Payroll takes a large chunk of a business owner’s time. To put matters into perspective, 26 percent of small business owners who do payroll on their own, spend about three to five hours per month on payroll. And about 40 percent of business owners spend 80 or more hours per year on processes involving taxes, payroll, and accounting.
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Processing payroll should not be a lengthy and time-consuming task. There are many ways with which you can decrease the time taken by payroll related activities. A recent study report about businesses states that more than 50 percent of businesses believe that their payroll process can be improved.
Despite the availability of many different HR software, tools, and resources, some typical problems still exist with payroll management that must be addressed to avoid delays and mistakes.
8 Payroll Problems Along with Their Solutions
1. Data Management Issues
It is essential to keep employees’ financial information in a safe, organized, and accurate manner. Manually it is kept in a central location to create a uniform filing process and smooth workflow.
Minimizing or completely eliminating paperwork and files can be an effective way to manage employees’ data and reduce the tedious amount workload. This can be resolved by using payroll accounting tool that allows integration of existing HR and payroll functions.
When payroll documents are stored electronically, it becomes much easier to search them because advanced tools provide you many filters to make your search results more specific.
2. Tracking Employee’s Availability
Keeping track of your employees’ time on a daily basis, and their absence can get hectic if done manually. Even simple digital time logs are prone to mistakes and misuses.
Tracking the staff’s absence and availability is vital for optimum productivity and deciding their schedule.
Automated timekeeping systems can eliminate inaccuracies in recording time. Many payroll accounting software also enables members to manage their calendar effectively. Through a centralized platform, team members can know when their peers are taking leave so that excessive absenteeism can be avoided.
3. Administrative Overwhelm
Many businesses, especially smaller ones, have a tendency to process their payroll manually in house. The manual process involves an enormous amount of paperwork, and it can act as a burden on the staff that’s handling it.
Mistakes can happen while entering or writing data that can lead to payment issues and exploitation of rules. Using integrated software can eliminate this. Investing in payroll accounting software rather than looking for additional staff to handle the process can be very cost-effective.
4. Managing Inconsistencies
Employees have lots of records that need to be considered and calculated before running out a payroll transaction. This could consist of whether the employee has any outstanding dues or has taken any kind of loan or insurance. All this information should be managed accurately and properly to prevent any type of delays in the payments.
Manually managing these kinds of information could consume a lot of time and resources, so it is beneficial to use any type of payroll accounting software that allows storing and processing employees’ data.
Also, Read: Difference Between HR and Payroll Software
5. Outlining Tax Compliance
There are many legal issues that a company or business could face regarding taxes. They need to care in order to avoid any legal complications. It is important to abide by the tax rules and regulations to protect themselves from any government investigations and complaints. This generally occurs when a company is dealing across multiple countries.
In such cases, it is recommended to outsource the payroll to any third party to relieve you from complexities regarding legality issues. A third party possesses expertise in their field, and they are quick to adapt according to trends or any reforms.
6. Distribution System
It requires a great amount of time to create and distribute payments each month or the time of pay period. Many businesses still use checks and other traditional methods to process payments. This could involve writing cheques and then handing or mailing them to the employees. Even with a few staff members, this can be a tedious process.
Setting up direct deposits can be much hassle-free with Payroll management software as it offers direct deposit services. The money would then be deposited in the employees’ bank accounts directly. Payroll accounting tools know how much an employee is going to earn over the course of time after processing the data that was fed to it.
7. Lack of Training
As mentioned at the start, even after using payroll accounting software, chances of mistakes aren’t entirely eliminated. If you’re aware, payroll consists of all financial information for employees, which includes records of salaries, incentives, bonuses, other benefits like an allowance for travel and accommodation, health insurance, loans, etc.
The staff handling such sensitive data must be empowered with relevant access, and they must sustain a high level of confidentiality regarding it. So the HR and accounting department of the company needs to ensure that payroll processes are done in time and in an error-free manner. Otherwise, it’s likely that employees would feel dissatisfied, and there’s even a possibility that the company may lose some skilled personnel.
To streamline the entire payroll operation, the company should hire only qualified candidates. And if your business is using a payroll accounting tool, then the people in your HR and accounting department should be provided appropriate training to get them familiar with the features and interface of the software.
8. The Reluctance in Seeking Help
As you might have already realized that payroll is a complex thing. There are so many rules and calculations, and they keep on changing with time. Sometimes some odd payroll challenges emerge that even qualified staff members can’t tackle due to their inexperience.
You can always find a way to figure things out, and many business owners try to do it on their own. There’s nothing wrong with it, but this could cost time. Sometimes it could even take weeks to research the problem and learn how to implement a fix. It might seem simple and obvious, but asking someone for help could save a lot of trouble.
If you have any accountants or payroll professionals in your social circle, you can seek help from them regarding your problem, and calling the customer service center is the easiest and quickest way to solve any software related issues.