Understanding Payroll
Payroll is the process of paying employees wages. The term payroll is also used to describe the employees being paid and the total amount of the payments.
Payroll Management
Payroll management can take on many different forms, including:
Verifying employee hours
Calculating payroll taxes
Deducting pre-tax and post-tax benefits from gross pay
Prioritizing payroll accuracy and timeliness
Filing quarterly and annual payroll tax
Issuing year-end payroll tax forms
Onboarding new employees
Tracking reimbursements
Since payroll is one of the main areas in a business that can be susceptible to fraud, it’s best to either outsource the process to an independent third party or have select individuals manage the payroll process.
Moreover, in-house payroll processing generally involves comprehensive payroll software. Online payroll software does the majority of the work for your payroll team, calculating gross pay, taxes withheld, and benefits. This can help you reduce errors in your payroll function while still keeping payroll in-house.
Importance of Payroll Accuracy
Payroll accuracy needs to be a priority. Not only can frequent payroll mistakes lead to unhappy employees, but regulatory agencies also closely monitor payroll, specifically when it comes to contractors.
Independent contractors are not considered employees of your company, resulting in no payroll taxes being withheld. It can be easy to misclassify employees as contractors. Differentiating between these worker classes is crucial, as regulatory agencies will assess fines, penalties, and back payroll taxes for any misclassifications.
