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Payroll Management: What You Need To Know

Mar 5, 2008
Owners of a new business may find the task of payroll management challenging. Those businesses with a small workforce may find it simple using a payroll management system recommended to them by their business accountant. Payroll accounting and administration are considered parts of payroll management.

Payroll accounting is a complex process that includes many different things. First, it involves calculating an employee’s earning and tax withholdings and other deductions. Then an employer must record the results and prepare the required tax returns associated with this information. It also includes reporting payroll results to federal, state and local tax entities and managing a payroll system, which include managing personnel information and complying with local, state and federal employment laws.

Several principles underlie good performance in payroll management. Any payroll accountant must follow Generally Accepted Accounting Principles (GAAP), which play a major role in any form of business accounting. In addition, there are many state and federal tax laws and procedures that must be followed, as detailed in the Internal Revenue Code (IRC) and enforced by the Internal Revenue Service.

It is the responsibility of the business owner to report and to deposit payroll taxes to the correct government agency in a timely and correct manner. Late deposits or inaccurate deposits can result in accrued interest and penalties. These requirements, while complex and sometimes intimidating are a necessary to challenge to business owners.

Company management need to understand human resource essentials such as payroll management and decide on the top ways to meet this important responsibility. There are lots of payroll management programs to choose from, based on your needs. Payroll figures can be calculated by the company itself, by an independent accountant, or by an outside vendor. Whichever method is chosen, timeliness and precision are absolutely essential. An overdue or incorrect payment may be reported to a proper government authority.

Some businesses opt to use outside payroll companies or consultants. These outside service providers take on the burden of ensuring compliance with the relevant requirements. The business owner saves time to spend on other tasks they’re more uniquely qualified to do, and is spared the risk of navigating the compliance requirements in this area. Regardless of whether a business does other accounting manually, installing an automated payroll system will streamline the process and help with the compliance aspects as well.

Managing a payroll can be daunting for an inexperienced entrepreneur. But if one utilizes an effective payroll management program recommended by the firm’s CPA, managing the payroll for a firm with a minimal workforce is really not a difficult chore. The managerial side of payroll accounting also includes organization of employees’ information, as dictated by employment laws of the city, state and federal government. Some businesses opt to use outside payroll companies or consultants. But by learning a few simple concepts, business owners will be able to understand payroll responsibilities and choose the best method in meeting them.
About the Author
Eric Chen is an acknowledged expert on payroll management. He wrote many articles on this subject and is a well-known public speaker on this subject matter. Looking for other great resources on payroll management, then the following site on payroll management might be interesting for you.
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