For businesses in today’s economy, there are more payroll processing options than ever before, and deciding what method will work best for your company can be daunting. If you’re thinking about switching how your payroll is processed or are curious about what is currently available, taking action on the following steps is a good place to start.
Making the First Step
If you are a seasoned business and are considering a change to your payroll processing system, before you make any decisions or put a plan in motion, you must first begin the evaluation process. At this stage in the game, the more questions you ask, the better. What compensation structure works best for your employees? Monthly? Bimonthly? How do you track employee hours? What about overtime? Paid time off? Health plans? Income taxes? Payroll taxes?
You’ll want to assess the strengths and weaknesses of your current workforce and identify the best person or team most capable of facilitating the switch. If you cannot identify a suitable person, consider hiring an experienced payroll processing professional as an independent contractor to help you make the transition. Payroll administration requires a high commitment to detail and accuracy and regardless of which route you take; any efforts must be comprehensive and dedicated.
It’s also in the best interest of the company to assess the timing of your payroll change, paying close attention to current economic conditions and growth trajectory of the firm. For example, a recent and robust expansion in business may make it a good time to reconsider your payroll processing—especially if there are plans to boost hiring significantly to maintain your growth.
What may have worked for you with just 50 employees begins to be strained by the demands of 200+ employees. In addition to this consideration, many common mistakes and errors in payroll processing become more visible and potentially dangerous to operations when you increase the number of employees.
Functionality a Determining Factor
Upon sketching a rough outline of what business factors will influence what payroll processing options to pursue, it’s then time to transition to the subject of functionality. After all, payroll processing doesn’t just need to work for the company, it needs to work—period.
Many companies that choose payroll processing software often do so without accounting for the range of capabilities and features a solution must possess in order to improve the business and save it time and money. Before you approach a vendor, determine what functions you’ll need or desire to be included in the processing software.
Again, asking yourself questions on what is needed from a solution is the best path to reaching an optimal selection: How frequent are tax updates sent through? What security checks are in place? Can we integrate existing data into the new platform? What payment options exist? How does it prevent fraud?
Besides ensuring a solution effectively addresses and takes care of standard compliance issues, it’s good practice to investigate what other added value such a service can provide. For example, many payroll processing software vendors offer deduction and earning codes, shortcuts that enable automatic and accurate deductions from employee paychecks regarding health insurance or child care. If your company’s pay structure is more complex, you’ll want to pursue vendors that can allow you to customize your own codes. Other features to look for include direct deposit, employee garnishments, and piecework pay codes that assign and track employee pay based on work completed.
It’s also worth examining the basic features of payroll processing, like electronic tax filing, which is paramount in any payroll software. This feature allows you to fill out and submit tax forms electronically and eliminates the need for printing out forms, organizing them, and mailing them out to the appropriate office—which can result in huge time savings!
It’s also crucial that employees have sufficient access and interaction with the system. Opting for a solution that can seamlessly allow for employees to view documents and pay stubs is important both to HR compliance and employee engagement.
Making a Choice and Implementing the System
After pegging down what payroll processing solution your business needs and what features and accommodations it should have, it’s time to research the market. Spend time closely evaluating all vendors, and consider their reputations and relationships with past clients. Pay close attention to how vendors service clients, price their solutions, and ensure their networks are secure.
Finally, once all has been said and done and a solution has been decided upon for implementation, you’ll need to ready your operations for the change. The most important function when readying the business is making sure you have the hardware needed for installation. It may also behoove the organization to solicit the services of an implementation team. But that’s only the half of it. Once in place, businesses must still conduct routine check-ups into how the solution has performed and what benefits it has provided or how it has streamlined operations.
After determining who can help facilitate the change, when the ideal time is to switch, and what functions your business needs out of payroll processing software. Evaluate which vendors most closely align with your values, budget, and business needs. Then it’s easy. Make the switch and reap the rewards!
Need more information about changing payroll processing? Visit our library of Human Resources Best Practices and Tools to download white papers like “The 15 Factors to Consider When Changing How You Process Payroll” or “Stay In Control: The Benefits of In-House Payroll Software.”