Employees are regarded as the most valuable asset of an organization. The individual contribution of every single employee builds a business entity. Now, it becomes the responsibility of the organization to maintain a proper track of record regarding the payment offered to each of them. Maintaining a continuous track and proper report serves as an essential purpose which gives birth to payroll accounting services. If you are an owner of an established business entity or an entrepreneur, you should maintain proper payroll services. This guide will help you to identify as to why payroll services turn out to be an important step.
What is Payroll Service Processing?
Payroll service processing is a step that every business entity needs to operate that determines the total sum of the amount paid to the organization’s employees. It holds employee’s payment records that collates salaries, wages, bonus, taxes etc. that is that a business entity offers. Moving ahead, let’s focus on the core process.
Maintain the employees master records
This serves the very first step where employee records are to be maintained properly including the basic details along with the payment details. It is to be kept in mind that it needs to be updated regularly.
Calculate of gross wage for each worker
By the end of a pay period, gross wages needs to be calculated for all the employees which are a combination of their basic salary along with allowances.
Calculate Over-Time Amount
This is another crucial part where-in the over-time performed by employees needs to be added back and allowances are to be provided accordingly.
If employees are benefited with additional allowance such as transportation expense, commission etc. they are to be added in parallel.
Due to unwanted instances, it might happen that certain charges have been levied which needs to be deducted.
Create Pay Slips and Salary Statement
A salary statement includes the overall salary components for a month. This is to be maintained as it becomes easy to trace monthly records.
Create WPS File
WPS stands for Wage Protection System which is an electronic means of salary transfer. Once the salary has been transferred to employees, it becomes essential for the payroll manager to create a WPS file.
The Payroll Process
The entire payroll process includes certain essential steps:
The entire payroll management system is beneficial for both startups as well as established entities. The below-mentioned importance will give you a more clear idea. Do read below:
Importance of Payroll Services
- To determine fair compensation for the company’s most valuable assets
- It enhances the morale of the employees
- A clear picture of the compensation package being provided
- Uphold the company’s reputation ultimately building goodwill
- Re-allocation of resources becomes easy
As you have seen the importance of payroll accounting services, we can say that maintaining the books turns out to be a tedious process. The best solution over here is to reduce the burden by outsourcing the payroll services. Read below to get an idea as to why outsourcing turns to be the best option.
Why Outsource Payroll Services?
- Increased productivity
- Assured Legal Compliance
- Reduction of Cost
- Better Security
The above-mentioned reasons are a few of them as to why payroll services are to be outsourced. On the other side, there are certain risks that you might end up facing if an in-house performs the same.
Risks Associated with Payroll Process
- Overtime Miscalculations
- Retro Pay
- Mis-classification of Employee
- Not providing final paycheck on time
- Not managing payroll records properly
- Payroll Audit
In short, we can say that delegating the payroll services turns out to be the best option. Outsourcing certain business activities help one to focus on the core business-related activities. So what are you waiting for? If you haven’t initiated the payroll process, it’s the perfect time to do it. At JAXA, we look forward to uplifting our client’s business. With that aim, we streamline the payroll tasks and do the needful effectively. To know more, contact us. We’d be happy to assist.