The Different Methods Of Carrying Out Payroll
There are a few different methods of carrying out the tedious task of doing the company payroll
. One way is the traditional manual system that involves pen and paper, adding machines and spreadsheets. Not many companies use this method today because there is more risk involved in making an error then there is when using a computer method. In companies where contract laborers are used, the majority of the payroll is done using one of the other methods and only the contractors payroll is handled manually. The manual method is typically only seen in small companies or companies with contractors when the owner wants to keep full control of the money going out in his own hands.If the organization can afford it, they may choose to hire a professional accountant to keep the company financial records and to handle the payroll. The professional accountant would then be responsible for all of the payroll activities. The benefit to hiring a professional accountant is that they would be someone with a sound knowledge of all acceptable payroll practices and any new tax laws.
Another method a company may choose is payroll software. In this world of computers, payroll can be done through computer software where the software will perform every action that is needed in the payroll process. The software is able to calculate the deductions and payable amounts very easily and accurately. The software will also generate pay stubs in a timely fashion and all data is validated automatically by the software. The con to using payroll software is that the company that is using it will likely have to spend money training the employees that will run the software on the proper use. Depending on how complex the software is, the employees may require extensive training.
Some companies choose to outsource their payroll process. Outsourcing involves using a third party in the calculations and deductions of payroll. The outsourcing company is responsible for all of the payroll accounting activities and for knowing all of the current laws and payroll practices. One of the cons of using an outsourcing company is that if an employee has a question or concern about their pay check or deductions, help may not be immediately available. Another con for the company is that if the outsourcing company makes a mistake, the company will be in trouble and possibly penalized by the IRS, not the outsourcing company. If an outsourcing company is to be used, it is recommended that the company has at least one person to work as a liaison to answer employee questions and concerns as well as to work with the outsourcing company to ensure that errors are kept to a minimum.
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