No matter how you choose to manage your payroll system, there’s some key information you’ll need to gather before you can start to issue paychecks. Most information is gathered during the employee onboarding process, but some data (like time & attendance) is collected later on. Other items, like contact information, may be changed in the future, so that’s something you’ll have to keep in mind. If you use payroll software then it’s not much of a problem; updating information simply takes a few keystrokes. However, if you use a manual process, it’s something you’ll want to think about. So what exactly do you need to gather before adding an employee to payroll? Let’s review!
Table of Contents
Employee Personal Information
During the onboarding process, you’ll need to gather some basic information from your new hire(s). Generally, this begins with contact information, such as name, home address, phone number, and email. More sensitive data (like social security and banking numbers) will also need to be collected and added to your payroll system. If you’re using payroll software like UZIO then this information will be secure in the cloud. If not, you’ll need to store the files in a way that is inaccessible to others to keep them safe from prying eyes. Many companies still use file cabinets and locked doors, but digital storage is a much safer option.
Pay Rate & Salary
In order to calculate paychecks, your payroll software (or choice of payroll system) will need to have a recorded pay rate for each employee. This wage will be used to calculate the compensation an employee is entitled to, or (in the case of a salaried employee) provided on a regular basis. If you’re manually processing paychecks then the salaried workers will be easy to manage, but you may run into complications with hourly workers. Unfortunately, errors (either by mistake or on purpose) are common when using a manual time tracking method instead of a digital one.
Relevant Taxes
If you use payroll software then taxes shouldn’t pose an issue for you, since the payroll system will automatically apply them for you. On the other hand, if you calculate them manually, this part will take up a lot of your time moving forward. In addition to relevant federal taxes, you will also have to calculate state taxes for each paycheck. Some cities even have local taxes, further complicating your manual calculations. Make sure that your paycheck is calculated correctly; if not, you will owe back taxes and may even be fined for tax non-compliance.
Deductions
Depending on the benefits offered by your company, these may be easy or complicated to figure out. Payroll software—like with taxes—can automatically calculate these deductions for you, but if you use a manual payroll system then you will have to compute them yourself. Here are a couple of the most common deductions:
Health Insurance –
Once companies reach a certain size, they are required to offer health insurance to their employees. Employees usually have a variety of plans to choose from, meaning the deduction amounts will differ by the employee.
Life Insurance –
Some companies may choose to offer life insurance. Like health insurance, plans may vary between employees.
Retirement Plans –
Many larger companies offer retirement plans as a way to attract and retain top talent. Like insurance, these retirement plan deductions will need to be calculated on a case-by-case basis.
Timesheets
Once an employee has been successfully onboarded and has completed their first pay period, you’ll need to use the data from their timesheet to calculate all necessary taxes and deductions, producing their paycheck. If you’re using payroll software then the paychecks will be calculated automatically. However, if you use a manual payroll system, then you (or your payroll specialists) will have to calculate a separate paycheck for each employee. It’s important that these calculations are accurate. Otherwise, your employees will be upset that they’ve received incorrect paychecks and you’ll have to recalculate (and reissue) new ones, wasting valuable work time.
As you can see, there’s a lot of information that goes into each paycheck. If you’re using a manual payroll system to manage your payroll then the process can be quite time-consuming, especially if you have a lot of employees. In that case, we recommend switching to payroll software like UZIO instead! The software uses employee information to automatically calculate accurate, tax-compliant paychecks each pay period, eliminating valuable time spent on such tasks. If you need to update employee information, it only takes a couple of seconds, so you won’t have to file any paperwork! Payday can be a stressful time (especially for your HR team), but it doesn’t have to be. Stop using manual processes, and make your life a lot easier with payroll software!
