Processing your employee’s paystubs does not have to be as hard as it seems. Sure, it’s a dreadful process and nobody likes to do it, but the fact of the matter is, it has to be done. On that note, we’ve decided to guide you through the process and show you a couple of easy ways how you can do this.
Before we get started, let us first go over what is payroll processing and why is this process so intimidating for many?
What Is Payroll Processing?
Managing your employee’s paystub is essentially what payroll processing is. It’s everything that goes with it – inputting all the necessary data to finally giving them their check stubs. It’s a fairly simple process, even though it can be quite intimidating if you don’t know what you’re doing. If you’re a small, start-up business, chances are, you’re doing this whole thing all by yourself and your employees rely only on you to process their paystub.
Once the company grows, it might be too much to ask of yourself to do all the processing single-handedly, so we’ll touch on a few other options in this article as well.
So, let’s go over some of the easy ways to process payroll. First up, let’s go over the manual processing.
1. By Yourself/Manual Processing
First of all, you’ll have to process payroll taxes. These are the taxes withheld from the employee’s paystub by the employer and they include income tax, social security and medical care. Calculating the rates isn’t hard, but you do need to know the current rates and you determine the percentages based on the yearly income.
Once you’ve got that settled, it’s time to process a paystub. We’re going to go through the whole process for a single employee (for simplicity purposes), step-by-step and then we’ll move on to alternative methods. Let’s get started.
- Create a payroll policy – This will be your first step. Before you start, make sure you get familiar with local labour laws, overtime laws and so on. It will be very important. Also, make sure you decide on pay dates, how you’ll pay your employee, payroll deductions and withholdings and so on.
- Gather the necessary information – Before you can process an employee’s paystub, you’ll need to collect all the necessary documents like W-4s, I-9s and the rest of them. With these, you’ll get all the necessary information about the employee like their social security number and the rest of the necessary information.
- Keep track of work hours – You’ll need an accurate record of work hours for the employee in question to properly compensate the said employee. This is very important, as it will greatly affect the amount on the paystub and it will help you easily calculate just how much you should pay the worker. Also, keep in mind the overtime laws and how will that affect the paystub.
- Finalize the payroll – Once all the data is collected and processed, you can send out the check stubs. Once you do that, you’ll update your payroll records with the necessary data and you’re done.
It will take you a few hours to finish this whole thing, according to paystubsnow. However, if you feel like that’s too long or too complicated, we have something better in store for you.
2. Use A Payroll Service
The previous method is quite slow and outdated and it only works well for small businesses. However, once you get bigger, you’ll need an upgrade. That’s where payroll service comes into play. These services automate the whole process making it a lot faster and easier.
Most of these services automate the boring part of the process, like processing and filing payroll taxes with the IRS and the state tax department. The great thing about these services is that you can speed up the process tremendously. The only thing you’ll have to do, as you’ll see in the moment, is collect the data you need, click a few buttons and that’s it. On that note, here’s another step-by-step guide.
- Choose a payroll service – Using the right software to process payroll will be the first step you’ll have to take. To be fair, this will be the hardest thing you’ll have to do, as there are many, great paystub processing software online, so you might be overwhelmed with options. But, once you find the right one, sign up will only take a few minutes and after that, you’re good to go.
- Adding the employees – Naturally, you’ll have to first add the employees to process their paystubs. In general, what you’ll do in this step is make a list of your employees and add all the necessary data the software requires you to (name, address, social security number, tax withholding information). In case you’d like to pay your employees using direct deposit, you could just add their names and email addresses and have them enter their personal information by themselves.
- Input the hours – Once again, you’ll need to keep track of the employee work hours and input the data into the software, to have it properly calculate the final paystub. You’ll also have to keep track of this data for at least two years. If you wish, you can automate this process as well by implementing a digital timestamp system that you’d integrate with the payroll service software.
- Finalize the process – Once you’ve done all of the above, all that is left to do is click Send and you’re done. All of the paperwork has been filed and the employees’ wages have been paid.
3. Hire An Accountant
Arguably the easiest way to process payroll and make sure every employee sees their paystub on time is to hire an accountant. However, the fact that it’s the easiest way to process payroll makes it the most expensive, as well. The upside is – you won’t have to worry about a thing. A professional accountant will handle all of this for you, so you can focus on the other important aspects of the business.
As you can see, you don’t really have that many options when it comes to processing real paystubs, but there are a few. Are they easy? Well, yes, once you get familiar with the process. Until them, you’ll have to work slightly harder, but that’s just how business works. On the other hand, if you can afford an accountant right away – you don’t have to worry about a thing. We hope we’ve managed to help you out with this article.