Page 34 - Essentials of Payroll: Management and Accounting

Cr eating a Payr oll System
staff may not know each employee by name and where there is,
therefore, some risk of paychecks being created for people who

no longer work for the company (see Chapter 9, “Payments to
Employees”).

16. Issue government payroll reports. The government requires several
payroll-related reports at regular intervals, which require infor-
mation on the payroll register to complete.

Overview of the Outsourced Payroll Process
Outsourcing the payroll processing function shifts a number of key
payroll processing tasks to a supplier, resulting in a significant drop in

the payroll department’s workload, its required level of expertise in
operating computer software, and in the risk that payroll taxes will not
be remitted to the government in a timely manner. For these and other
reasons, outsourcing payroll is an extremely popular option, especially
for smaller businesses that do not have much in-house payroll expertise
on hand.
The basic process flow for an outsourced payroll function is shown

in Exhibit 1.2. Note that the key items in the exhibit are the tasks that
are not shown because they have been taken over by the payroll supplier.
These tasks include processing the payroll transactions, printing payroll
reports and paychecks, and making tax deposits and reports to the gov-
ernment on behalf of the company. By outsourcing these activities, the
payroll staff is required only to compile and verify incoming data about
hours worked, load it into the supplier’s payroll system, and verify that
the results are accurate.
The process tasks noted in the exhibit can be streamlined by taking

several additional steps. First, use a computerized timekeeping system
that will prevent unauthorized overtime and automatically issue reports

7