Your payroll policy should describe the entire process of administering salaries, payroll schedules, timekeeping, and methods of payment. When you have a clearly defined payroll policy, the entire payroll process will run smoothly. Folks will get paid on time and there will be no surprises because you forgot important paperwork.
For most businesses payroll is the largest expense. The checks and balances that you define with your payroll policy help you control the process and avoid unnecessary expenses. Payroll takes a lot of time and effort, especially in large companies with lots of employees. When you have a clear payroll policy and strong controls in place you reduce the possibility of fraud or costly errors. With well-planned policies for your payroll you can make time collection, date of entry, document processing, record keeping, and payment efficient and cost-efficient. By using automated systems making simple choices like promoting direct deposit you can save time and money. If your skill set does not include payroll processing, outsource your payroll processing to a trusted company.
When your payroll policies are clear you will always pay the correct amounts to your workers. You will also adhere to state, local, and federal laws including those regarding taxes. You will comply with fair labor standards, Medicare rules, and Social Security. And, you won’t hit by any penalties.
Your payroll policy should start by defining who is responsible and accountable for various tasks. When this is decided your policy should make it clear who has access to information and institute security protocols. You then need to train your staff appropriately to handle the various jobs.
All payroll procedures from beginning to end should be clearly defined in your payroll policy. It should clearly lay out what needs to be done when someone is hired. When there are changes in employment, updates for information, deductions, special payments, time reporting, and employment termination all of these need to be clearly spelled out.
You will want to set up internal controls to prevent fraud. A useful approach here is to separate duties so that one person prepares the payroll documents while the other approves them. Auditing of payroll transactions would be done by another person or department. As all of this is arranged you need to make sure that only authorized persons have access to the necessary information.
To effectively manage payroll department workflow you need to have deadlines for getting payroll documents to the appropriate people. Someone needs to be in charge of overseeing the process to make sure nothing falls through the cracks. The person managing the overall process needs to make certain that each step of payroll documents is completed and moved on to the next phase. This requires up to date information and a process for handling discrepancies.
For help setting up payroll policy, contact us at Exigo Business Solutions in the Kansas City area.
