Streamlining Pre-Payroll Activities for Seamless Payroll Processing

The first step in payroll processing is often overlooked and underestimated. However, pre-payroll activity is actually an important foundation of the entire process and needs to be performed thoroughly.

Payroll processing is one of the important organizational duties that every business has to accomplish. Generally, payroll processing undergoes three steps: pre-payroll, actual payroll, and post-payroll activity. To ensure that the whole process happens smoothly, the pre-payroll step should be done thoroughly. It’s the important stage that acts as the groundwork of payroll processing.

There are several tasks that need to be completed in the pre-payroll stage. Here’s a breakdown of what should be done in this first step.

Setting-up Payroll Policies

First, it’s important to set up your company’s payroll policies. It’s a set of rules that determines how your payroll works, for example the wage guidelines, timekeeping, and payment methods. According to Paysquare, having a clear and standardized payroll policy is essential. It assures that all employees will be paid accurately and timely. It also assures that the company adheres to the local law and avoids penalties.

Collecting Payroll Data

There are two types of data needed for processing payroll, Lano stated. The first one is fixed data, meaning the ones that are stored in the payroll system and usually used without any alteration, like employee personal information. This step will be much easier when your company integrates payroll and HR functions together.

The second data is data that changes from pay period to pay period. This kind of data needs to be updated before each payroll begins. This includes the calculated hours worked and shifts, marked employee leaves, and calculated employee benefits. Depending on the company type and size, this data varies from company to company.

Ensuring Compliance

Adhering to the rules and regulations where a business operates is vital for every company. Each region has their own employment policy and it gets constantly updated. The regulations include employee minimum wage, overtime pay, and payroll taxes. Failure to comply with the law can result in severe penalties, ranging from expensive fines, being jailed, or forcefully putting the business out.

Verifying Payroll Data

Finally, review every data’s accuracy before the payroll processing begins. This step makes sure that every inputted data is accurate and properly backed up. It reduces the chances of errors,  to which the smallest mistake can lead to a bigger and more complicated problem in the future. Some of the payroll errors that can happen include being outdated in local regulations, incomplete data, and mistakes in calculating deductions.

Final Thoughts

Pre-payroll activity is an important step in a business’ payroll processing. It’s like the foundation of the entire process. When the data collected from the pre-payroll activity is clean, verified, and orderly, it will make the actual payroll process become effortless. It saves your time from unnecessary troubles. It also ensures that your employees will receive their payment timely and accurately.

Next Read: Payroll Software Benefits and Why Your Business Needs It