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August 15, 2016
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Payroll Processing

Career Options Africa Ltd offers Payroll Processing services in East Africa (Kenya, Uganda, Tanzania & Rwanda). In this article we look at payroll processing and its significance to your company.

Definition

Payroll processing describes the preparation of paychecks (including withholding and deductions), distribution of paychecks, and payment and porting of payroll taxes.

Payroll is the financial records for employee wages/salaries, withholding, deductions, bonuses, pay for time not worked (holidays, vacations, sick time, etc.) and other items on employee paychecks. It can also mean the record of total earnings of all employees for a company in a fiscal year.

In a company, payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period of time.

Why payroll is important

Payroll is crucial because payroll and payroll taxes considerably affect the net income of most companies and because they are subject to laws and regulations.

The payroll department is critical because employees are sensitive to payroll errors and irregularities: Good employee morale requires payroll to be paid timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct with holdings and deductions, and that the withholdings and deductions are remitted in a timely manner. This includes salary payments, tax withholdings, and deductions from paychecks.

Payroll software is technology that aims to streamline and automate the process of paying a company’s employees. Payroll software can be purchased from a human resources technology vendor or included as a module within a larger enterprise resource planning (ERP) package.

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A payroll system calculates the amount you owe your employees based on factors such as the time they worked, their hourly wages or salaries, and whether they took vacation or holiday time during the pay period. The system adjusts gross pay by calculating and subtracting taxes and other withholding amounts.

Processing Payroll

Payroll is processed at the end of each payroll period (either weekly, bi-weekly, semi-monthly, or monthly). Options for payroll processing include doing it yourself with accounting software, hiring a bookkeeper, or engaging a payroll service.

To prepare a paycheck for each employee:

  • Calculate the gross pay for the employee, based on whether this person is salaried or hourly.
  • Take deductions for federal income tax (withholding), Social Security and Medicare pay deductions, state withholding, and other deductions agreed to by the employee.

Career Options Africa Ltd has a Payroll Center which is a specialized section of  Human Resource Outsourcing Division specializing in Outsourced Payroll Services and which has a modern Human Resource and Payroll system to meet the needs of any client.

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