Best Practices for Managing Payroll

Everyone loves payday, but it takes a lot of work to get there. Between numbers, budgets, time sheets, and government forms, it takes a lot of time and effort to make payroll happen successfully.

According to one report, managing payroll accounts for over one-third of the average HR department’s time. If your payroll functions are overwhelming and time consuming, it might be time for a makeover. Whether you’re just starting your first payroll run, or you’re looking to make your old system run a bit smoother, best practices are a helpful place to start.

We’ve got some of the best tips and tricks used by today’s most efficient companies for managing payroll proficiently.


Any efficient system begins with organization. Not sure where to start? Here’s the things you should take care of first:

  1.     Dates and Deadlines

Use a calendar to make note of tax deadlines, quarterly tasks, and monthly reporting requirements. Make note on your calendar of both deadlines, and then create reminders in the week leading up to the deadline, so you’re ready ahead of time.

  1.     Hard Copies  

Even though “paperless” is trendy, there is still a need for certain hard copies of various forms. Establish a simple and “universal” filing system for storing them in chronological order. Keeping things chronologically is simple and easy, be sure everyone in your department is using the same system. Plus, if you’re audited, information is easy to find.

  1.     Employee Files

Keep a payroll file for each employee that is separate from their HR file. This should have their tax forms, hire information, classification, and any other forms or documentation regarding their salary.


Create a detailed work flow to list each step of your current process from start to finish. This type of self-audit can help you to spot redundancies and “bottle-necks” and create a new approach and eliminate common errors.


Try to simplify any processes you can. Encourage eligible staff to sign up to receive paycheck via direct deposit. Wherever possible, ditch manual processes for a more automated solution.


Payroll policies should be clear, consistent, and provided to each employee in writing. Having a clear method of recording hours, approving overtime, and correct classification of employees can eliminate, or at least minimize, many issues. Be sure your policies include the following

  •     How the payroll process works
  •     How employees are classified
  •     Employee reporting responsibilities
  •     Company procedures for handling payroll mistakes


Even with competent employees, organized flow charts and the best software program on the market, payroll management can be a challenge.

If your system isn’t working for you, consider outsourcing. Many businesses find that outsourcing payroll is an effective option. It gives them the opportunity to lower overall costs, provide more accurate and timely service, while allowing them to focus on other aspects of their business.

Outsourcing also gives you the peace of mind knowing that your processes are handled correctly, especially when you’re dealing with specialized functions like medical benefits, tax forms, federal reporting, and the requirements of multiple states.

If you’re interested in outsourcing your payroll department, give us a call and see how we manage hundreds of company’s payrolls while saving them money and allowing their businesses to thrive.

Everyone loves payday, but it takes a lot of work to get there. Between numbers, budgets, timesheets, and government forms, it takes a lot of time and effort to make payroll happen successfully.

By | 2018-06-27T22:47:10+00:00 November 22nd, 2017|HR Tips, Payroll, Small Business Tips|0 Comments

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