In the traditional setup one area which has been seen as the most ill performing at most organizations is often the payroll section. The accounting payroll services are often credited for improving the payroll process immensely and saving money at the same time. Here are some benefits and some areas which might be considered as cons of using them.
The most important benefit of payroll services is often its ability to handle verity of tasks in systematic approach without making errors. The result is often the improvement of payroll calculation and delivery of it even in light of few changes that might have happened during the last month.
The time-saving of using these services is huge as well. Even if you opt to do most of work in-house, with simple training your old staff can start to interact and perform with the help of extensive guide in light of updated legal requirements such as tax rates and associated benefits.
Security is often the key area for the management to address during the record keeping decisions; this however is quite easily managed with security features such as VeriSign® to improve the protection of your data. The data is often scrutinized for any changes and each change is fully investigated and justified, this gives you the chance to have the confidentiality of your records yet have the access to fast processing at the same time.
The real-time access is such valuable thing that your records get updated 24/7. The same effects can be applied from the offices even from the other side of the world quite easily here as well, which makes the whole reporting more reflective too. Similarly you are provided on-screen periodic reports on daily basis as well.
The only con that might be seen by using these accounting payroll services is the need of training to staff to start utilizing the benefits fully and understand the system. The cost is often a disadvantage as with these services you are actually doing the job of ten people with one or two staff members.
There are two kinds of taxes that a business conducting accounting payroll has to be concerned with to run payroll effectively. There are withholding taxes which are also known as Pay-As-You-Go/ Earn (PAYG/ PAYE) held from an employee’s pay, or the employer pays from their own funds. The later form can be in fixed amounts, or linked by proportion to the pay a worker takes home.
The calculation of payroll deductions requires a detail-oriented approach and accurate work on the part of the payroll accountant. Payroll is reported through calculating various payroll deductions as well as gross pay in order to come up with a net pay amount. Withheld amounts from employees net pay include Federal, Medicare and Social Security.
FICA are both the company’s and worker’s share of Medicare and Social Security taxes. These are withheld by ½ and federal income tax is withheld from a workers pay as well. A company can be required to pay federal and state unemployment amounts, and withholding county, state and city income tax may also be a requirement in some areas. Worker’s and independent contractors need to be differentiated when amounts are to be withheld, as hiring companies are not required to withhold from independent contractors.
A Trust Fund Recovery Penalty is charged on employers who do not pay the U.S. Government withheld taxes and is enforced by the IRS. Individuals who willfully do not pay, account for or collect the amounts and are determined as responsible for the payout by a 4180 Interview, are assessed the Trust Fund Recovery Penalty which is 100% of what is owed in addition to interest accrued. Whether nonpayment is intentional or accidental, the Trust Fund Recovery Penalty is a substantial hit to an employer’s funds, and it is important for employers to keep records of when withheld payroll taxes are due to be paid.
Unemployment taxes are both state and federal (FUTA and SUTA). Hiring companies are allowed credits of up to 5.4% on State unemployment amounts if they have gained eligibility for the maximum credit, and usually net 0.8% of gross compensation. State rates differ for FUTA based on the base of minimum wage, and companies are only liable for the first $7,000 in an employee’s calendar year of compensation.
Be sure that a detail-oriented approach is used when calculating payroll deductions, and use additional care when scheduling the payment of amounts withheld to avoid unnecessary penalties.
The most important fact about accounting payroll is that it involves financial statements and not filing tax returns. It requires a detailed description of fringe benefits and payroll for employees which is necessary in the management of employee time. Employer paid benefits, taxes and costs as well as wages, salaries, bonuses and commissions are only a few of the items included on a business´s balance sheet and income statement. If you only have a couple of employees, using a general ledger will be sufficient to record all such information, but if you have more than just 1 or 2 employees or expect to have many more in the future, automating your payroll system can make your it simple and efficient.
When keeping track of it using journals, there are two journals that are used in this system. A Payroll Journal records it that is due to be paid to employees. When it is time to disburse payments, a Payroll Disbursement Journal records amounts when it is finally paid to employees. Journals must be kept with detailed information on hours worked, amounts to be paid, dates and to which employees. Automating this process makes data entry very simple, and any errors can be caught early rather than searching paper journals to catch mistakes.
Computerized one allows for the printing of hard copy journals as well as payroll ledgers and calculates employee taxes to be withheld automatically with a few simple settings. Paying attention to detail is crucially important, as errors can cause problems for the accounting of your business. Keep individual files for your employees with their time and payroll information in them to make pulling information later an easy task. Be sure to keep a list of your employees and employee numbers handy if you choose to list employees by their number in your accounting payroll.
Employee time sheets are also called payroll source documents, and are required for audit use when accounting payroll. These documents should be put into a document source folder for easy access when requested. The Labor Department is one organization that requests these source documents on an audit basis. It is important to keep documents well organized, whether they are in paper form or computer form. Use software which will allow you to customize your fields to accommodate your particular needs, as well as software that will make it easy for you to transfer your information to other accounting programs.