What is a payroll system?

 
As a payroll outsourcing company, many times when we sit down with clients, they initially ask “What is a payroll system?” This is a great starting place for planning how your payroll system will, at a minimum:
 
  1. Gather your employee work hours
  2. Cut checks
  3. Stay in compliance with taxes and withholdings on a federal, state and local level.
 
Companies generally handle creating their payroll system in a few popular ways:
 
You can have employees fill out time cards and use your internal accounting staff to handle all checks. While this is a popular strategy, pay attention to some of the shortfalls of this system:
  • It usually doesn’t scale easily as you grow your business
  • It can be unmanageable to keep the accountant up-to-speed with state and federal withholdings and compliance issues
  • You’re dependant on one person for your system. This makes the person very hard to replace if the need should arise for any reason.
 
You can automate much of the process in-house using time clocks and software.
  • This helps the system to scale.
  • There are usually some features built into the software to try to stay in compliance with federal withholdings and such, but support dwindles as the focus turns to state and local withholding and taxation issues.
 
You can use an outsource to handle your payroll processing. (Full disclosure: Modern Business Associates is a payroll service.) These services:
  • Can easily scale with your business.
  • Have major data safety policies regarding the backing up of data and recovery, if necessary.
  • They have experience with many clients that have the same compliance issues.
  • It is their primary business to keep their services enabled to adjust to the most recent changes in federal and state regulations regarding taxation and withholdings.
If you consider an outsource for your payroll processing, you will need to spend effort to properly identify a good payroll processing firm that you are comfortable with. In addition, plan to spend time adjusting to new routines to get your staff’s timesheets and withholding data into their system to get the ball rolling.
 
If you are asking, “What is a payroll system?”, why not contact us at MBA to talk it over. It’s the kind of question we get asked every day.
 
Modern Business Associates is an HR company that focuses on payroll and HR outsourcing.  We routinely work with clients to help with all kinds of HR and payroll issues. As a Professional Payroll and HR outsource organization, our clients rely on us to help them effectively deal with these kinds of topics.