Payroll is an important part of your business operations and an important part of your employees’ working life. Getting payroll right can be a major headache for a new company until it is set up and running regularly. We have pulled together some ways you can make your payroll process run smoothly and save yourself time during each payroll process.
Payroll Setup: A Starter’s Guide
Setting up payroll for your employees does not have to be a time-consuming endeavor every pay period. The best way to make payroll easier for you and your company is to get a good routine going, making the process more streamlined each pay period.
Firstly, decide how you are going to complete your payroll each month; will this be completed manually or on the computer, then decide whose responsibility this will be within the company. We recommend that if you decide to make a paystub manually, by handwriting paper paystubs, then the best thing to do would be to create a database.
A database will allow you to keep all of your employee information in one place, meaning you will not be moving through employee files to get their personal details each time you write out their paystub. You could use a paper ledger or logbook to record all of the details, do ensure that this is securely stored after each use to ensure that there is no loss or unauthorized access of the employee data.
If you are going to make a paystub using a computer, then an online database would make more sense as details could be copied over to the paystub before being issued to your employees. When completing an online paystub, you can also then choose the method of sending pay stubs to your employees. You can either email or print and give out pay stubs depending on which is most convenient for you.
The final way to make a pay stub for your employees is to use a payroll software system. A payroll software system may be the easiest way to make paystubs each pay period as the software will save the employee data for you to make payroll quicker each time. The software will also automatically generate the paystub for you to issue by whichever method is suitable for you.
Pros and Cons
Each method will have pros and cons, so we will go through them each in turn.
Paper Paystub filing:
The pros of this method are that there will be no new systems to purchase or learn when setting up the company. This can leave more time for other tasks when the company is first starting up.
Another pro of using paper paystubs is that if your employees all work in the same office, you can give them directly without having to print them.
If you have very few employees, this could also be the most cost-effective way of providing pay stubs to employees.
One of the cons of this method is that it is very time-consuming if you have a medium-sized business, as you would need to calculate all of the deductions to complete the paystub information.
Also, if you have a medium to large-sized business, it can be costly to purchase the necessary templates to give out regular paystubs, especially if your employees are paid weekly.
The final con to this method of creating paystubs is that you may need someone who has prior payroll, finance, or accounting experience or training to ensure that the paystubs are correct. As there will be no failsafe or checks such as there would be with a computer system, this could mean manual checks to ensure correctness.
Computer-based, not Payroll Software:
The first pro of this method is that you do not need to purchase any additional software at a cost to the company. There are programs you can use within your computer set up or that you can access online, which you can use to make all of the calculations needed for employee paystubs. You can also use these same programs to work back and check your calculations.
This method will also be quicker than manually handwriting all of the paystubs as you can create a stored database in which you can copy details over onto the paystub. Using the shared function of a computer program will also mean that if the person who usually completes payroll is off, someone else can complete it in their place.
This option of creating paystubs also allows for online sending of the paystubs directly to your employees via email, meaning there will be no printing or paper cost to the company, making this the cheapest of the options if you send via email.
The cons with this method are that it again will require someone with financial or payroll knowledge to ensure that all formulas are set up correctly. However, once this is done, it can be used by any member of staff.
This will be slightly more time-consuming as you will need to move information from the computer program you are using onto the paystub template before sending it to the employees.
Payroll Processing Software:
The main pro of using payroll processing software is that you will complete all tasks within the software. The software program will save all employee personal information between uses meaning you will be ready to enter the salary information each pay period.
The software will also complete all calculations for you, meaning it can be used by any member of staff with no need for prior training, knowledge, or experience of payroll. However, basic knowledge may be helpful so they can spot any obvious software errors in case of a glitch.
As with the second option, you can send paystubs online to your employees, meaning there will be fewer printing and paper costs for the company.
However, the main con of this option is the cost. Depending on which software program you buy, they can become expensive. If you are a very new or very small company, this may be more than you want to or can afford to pay for a small number of staff. We recommend that you do shop around and see what deals are available at the time you think this option is best for your company.