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Payroll administration is defined as any of the tasks necessary to organize the compensation of employees for the hours that have been worked. This may include keeping totals for hours worked by employees, rates of pay and managing payments to employees. Businesses that use a commission system often benefit from having a dedicated payroll administrator in order to better manage payroll services for employees.
For a small business owner, payroll administrative work is often performed by the business owner initially as there may be few employees. Software may be used to facilitate ease of payment and tracking of payroll concerns or payroll may be managed on paper. Often, software used for payroll purposes can make issuing paychecks easier as well as helping business owners to keep track of payments made. This can also help with direct deposit payments for employees or managing company accounts used for funding payments.
When payroll must be organized for only a few employees it may be easy to keep track of payments but as employee numbers grow it is important that enough time is devoted to payroll upkeep. This can help to prevent errors in both accounting and payroll to ensure that employees receive the appropriate amount of compensation per pay period. Payroll administrators are also responsible for making sure that payments are delivered on time to employees.
Another aspect to managing payroll is ensuring that payroll taxes have been properly deducted from the employee's income. This process can sometimes become overwhelming, prompting the small business owner to hire a payroll specialist who is experienced in managing payroll matters. This can help to prevent problems such as direct deposit issues, tax exemptions or problems with deducting taxes. Errors in deductions for taxes can cause serious complications for small business owners. Manage payroll as efficiently and effectively as possible is vitally important.
Payroll administration also includes making sure that company payroll policies adhere to employment laws. This can apply to overtime that has been worked, holiday pay or other payroll changes. As businesses grow and employ more workers, it becomes increasingly important to have someone who is capable of processing payroll.