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The most convenient time to switch to a new payroll provider is at the beginning of a new financial year or at the end of the tax year. There is less work involved when switching in the middle of the year.
The New Year is upon us, and smart business owners are already finding areas of improvement that need to show progress by a specific timeline. Streamlining business processes is a good way to ensure maximum productivity, thus influencing profits, visibility, and growth.
One area that small business owners need to examine this new year is payroll processes. The satisfaction of employees greatly affects the productivity and profitability of the business. And one of the ways to ensure employees are satisfied is by paying the correct amount and on time.
Business owners who have had trouble with payroll systems should consider switching to faster, more accurate, and less strenuous systems. Luckily the information below is a detailed guide to switching the payroll process and some of the best payroll services for all businesses. But first, understand the features of a good payroll system.
Today, payroll systems come in different forms. There is payroll software, payroll services, and even payroll providers within the company. Despite their differences, payroll systems need certain features to make them effective, minimally time-consuming, and accurate. Therefore, the basic features of a good payroll system are the following:
Simplicity is a key component, whether it is software or a payroll service provider. Simple setups save time and money, thus directing said resources toward important processes like marketing and customer satisfaction. Business owners should look into setup options to find the easiest system to configure and run.
Dealing with payroll tax is a key requirement of running payroll. Tax withholding and filings must be accurate to avoid penalties. Therefore, a good payroll system offers accurate tax fillings. The system should handle calculations and collections, depositing payroll taxes on behalf of the business owner.
Integration with platforms and software is a key characteristic of a good payroll system. Business owners often run payroll with regard to timesheets, employee documents, and accounting. Therefore, systems that integrate with HR, time, and attendance software save time and offer better accuracy.
At some point, employers may find themselves digging for payroll information. Therefore, easily accessible reports are another quality of good payroll systems. Good reports offer payroll details, payroll register, payment details, tax liabilities, tax deposits, and collections.
Employers should find payroll systems with excellent support, especially if new to payroll. Support helps employers access the system, understand the features, and fix issues that arise. Payroll support is especially important for business owners looking into payroll software rather than services.
Smart business owners should analyze business process spending– this includes running payroll. It is important to offer a generous budget for the best accuracy and ease of operation. However, it must also be within a reasonable limit to not cost the business money.
Payroll systems need to offer flexibility to serve different types of employees. Business owners with hybrid employees, independent contractors, and freelancers require payroll that seamlessly caters to salary and employee benefits differences while retaining accuracy and timeliness.
Running payroll requires sensitive data like employee information and finance details. Therefore, good systems have security features to ensure limited access to the information. In addition, good payroll systems have security measures in place to reduce the chances of information leakage.
Employers going for payroll software should look for on-the-go capabilities. With more people relying on mobile devices than PCs for internet use, good payroll software needs mobile-friendly features.
Worth Noting: Employee self-service is a bonus feature to look for in payroll systems. Self-service allows employees to make changes to personal details, review benefits, and track their payments.
The most convenient time to switch to a new payroll provider is at the beginning of a new financial year or at the end of the tax year. There is less work involved when switching at the end of the year. Managers and employees can enjoy less data entry, thus lowering the risk of errors.
While changing payroll providers mid-year seems difficult, it does not have to be. Business owners can change payroll software anytime as long as the process is clear to guarantee a smooth transition.
Switching in the middle of the year demands transferring more payroll data and closing accounts with the current payroll provider. In addition, the old provider will have to issue refunds, and the company may have to pay a fee for cancellation per contract terms.
However, it could be worth switching in the middle of the year if the old payroll system is affecting the bottom line and hurting employee retention or onboarding.
Further below is a detailed guide to switching payroll providers. But first, here are the benefits of going for a new payroll provider or software.
Switching payroll companies comes with advantages such as:
● Addressing payroll problems.
Switching to a new payroll software can address inaccuracy, lateness, and tax inaccuracies. However, employers must ensure the new payroll provider handles these issues well.
● Capital distribution.
Payroll software pricing can be so high that it affects the business. Making the switch gives employers access to more affordable payroll solutions. This way, capital distribution is practical and streamlined.
Businesses yet to automate their payroll process enjoy this advantage by upgrading. The results are less time spent running payroll and better accuracy.
● Addressing cutbacks.
Companies facing cutbacks can still run payroll by switching to software.
Switching to a different payroll system is a good way to fix payroll problems. It is also the key to simplifying and streamlining the process. So how can business owners ensure that the transition is smooth? The following step-by-step tips should be useful:
Employers need to check the terms of the current payroll company contract. It is important to determine cancellation fees or if the company expects a notice. If the contract is almost up, switching providers may be worth waiting.
Managers must consult thorough research for a new payroll company. Employers can start with highly-rated local companies before moving to a broader target area. It is also advisable to work with service needs. Additionally, employers should be keen on pricing.
An excellent way to eliminate the many choices is to align service needs with the company's services. This way, managers can find the service providers that will fulfill their current and future business needs. When in doubt, employers should seek the option of team members that will use the software the most. It is worthwhile to ask the company to run a test.
The new payroll company will require some information to take over the process. Therefore, employees must transfer vital information, such as
● Payroll registers
● Employee details, including benefits and tax withholding information.
It is also a good time to notify employees of the incoming switch so they can close accounts with the older provider and prepare for the new one.
With this, the new payroll system will be ready to run. Employers can set up a contract with clearly outlined terms. If this is the first payroll run, the manager should complete the following steps of managing a payroll system:
● Apply for an employer identification number.
The number is obtained from the relevant government bodies for payroll tax filing.
● Gather employee tax documents.
Employees need different tax e.g. withholding certificates to calculate payroll tax deductions.
● Determine payroll schedule.
Managers should choose from weekly, monthly, semi-monthly, and bi-weekly frequencies.
● Document terms of compensation.
Employers must have well-documented policies for overtime, working hours, paid leave or time off, benefit contributions, voluntary deductions, etc.
● Open a separate bank account.
A separate payroll account is a requirement to manage funds better. In addition, it facilitates more accurate transaction records.
Once employers complete the above processes, the payroll company can run a test to ensure everything is working well.
Finally, managers must take one final look at old records, compare them to new ones, and ensure everything is accurate.
Employers already using a functional payroll system should look for ways to improve management. Employers can do the following to improve their payroll management system:
● Synchronize pay dates.
Businesses have hourly, weekly, and monthly pay periods for different employees. Unfortunately, it can lead to errors when processing payroll. Managers should consider paying all employees on the same day, reducing pay cycles, and improving efficiency.
● Streamline payroll systems.
Some employers have good payroll software that needs to be in sync with other systems. Using separate systems, say for time tracking, can lead to errors and data loss. Managers should consider syncing these systems.
● Keep up with tax requirements.
Tax requirements can change, so managers should keep up with regulations set by the government. This is especially important for businesses with employees in different countries. Managers should familiarize themselves with the tax regulations of these countries.
● Outsource payroll.
Ultimately, outsourcing payroll is an excellent way to improve payroll management. Outsourcing payroll can save on costs and improve accuracy, plus on-time payments for all employees.
Simplifying payroll comes down to the following:
● Use reliable time-tracking software instead of a punch-card system. Ensure the software has GPS tracking and geofencing features and can be integrated with accounting software.
● Centralize payroll, HR, and time data into one system. Doing this will improve data management, reduce potential compliance errors, and offer visibility into paying employees.
● Digitize reports and other paper documents related to payroll. Having important documents digitized will help with payroll software integrations. And on that note, managers need to turn to direct deposit and get rid of paper paychecks. Paper transactions are a hassle and often prone to error.
● Filing taxes electronically is necessary for all companies. It reduces the chances of errors and saves time. Luckily, outsourcing and using software enables managers to file taxes electronically rather than printing and sending the files.
The best way to run a payroll system is by switching to software. Payroll software is more accurate in payments, and tax compliance, even when working with remote employees and independent contractors. Payroll software can simplify everything and make payroll management a breeze.
The best payroll software for African businesses is Workpay. Workpay offers simplicity, accuracy, and flexibility that can easily be integrated with other software. The features ensure the employer stays compliant and receives comprehensive reports.
With Workpay, employees can easily access payslips and payroll information. In addition, they will get paid on time! Get in touch to learn about our cost-effective pricing and how we can transform your business in 2023.
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