For businesses with employees, an efficient payroll solution is essential. Payroll is considered the go-to application related to records for employee wages, bonuses, commissions and deductions. Payroll plays a major role in a company for a number of reasons. From an accounting perspective, payroll is critical as direct payroll and the related taxes impact the net income of most organizations. They are subject to state, federal and local regulations. The payroll function is responsible for ensuring employees are paid accurately and timely with the correct withholdings and deductionsExamples of payroll withholdings, deductions and deferrals can include:
- Federal income tax withholding
- Social Security tax withholding
- Medicare tax
- State income tax withholding;
- Various local tax withholding, such as city taxes, county taxes, school taxes, state disability, and unemployment insurance.
- Benefit deductions
- Pension deferrals – 401(k), etc.
Withholdings, deductions and deferrals then need to be remitted in a timely manner. Comprehensive payroll systems assist an employer in achieving these requirements. With items such as pension plans, reporting from payroll is critical related to items such as complying with annual audits and annual 5500 filings.
In today’s environment, a payroll application should have the payroll management and reporting needs of people in mind related to processes and reporting. When a payroll solution has full integration into an HR solution, payroll and HR combined become a powerful resource to an employer.