Knowing how well your payroll process is performing isn’t always obvious. What if it could do more? Here are a few questions to help you find out.

A Payroll Check Up

Evaluating how your payroll is performing helps you identify areas for improvement and establish necessary goals to drive success. 

How Much Are You Spending To Run Payroll? How much are you spending on errors, fines, late fees, or overtime? How much does maintaining your payroll department cost, including staff, training, and office space? What about software and IT-related expenses? Payroll costs go beyond salaries, hourly wages, state payroll taxes, and benefits. It also depends on other factors, such as your business size, compliance requirements, and payroll frequency. 

How Much Time Does It Take to Run Payroll? From calculating overtime, benefits, and deductions to varying tax rates in different locations, it’s easy to see why running payroll can be complex and time-consuming. Generally, the amount of time depends on how many employees you have and your responsibilities under applicable labor laws in all states where you have employees working.

In a Deloitte study, employers who process payroll manually said that payroll reconciliation, audits, and data entry were the most time-consuming tasks, particularly loading payroll inputs and entering manual adjustments.

How Much Do You Spend on Training? The hiring and onboarding process can be expensive, so tracking the costs associated with training new employees is important for planning the hiring budget. Recent studies show that bringing new talent to your payroll team generally takes about four to six months to get them up to speed.

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What's Your Accuracy Rate? Manual payroll processing leaves employers exposed to human error and can also consume valuable time correct. According to an Ernst & Young study, the average payroll accuracy rate is 80%. Employers make about 15 payroll mistakes for each payroll period, costing an about $291 per mistake.

Some of the most common errors include misclassifying employees or contractors, not distributing W-2s or 1099s on time, mistakes in record-keeping and tracking time, inaccurate pay stubs, miscalculating pay, and failure to comply with new overtime and tax laws. Regularly auditing your payroll can help you assess the health of your processes and improve accuracy by verifying taxes, deductions, and employee data.

Do You Have a Reliable System for Tracking Overtime? Under the Fair Labor Standards Act (FLSA), employers must pay workers an overtime rate of 1.5 times their regular pay rate for hours worked beyond 40 in a workweek. Tracking overtime can help you manage project costs and identify workload issues that may require full-time hires. It's also an important tool for staying compliant with new and changing labor laws. For example, one of the latest is the Department of Labor’s (DOL) new overtime rule, which went into effect on July 1, 2024. The new rule makes salaried employees earning $844 per week or $43,888 annually eligible for overtime pay.

The second phase of the DOL's rule, which goes into effect on January 1, 2025, increases the salary threshold to $1,128 per week or $58,656 annually. These salary and compensation levels will be updated every three years. The overtime rule also covers more details related to overtime pay, worker classification, and the specific standards by which employees may be considered exempt from overtime. With changes like this, employers must rely on capturing accurate timekeeping data to make important decisions, such as modifying staffing budgets or reclassifying certain employees as non-exempt.

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Are You Up to Date with the Latest Labor Laws (Federal, State and Local) Where Employees Are Working? Getting a paycheck right is only part of the process. You also have to stay on top of IRS requirements, as well as state and local tax laws, posing additional compliance challenges for multi-state employers. With so many laws and regulations constantly changing, ensuring you’re in compliance is an ongoing challenge.

Is Your Payroll Process as Efficient as It Could Be? How well are you using your resources, in terms of time and budget, to run payroll? Is it running smoothly, and are employees receiving accurate paychecks on time? Is your process designed for your industry, size, and location?

You can drive more efficiency and savings by streamlining processes and identifying areas for improvement. Look for automated solutions with an integrated, cloud-based Human Capital Management (HCM) system that processes payroll in real time, so you can control labor costs, minimize compliance risks, determine overtime pay, and reduce errors.

How Does Your Payroll Process Measure Up?

When it comes to payroll, you want to work with a reliable provider that saves you time and money without sacrificing any key features.  An IRS-certified PEO, Propel HR simplifies the time-consuming process of managing payroll. We also take care of employee onboarding, payroll tax withdrawals, and timely IRS deposits. Our team of payroll experts will integrate your new employees into our digital payroll-processing system and train your team to submit payroll reports quickly and accurately. 

We support your payroll with:

• Cloud-based payroll portal for your business
• Online employee access to pay stubs, W-2s, benefits information, and company handbooks
• Paperless, efficient direct deposits
• Data integration so you can sync payroll data to your product to help users analyze compensation and identify areas of improvement
• Customized solutions designed for your business size, industry, and location

If you need more help, we can also handle your benefits, compliance, and other important HR-related tasks, which are also managed securely in the cloud. By taking care of all this and more, you can get back to running your business, not your payroll. For more info, just give us a call at (800) 446-6567 or visit www.propelhr.com. 

PLEASE NOTE: This information is for general reference purposes only. Because laws, regulations, and filing deadlines are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your payroll specialist and/or employment attorney regarding your responsibilities. In addition, your business may be exempt from certain requirements and/or be subject to different requirements under the laws of your state. (Updated September 25, 2024)

About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for more than 25 years. Propel partners with small to mid-sized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. For more information, visit www.propelhr.com.