work, such as travel time. The report is necessary because the absence can negatively affect your employees’ credit score and they may not be eligible for future raises or promotions. A payroll processing company should be able to help you with this requirement.
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