No employer would ever say that payroll is just like another company chores. On the contrary, it is quite complex. But, if you have a few employees and have just started your company, you may want to handle things on your own to save expenditure and increase returns. The idea of investing in a payroll management software or delegating the payroll work to a third party may not be seeming worthwhile.
Don’t worry! We are here to help. Here is a step by step small guide on processing the payroll on your own. Take a look and get ready to stay vigilant all the time.
The payroll steps can broadly be divided into three steps-
Preparation: In your organisation, you should focus on delegating payroll responsibilities and get ready for payroll calculation even before your first hiring.
Payment: You should have a setup to calculate the pay like an affordable payroll management software. Otherwise, even the best person to do calculations can make errors as a lot of aspects like arrears, overtime, half-days etc have to be considered. After that, writing paycheck and distributing or transferring the same to bank accounts is required.
After-payment: After the payment is done you should keep the money due in the name of taxes, complete the register, do tax-related payments, send payroll reports timely.
Do This Before Hiring
As an employer, you must be responsible enough to-
- Understand your legal responsibilities.
- Decide how and when you want to pay your employees. For instance, you should be clear about the overtime policy, way to track time of hourly employees and if you will give PTO.
- You should also choose the accounting system that can help you with payroll processing.
- Besides, you should also have all the paperwork that the employee will sign at the time of joining. From your side, you should also get the new hire applications and forms at the time of on-boarding.
Do This After Hiring
- Apart from all the other thing, it is very important to set up a direct deposit salary account for employee(s).
- You should set a payroll account with your bank. Use this account for writing paychecks, and to deposit the amount withheld for payroll tax.
- Pay your employees the right amount every month after calculating the same with payroll management software or manually. While doing the calculation remember to do deductions. Thereafter, deposit the payroll tax.
- The next step is to file for tax returns. This should include all the amount you have paid as payroll tax. At this time, you should also clear any remaining amount that you owe.
- You should also maintain a payroll register. You will require this at the end of the year for payroll reports and totals
A yearly tax calendar is the last requisite. Lastly, it is advisable to start using payroll management software when your company has more than 10-15 employees.