In order to make the most efficient use of their resources, it is crucial for growing organizations to adhere to payroll best practices. Payroll processing in general is challenging because it meshes HR and finance. Payroll departments need to be minutious, analytical, able to adhere to complex procedures and great at communicating while upholding the human aspect of work. Furthermore, best practices can sometimes take some time to implement appropriately.
Payroll processing for growing organizations has challenges of its own. The paperwork and time commitment are overwhelming. Smaller teams don’t always have a dedicated payroll manager so the responsibility often ends up falling onto the business owner’s shoulders, or team members who are not specialized in payroll management. We’ve come up with a few ways that growing teams can optimize their payroll processes.
1. Be prepared
Being prepared for deadlines and submission dates is vital for efficient payroll processing. Missing deadlines can incur unnecessary penalties, fees and interest rates, which can cause great prejudice to smaller or growing organizations. This is the reason why our first and best tip is to be prepared, and by be prepared we mean note and track important payroll dates for the whole fiscal year.
A great resource for information concerning payroll processes is the Canada Revenue Agency´s (CRA) website, where you will be able to find everything you need to know on payroll best practices for growing organizations.
2. Clearly outline payment processes for your organization by implementing a payroll communication plan
The aim of a payroll communication plan is to steer clear of any miscommunication, mistakes, or ambiguous arrangements and to allow employees to understand their net pay. A payroll communication plan may be included in an onboarding package, along with information regarding pay schedules or how sick and vacation days are handled.
Here are some basic steps to follow to improve payment communication according to The Canadian Payroll Association:
- Creating and publishing a template which identifies all elements of the pay statement including details of earnings and deductions
- Explaining how different exemption amounts and tax credits can impact net pay, is unique to each individual, and may change over time
- Preparing an annual statement of compensation and benefits
3. Consider automation
Electronic payroll systems and software free up time, guarantee timely payments, are more sustainable, and include features such as cloud data storage, payroll reporting, or end-of-year filing. Many payroll software providers offer free payroll management services to growing businesses up to a certain number of employees.
They have existed for a while and one of their main advantages is that they automate the more error-prone repetitive parts of payroll management. They are usually considered more efficient by employers and are generally easier for employees to use.
4. Make sure your payroll record is well-kept and tidy from the start
This entails that all employees’ historical records should be readily and easily accessible whenever necessary. This can be achieved by using powerful payroll and HR software systems which have now become the norm. Human Resource Information Systems (or HRIS) efficiently collect and store historical data corresponding to each employee profile which allows for payroll information to be found right when it is needed.
5. Classify your employees the right way to file your tax forms right the first time
Many companies classify their employees incorrectly. Knowing the distinction between types of employee classifications is essential to filing taxes correctly at the end of the year. If you are unclear regarding employee classifications, Payscale offers great explanations of the different terms to help you understand them better.
6. Regularly evaluate your payroll management system through audits
Evaluate through audit reports where your payroll management process could be improved or automated in order to make sure it is optimized for your organization’s needs. What are the most consuming tasks for you or your administrators ? Is the system producing results? Are mistakes or errors common? Are repetitive tasks optimized for efficiency? Determine what is working or what could be improved and come up with solutions that correspond to your unique needs. Efficient payroll management for a growing organization requires a thorough understanding of payroll best practices. Preparation and organization are essential to effective payroll management and easy filings during tax season. JungoHR is launching its own payroll program, and we invite you to book a demo if that is something you are interested in.