Payroll has its own unique terminology. It’s important to know and understand what payroll processing systems offer. Here are important topics you should be familiar with:
Labor Laws – These involve challenging factors—such as premium for overtime pay or hours worked over a specific limit. Working on holidays may also include a premium. There might also be other pay required by company practices, local laws or labor contracts.
Tax Tables – Tax tables for payroll change and must be updated. You can pay for a subscription to a tax table update service or download the newest tax table information from the Internet. Payroll processing companies handle all of this for you.
Pay Base – This is the method that is used for calculating standard pay. Two common methods are salary and hourly. In addition, sales staff may be paid a commission (either in addition to another type of base pay or as a base).
Pay Period – This is the length of time between payroll runs. Options include monthly, semi-monthly (twice per month), bi-weekly (every other week) or weekly. In some cases, daily pay is needed.
Additional Deductions – Before calculating the bottom line, insurance, union dues and any other deductions must come off. Some systems are limited to the number of deduction types they can process.
Checks or Direct Deposit – These days, most workers prefer a direct deposit payroll system that immediately puts money into their bank account. This service does not cost companies any money. Direct depositing paychecks do save money on printing and passing out actual paychecks.
Payroll Costs – Some companies require a specific tracking process for payroll costs. In order to do this correctly, a payroll software system that integrates with the time billing or job cost application is necessary. Payroll outsourcing companies can manage this too.
Regardless of if you do you payroll yourself or outsource it, you should be familiar with all it entails.
Modern Business Associates is an HR company that focuses on payroll and HR outsourcing. We routinely work with clients on payroll terms and requirements. As a Professional Payroll and HR outsource organization, our clients rely on us to help them effectively deal with these kinds of topics.
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