Choosing a new payroll solution can be difficult, but preparing for a new system can also be quite the challenge. Understanding all the parts of payroll and what information is needed beforehand is critical to get things up and running quickly and successfully. After all, efficiency is important for any business! Here are seven things you can do to prepare yourself in implementing and using a new payroll solution.
1. Make sure the payroll solution meets your needs
Not every solution is a one-size-fits-all. Every organization is different, yours included. Determine your objectives and needs for a payroll solution. Be realistic in what you will need and not what you would like to have. As discussed in our last blog, 6 Key Areas to Consider When Choosing a Payroll and HR Solution, make sure the software you select meets the needs of your organization.
2. Gather information relevant to payroll
To understand what your organization needs, you need to know your organization. Compile important information about your business, employees, and Tax ID numbers prior to using a solution to make the implementation process smooth and efficient. You don’t want to waste time to look for things when you need them!
I. Business Information
Compile items such as your organization’s legal name, address, and other necessary details. Having these basic details will help not only you, but also your payroll solution provider to have a smooth implementation process with minimal time disruptions.
II. Employee Information
Gather your employees’ information, such as full legal names, addresses, social security numbers, and other important details before setting up your payroll software. You will have to input these pieces of information into the system once it is set up for your organization’s use. We recommend having an Excel spreadsheet of all the information to import, since most systems will accept this file format.
III. Tax Identification Numbers
You will need tax identification numbers, such as your Employer Identification Number (EIN), and your State and Local ID numbers to report federal taxes to the IRS. Most systems have these in the system for your convenience.
3. Figure out your tax rates and deadlines
When you set up your payroll software, you will have to enter your tax rates for federal and state unemployment taxes, Social Security tax, and Medicare tax, unless, of course, the software does this for you automatically. Each state or province has a different rate and set of payroll tax regulations, so you’ll need to do your homework to verify your local tax rates.
You’ll also need to know when your payroll taxes are due, since not all employers have the same deadlines. You’ll need to enter this information into the software to ensure accuracy and consistency. This will help the software properly calculate how much of each tax you have due and when they are due.
4. Choose a pay frequency
When you set up the payroll software, you will have to set a pay frequency (how often you pay your employees). Examples include daily, weekly, bi-weekly, semi-monthly, and monthly. This will be important in determining how frequently you and your payroll software will have to perform a pay run. You may require different pay frequencies for different employees, and if this is the case, make sure the payroll software you choose can accommodate this.
5. Establish employee wages
Of course, other than knowing how often you have to pay your employees, you have to know how much to pay. Entering your employees’ pay rates, whether this is hourly or annually, will be required in your payroll software. You will also have to identify each employee as either exempt or non-exempt from overtime wages (and make sure you know your local overtime regulations!). You may want to consider other types of compensation, such as commission or tips, as they are both taxable and must be recorded.
6. Collect previous payroll records
If you’re a new employer running payroll for the first time, you won’t have previous payroll information, so don’t worry about this item. On the other hand, if you’re switching to a new payroll system, you may have to enter previously-run payrolls to ensure your software can accurately calculate taxes and deductions from employee wages. Be sure to have these ready if this is the case! Your new payroll software provider may even do this for you – so it can be important to consider this, especially if you have lots of historical data.
7. Consider your record-keeping options
The last thing you’ll need to do is to reconsider how you keep your payroll records. For example, moving your records to a digital format and storing them on the cloud instead of keeping paper files. But, keep in mind that as an employer, you are required to keep some payroll records on file, such as W4 Forms, W2 Forms, and tax deposits.
So there you have it. The seven things you can do to prepare yourself before implementing a new payroll solution for your company. First, making sure the software meets your needs ensures that the solution will work the way you want to. Second, gathering information about your business will ensure a smooth and easy implementation process. Third, determining your tax rates and when they’re due will help your payroll software calculate taxes and ensure your payrolls will be accurate. The fourth and fifth items consider when and how much to pay your employees. The software needs this information to ensure your employees are accurately paid on time. The sixth item requires you to gather your historical payroll data to calculate taxes and deductions from your employee wages effectively. Finally, the last item to do before implementing a payroll solution is to consider your record-keeping options. This will help organize and prepare your organization for a new system.
By following these seven simple items, preparing for the implementation of a new payroll software will be simple and quick. You shouldn’t have to worry about disruptions when you’re trying to make your processes more efficient. That’s how Paymate can really help you. We take care of the implementation process for you, so you don’t have to fret over it. We help you through every step of the process, from implementation to daily use! Our friendly support team is there for you. Contact us to see what we really mean when we say we’re customer-focused.