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10 Payroll Best Practices for Small and Big Companies


Payroll system should be very transparent and must be carried out successfully. Though most of the companies try to achieve this feat successfully, more often they end up being unsuccessful if they fail to implement payroll best practices.

Employees do have some issues with their payroll even when the HR works really hard to prepare it.

You will be surprised to know how much time is spent on preparing the payroll and it seems that the HR department has only been created for this purpose of preparing payrolls.

Employees work hard all throughout and even the HR people themselves works efficiently so that they get the perfect paycheck that will show the numbers that they deserve.

But most of the times what happens is that once the payroll is handed out employees start complaining about the amount and they assume that deduction has been made without any intimation.

They are not able to get it why they are getting paid less this month and what their deductions are. A lot of complicated calculations and assumptions go into the making of a proper payroll and in order to prevent error every company has their own set of policy.

Payroll Best PracticesIf you want to ensure that the next time when the payroll is out you will have all your employees happy with what they have on hand, then you will have to follow certain best practices and they are:

Payroll Best Practices Guide:

1. Transparency is the key:


transparency is the key

When you are talking in terms of money then transparency is very important and you must be able to explain in black and white what is there on the payroll.

The classification of the employees must be very clear and you cannot assume anything while doing this.

Even when it comes to consider the wages, promotions, or raise then the calculation must be crystal clear.

2. Take help of technology:


take help of technologyTechnology is there to help us so why do it manually and mess things up. People tend to make mistakes while writing it down, but if technology intervenes and helps in recording the numbers, then there are less chances of getting things misplaced or full of error.

When you are getting any information, update it directly into the system rather than writing it down first and then updating it.

Even maintaining paper files are costly affairs than the system storing in all the information.

3. Payroll deadlines:

payroll deadlinesIf you are preparing the payroll then make sure that you write down the deadline in front of you so that it keeps on reminding you that you need to finish off your work efficiently before that date.

Else you might get into trouble and even payroll taxes if not paid on time will earn you penalties which will be harmful to your company’s reputation as well.

4. Status of the employee is important:

While calculating the overtime payout it is important that you have the correct information in front of you about the exempt employees and the non-exempt employees.

Otherwise, you will end up calculating wrong numbers and that will be a costly affair for the business too. So update the status of your employees carefully and then go in for the calculation of overtime.

5. Sharing the data across departments:

sharing data across departmentsAny information that you have must be shared through the web so that the payroll system is aware of the information.

When you have the system integrated in any company then their HR department is more likely to give out successful payroll every time.

6. Selecting the payment methods:

selecting the payment methodsIn some company direct payment is the only option, whereas in some company employees have the option of choosing between direct deposit and pay check mailed to their address.

Every company cannot follow the same rule when it comes to providing the paycheck as the requirement of the employees may be completely different.

So, being flexible in the payment mode will definitely help the company achieve successful payroll system

7. Outsource to get efficient:

outsource to get efficientIf you think that your department is not competent enough, then it is better to outsource it as you will get the experts working on the payroll system for your company.

There are people who are there working on this only so they will have a better idea of keeping the numbers accurately.

8. Involvement of the staff:

Involvement of the staffWhen a new system has been introduced in the payroll system, it is important that the staff gets to know how it functions as they will not be able to work efficiently anymore.

So arranging a training session with them and making them understand the system is a great way of incorporating efficiency.

9. Maintaining time record as accurately as possible:

maintaining time recordThere are high chances of your employee not recording the time perfectly.

When they are out taking a break some friend of his punching in the time as if he is working or even when they are at their cubicle they are wasting their time chatting but the time records shows that they have been working all throughout.

So in order to prevent this kind of time theft it is crucial that some measures are taken right away else the company has to pay the employees over – time, even when they are not working and that will be a loss in the company’s behalf.

10. Make sure that the system works just fine:

When you are introducing new system it is important that you test it thoroughly. Every aspect need to be verified before the system is rolled out else the company has to bear huge losses due to dishing out wrong figures.

Correcting the figures will mean that you have to invest time and energy again in doing the same thing that could have been done on the very first time.

You will also be utilizing the power so that means the company is paying even for the utilities again and again which should have been done once. Again if there is any issue then it can be fixed while carrying out a test thoroughly and saving time and money of the company.