by Michael Reis, Vice President of Sales
National Payroll Week is an annual event that recognizes payroll professionals and raises awareness about how payroll and related financial matters work. National Payroll Week takes place the first week of every September to coincide with the Labor Day holiday. In 2023, it begins on Tuesday, September 5th and runs through to Friday, September 9th.
While payroll might not be the most exciting topic, it is an important component of business. It is vitally important for both employers and employees to understand how payroll is calculated, how taxes are deducted, and how to manage money. With this knowledge in place, organizations and employees are in a better position to make good financial decisions. At Southland Data Processing, we believe that National Payroll Week is a good opportunity to highlight the support that is available to our clients and their employees. In this BLOG, I’ll share some payroll basics and visit a few common terms.
In short, the payroll process is the basic mechanism by which an organization compensates its employees for their work. Payroll payments are based on total wage earnings combined with the calculation of deductions (such as medical benefits) and payroll taxes. Payroll must be compliant with all applicable local, state, and national labor laws.
How payroll is processed is a critical issue for organizations of any size. Southland Data Processing strives to eliminate concerns and customize solutions so that all of our clients and their employees are fully confident in the payroll process. Reliable payroll is critical in order to keep an organization functioning properly, maintaining trust and confidence between the employer and employees, and operating a positive workplace. Employee morale can easily be damaged with late, inaccurate or inconsistent payroll, and it also can put the organization at legal risk. Another critical component is the accurate filing of payroll taxes. Late payments or inaccurate tax information can lead to costly penalties.
Our job as a payroll provider is to help ensure accuracy and reduce the risks of improper processes. Some of the basics every organization needs for proper payroll processing includes:
- Federal EIN – Employer Identification Number.
- All state and local tax identification numbers that apply.
- Employee tax documents including Forms I-9, W-4 and W-9.
- Business bank account assigned for payroll and taxes.
- Internal payroll manager or designated employee.
- A payroll partner, such as Southland Data Processing, for remittance and processing.
- Company payroll policy as part of the organization’s employee handbook.
- Payroll schedule.
- Commitment to ongoing education as payroll compliance at a federal, state and local level can change often.
A payroll policy should be clear on how the organization is complying with regulations and what guidelines employees are expected to adhere to. For assistance with implementing or managing an employee handbook, Southland Data Processing offers Human Resources support. However, some of the basics include:
- Defining the workweek.
- Time and attendance tracking.
- Break periods and rules.
- Overtime eligibility and rates.
- Pay periods and payroll schedule.
- Payroll deductions – both mandatory and voluntary, such as insurance.
- Wage structure.
- Recordkeeping – must be compliant with federal, state and local rules.
There are several methods to processing payroll. Manual payroll can take hours up to days for processing, depending on how many employees are involved. Our SDP Connect payroll system can reduce the process down to minutes. By maintaining a regular pay schedule, utilizing digital timekeeping, and automations to calculate tax deductions, organizations benefit from a single point of contact for every aspect of payroll fulfillment. It’s important to also note that, at Southland Data Processing, our dedicated payroll professional provide accessible and reliable customer service. If our clients run into issues or have questions, our level of service is just one phone call away. No voicemail. No automated prompts.
Most organizations today elect Full Cycle Payroll Processing. Full Cycle (also known as “Normal Payroll”) refers to the period of time between each payday. During this time, employees work and keep track of their time, their gross pay is calculated, and taxes and other deductions are withheld from that gross total. The net pay is issued to employees by paper check, direct deposit or paycard. Issuing payroll via paycards has been increasingly popular in recent years as it offers more flexibility to employees, provides electronic payment without the need for an employee to have a bank account, and helps pay remote or traveling employees faster than issuing a paper check.
Other payroll processes such as Off Cycle, Retroactive and End-to-End Payroll Processing are also important payroll issues that may arise for any size organization. With Off Cycle processing, it is sometimes necessary to pay an employee who has been terminated or who has earned a bonus. Off Cycle is not part of the regular payroll schedule but it does need to adhere to the same standards and requirements of a Full Cycle payroll. Retroactive Pay refers to an adjustment that may need to be made due to an error, or if an employee receives a back-dated pay increase. Retroactive adjustments can be confusing and we always encourage our clients to reach out to us for support and questions to ensure accuracy. Lastly, End-to-End payroll integrates workforce management, such as electronic timekeeping, so that there is improved accuracy and record keeping for both the organization and employee. With our partner Swipeclock, we have helped many organizations improve the way they collect employee hours worked, data, and recordkeeping.
Other aspects of an organization’s payroll processing with Southland Data Processing includes Onboarding of new hires, training and development to ensure an organizations’ internal staff maintain the most updated compliance standards, workforce management, leave management, HR documentation, and offboarding.
There are many layers to processing payroll. As your payroll partner of choice, we strive to provide unrivalled service coupled with automation to ensure compliance and streamline your operations. As we celebrate National Payroll Week with our employees, we encourage you to do the same. Communicating your organization’s dedication to quality payroll management builds trust amongst the team, confidence, retention and loyalty.
To our valued clients, I take this opportunity to sincerely thank you for allowing to be of service. And if you’re considering Southland Data Processing for your payroll and human resources needs, please reach out to me directly. I welcome every opportunity to meet with prospective clients and introduce our payroll professionals who dedicate each work day to exceptional experiences.
SDP payroll professionals assist our clients with payroll, workforce management, benefits administration, and human resources needs. To get started or learn more about these solutions, simply contact us today.
And, for more information about Southland Data Processing, call us today at 909.946.2032. Or, click here and Let’s Talk!
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*Southland Data Processing, Inc. (“SDP”) is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other SDP materials does not create an attorney-client relationship. SDP is not responsible for any inadvertent errors that may occur in the publishing process.