8 Tips on Managing Your Payroll Effectively

What is Payroll?

Payroll is the procedure of paying staff so that the employer must handle payroll on a regular basis to verify that employees are paid. The process consists of calculating the employees’ earnings and excluding deductions like taxes. Payroll might be a difficult subject but knowing each component of payroll can help you better comprehend the process.

What you will learn:

1. What are the essential payroll components?

2. What are the steps of processing payroll?

3. What are the tips on managing your payroll effectively?

4. What are the benefits of payroll outsourcing?

5. What are the 5 tips on helping you to choose your payroll service provider?

6. How can Fastlane help?

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What are the essential payroll components?

Payroll processing consists of three main categories: 

Employee Information

In order to hire and pay employees, you will need the employee’s essential information, such as employee personal information like their name, address and Hong Kong ID or passport number.

Salaries and wages

Salaried workers are paid a certain amount monthly, whereas hourly employees are paid an hourly rate. A pay stub for an employee might show the following items:

Deductions

The earnings of an employee may be reduced to any amount, and common deductions include:

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What are the steps of processing payroll?

There are 6 steps of processing payroll:

1. Track time
2. Calculate Employees’ Gross Wages
3. Subtract taxes and other deductions
4. Pay Employees
5. File and Deposit Taxes
6. Keep Records

8 tips on managing your payroll effectively

• Create a payroll calendar

Payroll calendars have several advantages, including informing employees when they will be paid and assisting your payroll staff with scheduling and executing payroll activities. Xero hk will help you set up a payroll calendar after you’ve established your pay schedule, which will also notify you to allow enough time to complete the payroll procedure for a few days. This reduces employee confusion about when they will get paid and how long their paychecks will last.

• Allow your HR staff to attend payroll training

Even though human resource professionals’ main expertise is in recruitment and employee records management, processing payroll is still an element they will be involved in during their training process hence why it’s a good idea to organise payroll training sessions for your HR staff.

Some benefits payroll training provides are…

• Improves collaboration among HR and payroll departments & shares their known knowledge
• Reducing manual/double work: Save time & paper
• Provides a more coherent team: HR staff has an understanding of the payroll team’s procedures and is more attentive to the completion time
• Prevents conflict: Avoid misunderstandings between HR and payroll staff & provide employees with a better understanding of employment policies.

HR team’s deeper understanding of payroll regulations might assist to relieve some of the payroll pressure when interacting with employees hence improving staff interactions and boosting the overall mood of the office.

• Be aware of any updates on tax obligations/reporting requirements

Employers must stay on top of their tax obligations as well as any modifications in reporting requirements. Changes may be caused for a variety of reasons, including company relocation, employee relocation and the use of remote employees. When this happens, it’s the employer’s duty to gather and update the information required to compute payroll and tax correctly.

In Hong Kong, companies need to report remuneration paid to employees by submitting an annual employer’s return form (either the BIR56A form, which is a cover letter for all the IR56B forms an employer has to submit, or the IR56B form, which is the form you have to submit to the IRD within the 1 month from the date of issue of BIR56A). The two forms are typically sent to the employer on the first working day of April.

• Automate your payroll process

It’s simple to make errors in a manually administered payroll procedure, especially for a growing business with an increasing number of employees. Automating your payroll procedure might be advantageous to stay up with time-consuming tasks, which is why software like Xero accounting software might help you manage your employee payroll, benefits, third-party apps, and more in one place.

• Observe transparency in your payroll process

Employee misunderstanding might occur if a business is unclear or does not provide its workers with a clear and sufficient compensation policy. A completely transparent payroll policy may be used to address a variety of payroll issues, such as underpaid taxes or employee misclassifications.  A transparent payroll policy should provide key information such as how the payroll process works, company procedure for handling payroll mistakes, employee reporting responsibilities and how salaries and employees are determined, etc. It’s also critical to keep the employee handbook up to date and make sure it’s accessible to everyone.

• Document your payroll process

Documenting your payroll procedure is one of the most crucial phases in controlling your payroll process since this helps to analyse your payroll procedure and the identification of its weak spots. Once you’ve established a payroll procedure that works best for your company, make a note of it and pass it along with the payroll crew to help ensure each payroll employee knows their position.

Maintaining a consistent payroll processing manual is beneficial since it covers all of the payroll procedures and reporting and checks handling process. Document the procedures for printing and submitting payroll registers and tax reports, as well as the individuals to whom you will be distributing paychecks and pay stubs.

• Audit your payroll process

It’s also important to make sure that all elements of the overall payroll process are always audited. When you discover a complaint, it’s a strong indication that your annual audit should be conducted more frequently. Automated systems can also be affected by errors like incorrectly recording a new employee’s tax status (married vs single) or entering previous pay rates.

Things to consider to ensure an effective audit include:

• Verify and reconcile the accounting, payroll, and cash records to ensure that dollar values match across all documents.
• Installing a check-in system and/or biometric sign-in hardware so you can automatically record when an employee checks in for work
• Utilising plugins or add-ons to ensure payroll software is fully integrated with your time and attendance system

When employees express concerns about or struggle to comply with payroll rules, it’s time to evaluate your policies for accuracy and clarity. Employees should understand why completing tasks, like timesheet submission or timecard, is key in the payroll process.

• Outsource your payroll tasks

It’s critical for firms to be able to pay staff promptly and correctly to avoid problems related to staffing. This might be stressful for a growing business in which activities such as payroll take longer hence it may be a good idea to consider a payroll outsourcing option. Payroll software is responsible for managing the system and processing every payroll plus the calculation of paychecks and taxes are done automatically and filed on your behalf.

If you want to take a more hands-off approach, utilising a professional employer organisation (PEO), instead of doing it all yourself, may be a better alternative since they operate as your company’s employer for payroll and tax purposes so they handle the majority of your HR and payroll responsibilities.

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What are the benefits of payroll outsourcing?

Outsourcing payroll duties can bring a lot of benefits to the company such as:

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5 tips for choosing your payroll service provider

• Timing of payroll conversion

It’s crucial to get the new payroll system up and running at the right time, which means making sure you don’t put it off too long. Delaying it any longer could jeopardise any year-end processing that must be done. Working with an experienced and knowledgeable provider who understands your needs. They should be involved in every stage of the process.

• Data integration capabilities

Payroll providers generally provide software that may link existing data with an online payroll system and assist in keeping data current and up to date, minimising paperwork, and eliminating duplicate data entry.

Software is key for payroll services because it allows you to save all sorts of employee paperwork, keep track of personnel changes such as benefits and raises, and keep track of employee anniversaries to schedule performance evaluations.

• Payroll tax compliance management

Since payroll tax calculation is difficult, it’s essential to find a payroll service provider that understands and follows tax laws and updates so that you can be certain of security, accuracy, and compliance.

An experienced and competent payroll service provider should be able to assist you in ensuring that your taxes are accurate, that you pay them on time, that tax filings and payments are handled, and that you complete year-end tax returns.

• Data conversion

It’s critical to validate your data and remove any incorrect or out-of-date information before switching over to the new payroll program in order for the conversion to be successful. Transferring data successfully provides a number of benefits, including reducing payroll mistakes, eliminating duplicate data entry and outdated information, and highlighting company trends and metrics.

It’s important to discover a payroll service provider that can help your business enroll in benefits and suit your HR requirements, such as annual leave, holiday policies, working conditions, and so on. A payroll service provider should meet your company’s demands while also being appropriate for your organisation’s structure. Look for a firm that has experience with all sorts of company demands, which will be advantageous to you in terms of fewer errors and making the whole process efficient and straightforward.

• Customer Support

The last important consideration is excellent client service, which is significant to customer happiness. Since you‘re entrusting them with such a huge responsibility of the company, and the payroll services being an ongoing process and crucial to companies, it’s essential that they’ll be available and in touch regularly.

Employee turnover is a cost of doing business. As businesses expand, so do their demands, especially payrolls, which is why it’s critical that they have the expertise and are equipped to meet any specific requirements. The supplier should be accessible, helpful, adaptable, and able to help you with future requirements, needs, and circumstances that will inevitably occur in businesses.

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How can Fastlane help?

Fastlane is a company that specialises in HR process improvement using cloud-based solutions and the assistance of our experts and appropriate payroll programs.

We are also partners of Deel, which provides a worldwide payroll service that allows businesses to hire people from 150 countries. They also have a tech-enabled self-service system that lets the company find and employ independent contractors or full-time employees from 150+ countries in only a few minutes, with 8,000+ customers ranging from small businesses to publicly listed companies around the world. 

To know more about our payroll services and what we can provide via key features like Deel and Xero hk, why not get in touch with our professional advisor by dropping an email or arranging an appointment with us.