When people think about payroll, the first thing that usually comes to mind is receiving a check (or direct deposit) on payday. The majority of people don’t give much thought to their companies’ payroll departments and processors, unless there is an issue or question about their pay. A well-functioning payroll team that consistently processes smooth and error-free payroll might be invisible to the rest of the organization. While it’s safe to say that most payroll professionals aren’t in the business for fame and glory, they are definitely some of the unsung heroes in the organizations they serve.
For those who are not in the industry or who don’t have the exposure or familiarity with all the aspects of payroll, it can be surprising to learn how much the payroll team of a company actually does. Making sure employees are paid correctly and on time is the primary goal of any payroll department, but what many people don’t realize is that generating paychecks in time for payday is just a small part of the payroll team’s job. Specific duties and responsibilities vary from company to company depending on the organization’s size and structure, but in most cases, payroll is much more than getting people paid.
The payroll process can start a week or more before payday. There can be a lot of preparation involved in getting the paychecks generated, including verification of employees’ hours in the period, making sure all of the calculations (deductions, taxes, etc.) are being done correctly and in accordance with all applicable federal, state, and local regulations. Payroll usually works in conjunction with human resources and benefits to make sure employees are properly configured in the payroll system with the right information, including effective dates, amounts, and tax-treatment of specific earnings and deductions. Most organizations also run preliminary calculations that are used to verify payroll data before finalizing the payments.
Finalizing payroll, however, does not mean the payroll team’s job is done. Taxes must be submitted to the various local/state/federal agencies on a specific schedule, with due dates that have the potential to change depending on the amounts processed in payroll; missing these due dates even by one day can result in costly penalties. If the company collects deductions from employees for benefits such as healthcare, retirement plans, and other items, making sure those amounts are remitted to the appropriate parties can also fall under the payroll team’s regular duties. Oftentimes, the payroll team also prepares and/or records journal entries for accounting.
In addition to these recurring responsibilities with each pay cycle, there are also government reporting and filing deadlines which can vary for each business, depending on multiple factors. This includes quarterly and annual payroll tax filings, W-2 forms, and sometimes 1099 forms. Laws and regulations are constantly changing, which means payroll professionals need to be aware of the updates, as well as apply and test the new rules in the system to make sure their processes are staying in compliance. Due to the sensitive nature of the data and financial impact it can have on a company, payroll departments are also the focal point of many audits, both internal and external, to ensure data integrity and security.
With so much responsibility falling on the shoulders of the payroll team, it’s no wonder that many companies turn to outsourced services and partners. Working with a team like Valor Payroll Solutions can provide the experience and expertise to take away the stress of payroll, so you can focus on your business. Contact us today and see how we can help!