Payroll Administration is a core function of any business with employees and one thing you must get right. Payroll and tax problems can have enormous impacts on your business for managing cash flow, employee morale, tax compliance for you and your employees, and many other areas.
Sometimes employers do their own payroll or have a family member, friend, or employee do it for them. But unfortunately, payroll is one area where bookkeeping classes probably aren’t enough… it’s easy to get into hot water because of a surprise tax violation. Issues range from not deducting the right amount from employees’ checks to cover taxes, to completing employee forms incorrectly, to processing state tax inaccurately. Other times employers simply realize the process takes so much of their time each payroll cycle that they barely have time to run their business! Payroll is a lot more work than simply pressing a button.
The top challenges employers face when doing their own payroll administration are:
- Consistent and accurate deductions and withholdings
- Getting payroll processed and out on time
- Compliance with state employment compensation and tax laws
- Timeliness of tax deposits
Any or all of these can prompt an employer to seek expert help when it comes to payroll. This article will review the solutions that PEO Payroll Administration offers employers.
See also: 5 Common Types of Payroll Withholdings
So What Does “Payroll Administration” Cover and What Are the Benefits?
Let’s start by taking a look at exactly what payroll administration is and the work it involves. Payroll Administration is “all tasks that involve paying employees on time, accurately, and in compliance with employment laws and tax regulations.” The basic processes involved in Payroll administration are:
- Calculating, cutting and sending payroll checks
- Updating personnel on file and their pay rates
- Ensuring deductions are accurate and up-to-date for the employee side
- Deducting child support and tax liens correctly and paying all agencies based on state law
- Ensuring that proper withholdings are taken care of for the employer side
1. PEO Payroll Administration Simplifies a Complicated Process
Things like differing pay rates, commissions, payroll taxes, and varying annual state withholding amounts make things so difficult that most business owners simply choose to pay a specialist to handle it. Each payroll cycle is unique: regulations change, personnel change, and hourly vs. exempt employees. There are many variables that make each payroll cycle a challenge for whoever is doing payroll administration. Here are a few more…
See also: 4 Common Startup HR and Payroll Mistakes
Why Payroll Is Complicated
- Multi-state employment? Laws vary by state regarding basic things like how a work day or period is defined, along with overtime, comp time, and final payment deadlines. Some states even vary by county!
- Accurate classification of employees – are they part-time, full-time, temporary or sub-contractors?
- Proper forms and accurate completion of them, and even the protocol that conforms to regulatory laws for storing and keeping those documents.
- Keeping track of state and federal deductions.
- Withholding the right amount for benefits and/or workers’ comp coverage.
- Withholding for other types of elected employee savings programs.
- Date final pay is due for an employee who is no longer with the company and other deadlines.
- Tracking reimbursements and credits owed back to employees.
- Issuing reimbursements/credits, bonuses, vacation pay, holiday pay, sick pay, additional wages, travel, etc.
- Knowing where in the payroll process the deductions are calculated and the order in which they should be taken.
These variables create a lot of paperwork, require a lot of time and focus, and create a lot of anxiety for employers trying to handle it in-house. Outsourcing your payroll service allows owners to avoid completing the majority of paperwork related to payroll and eliminate worry about complying with state and federal payroll and tax requirements! It is also a huge advantage for cash flow management as your deductions will be more consistent throughout the entire year.
PEOs Make Payroll Administration Simple
PEO Payroll administration solutions allow employers to make just one simple payment per payroll cycle that they know is accurate, on-time, covers all their liability, and simply takes care of everything. Employers provide a list of their employees, how many hours they worked, along with their pay rate, and we handle the rest.
2. Save Time
Time is the most valuable resource a business owner has. Payroll is very time consuming and complex. For example, trying to calculate overtime in a state like California takes hours of your time each payroll cycle. This time could be spent focusing on growing your business.
3. Reduce Liability Costs
No more stressing about deductions and withholdings – you will have a team of experts who are a second pair of eyes bringing things to your attention. You can sleep better at night knowing you won’t have a huge surprise at tax time because you have been withholding the right amounts.
Ignorance can be bliss – with payroll and tax compliance, this is not the case. Even if you don’t know you should be paying something, at the end of the year the IRS still expects you to pay it. Mistakes can clean out your bank account, cause missed paychecks, or even bankrupt you. One small oversight related to a withholding that is not properly handled for the duration of a year can end up causing a HUGE surprise.
When you use PEO Payroll administration, you’re protected from tax liabilities. At ERM we are constantly tracking, advising, and collecting the amounts that you as an employer should be paying for things like benefits, workers’ comp, and other withholdings. We protect you from those year-end surprises!
4. Retain Employees and Improve Work Quality
Having happy employees saves you money. They produce better work for your company. When you consider the factors that have immense impact on your employees’ morale, untimely/late paychecks are almost always found toward the top of the list. We’ve heard from clients that prior to using a PEO Payroll administration solution they had employees who wouldn’t even show up to work as the result of lost, inaccurate, or late paychecks. Employees expect to get paid.
5. Get Support and Guidance
There are many alternatives to PEO payroll outsourcing. However, there is one large, critical piece that is missing when you look at all the alternatives: Constant Advisory.
PEOs provide payroll techs that work in conjunction with other departments like benefits and workers’ comp, and have an extensive knowledge of payroll and tax compliance that you simply cannot find in your average bookkeepers or accountants.
Compliance with payroll laws is not a solution that a DIY software for payroll offers. It is very common to overlook a specific regulatory law. PEO Payroll administrators will constantly provide that second pair of eyes, and keep looking at the big picture for you. Accountants can often focus only on the end result of running the numbers. They are not always able to provide the guidance needed to comply with the many variables of employment regulations.
Take the Stress Out of Payroll
At the end of the day, this is what matters:
- Are your employees getting paid accurately and on time?
- Are you spending your time on the things that matter for your business?
- Can you sleep well at night knowing that you’re in compliance with all the payroll and tax laws and that you’ve made all the correct withholdings for your business?
We want you to be able to relax and forget about all the details related to Payroll and get back to running your business.
Need Help With Payroll?
Get a quote from us today, backed by the only 100% satisfaction Guarantee in the industry. Learn why we are so confident that using Employers Resource as your strategic HR Outsourcing Partner will be one of best business decisions you have ever made. Learn more about our payroll and tax services here.