Inaccurate paychecks, overlooked deductions and input errors put considerable strain on managers and employees. While navigating new payroll tech isn’t easy, just one manual error puts you at risk for major fines.
Luckily, modernizing your payroll approach simplifies compensation, enhances productivity, and saves time and money. Kickstart your search for the perfect payroll platform with a payroll implementation checklist!
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There’s no denying the importance of payroll, with 49.14% of people finding it difficult to meet financial obligations if their paychecks were delayed by a week, according to the 2023 Getting Paid In America survey by Payroll.org.
With that in mind, we’ve compiled a list of the top payroll features below for your payroll checklist!
Article Roadmap:
- Key Requirements
- FAQs
- Next Steps
Key Requirements
1. Benefits Management
Compliance management tools monitor local, federal and global standards ensuring all processes follow laws and regulations. A comprehensive system accounts for all business locations and tailors compliance measures accordingly. Automate compliance with notifications that alert users of any changes to relevant regulations.
Stay up-to-date on legal statutes when handling financial transactions and contracts, maintaining efficiency. The goal of compliance management is to control legal parameters related to the software functions. Compliance management software works in the background of other features, empowering employees to focus more on business processes without fear of non-compliance.
- 401(k) Plans
- Configure New Benefits
- Workers’ Compensation
- Life Insurance
- Disability Insurance
- FSA
- Commuter Benefits
- Benefits Plan Recommendations
Key question: What are the best practices for benefits management? According to Forbes, you should:
- Offer benefits your employees will actually take advantage of.
- Provide affordable options.
- Communicate benefits package details clearly.
- Ensure you’re compliant with legally required benefits in your state.
2. Dashboard and Reporting
Business intelligence features present data as reports, providing insight into current processes. Besides observing present trends, HR departments use reporting to analyze findings to make predictions and decisions based on those predictions. Enhance decision-making, identify opportunities and overall increase operational efficiency.
Paychex Flex Dashboard.
- Auto-Scheduling Reports
- Custom Reports
- Dashboard
- Pre-Built Reports
- Visualizations
Key question: What specific details do payroll reports typically include? Business News Daily explains:
A payroll report includes detailed information about an employee, department or team. An employer can use the report to verify tax liabilities and company accounting data. A payroll report may include pay rates, timesheets, overtime data, taxes paid by the employee and employer, PTO, and more.”
3. Expense Management and Processing
The purpose of payroll software, management and processing tools is to compensate employees correctly. Digital and physical payment methods must be processed daily, weekly or monthly. So, which payroll method is best?
Typically, payroll suites factor in bonuses, deductions and contributions for 401(k) and insurance. Some systems visualizations provide insight into a company’s processes. A business can use these insights to evolve policies over time and track the effectiveness of its policy changes.
- Automated Reminders
- Digital Receipt Management
- Expense Approval
- Expense Reimbursement
- Expense Tracking
Key question: What is expense tracking? Payhawk writes:
In the simplest terms, it’s a way to document the money you spend on different initiatives so that you can track your spending against your business income and see whether or not you’re getting a good ROI.”
4. Mobile Capabilities
With 12.7% working from home and 28.2% working hybrid, mobile capabilities are extremely important when using a payroll system. Implementing a mobile-compatible system gives your employees more ways to stay on top of their paychecks.
- Create Direct Deposits from Mobile Devices
- Create Paychecks from Mobile Devices
- Mobile Clock In/Out
- Mobile Collaboration
- Mobile Expense Management
- Mobile Push Notifications
- Mobile Wallet
- Native iOS and Android Apps
- Responsive Design
Key question: What security measures are in place to protect sensitive payroll data on mobile platforms?
Your payroll implementation setup should include robust security protocols such as encryption, multi-factor authentication and regular security audits. Ensure that sensitive data like employee Social Security numbers and financial information are protected both in transit and at rest on mobile devices.
Consider features like remote data wipes in case of device loss or theft to mitigate security risks.
5. Payroll and Tax Management
Payroll software provides accurate payment deductions and tax calculations on financial transactions. This feature notifies users of upcoming deadlines or law changes that could cause errors. Automation prevents mistakes when filing tax forms, like W-2s and 1099s. Payroll systems handle the entire process of completing tax forms digitally or with support.
- Automatic Pay Runs
- Calculate Overtime Pay
- Cancel Payroll Record or Void Check
- Create or Print Checks
- Deduction Codes
- Direct Deposits
- Earning Codes
- I-9 and W-4 Forms
- Multiple Payment Schedules
- Multiple Pay Rates
- Multiple Pay Processing
- Off-Cycle Pay Runs
- Pay Cards
- Pay Groups
- Payroll Alerts and Notifications
- Payroll Journal Series Entries
- Payroll Preview
- Payroll Register
- Payroll Tax Calculator
- Pay Stubs
- Process Advance Salary
- Prorate Paycheck for First and Last Check
- Record Ad-Hoc Manual Paycheck
- Recurring Payment Types
- Salary Structure Rules
- Split Payments Between Multiple Bank Accounts
- Statutory Deductions
- Tax Credits
- Voluntary Deductions
- W-2 and 1099 Forms
- Wage Garnishments
Tax management is crucial for small business owners due to limited resources, complex tax laws and the need to maintain cash flow. It provides a competitive edge, supports growth and mitigates risks.
Key question: What are the most common tax mistakes for small businesses?
According to C. E. Thorn, CPA, PLLC:
- Not selecting the proper entity (LLC, C-Corp, S-Corp, Partnership, Nonprofit).
- Deducting start-up costs incorrectly.
- Missed deductions.
- Over-reporting, under-reporting or misreporting income.
- Incorrectly classifying employees.
- Not filing or paying on time.
- Poor record keeping and payroll mistakes.
- Separating personal expenses and business expenses.
6. Platform Capabilities
Understanding platform capabilities ensures your employees know what they can do while empowering their work productively. Self-service portals, calendar views, document sharing and global search bars make everyone’s lives easier. Custom access for employees, skipping waiting for important documents for a smooth workflow.
- Calendar View
- Digital Signature
- Document Retention Settings
- Document Sharing
- Employee Self-Service Portal
- Global Search Bar
- Internal Collaboration
- Manager Self-Service Portal
Key question: How do employee self-service portals affect HR personnel efficiency in administrative tasks? According to the Society for Human Resource Management (SHRM):
ESS portals allow employees to have quick and easy access to HR-related transactions and services that HR personnel would otherwise have to provide. This can reduce HR’s tactical duties and free up time for more strategic pursuits, with realized cost savings in time and efficiency.”
7. Security and Compliance
Security and compliance are always a big deal. If something goes wrong, fines and other consequences can damage your company’s integrity and employee morale. Boost peace of mind with added security and ensure protection from hefty legal fees.
- ACA Compliance
- Audit Trail
- COBRA Compliance
- FLSA Compliance
- FMLA Compliance
According to ADP payroll laws and regulations include (but are not limited to):
- Fair Labor Standards Act (FLSA)
- Federal Insurance Contributions Act (FICA)
- Federal Unemployment Tax Act (FUTA)
- Equal Pay Act (EPA)
- Davis-Bacon Act
Key question: What are common payroll compliance mistakes?
- Overtime misunderstandings
- Garnishment issues
- PTO handling problems
- Tax form and filing errors
- State-specific payroll missteps
8. Time and Attendance Management
General human resource management streamlines every aspect of managing people. Employee information regarding history, performance, compensation and benefits is stored so managers and team members can access all HR resources.
View and update personal details. With comprehensive payroll, HR departments can merge all necessary functions into one software, saving time and money.
Clockify TAA dashboard.
- Employee Scheduling
- Leave Configuration
- Overtime Tracking
- Prevention of Buddy Punching
- Timesheet Entries
- Time Tracking Methods
Key question: What time-tracking methods does the software offer?
Common modern time-tracking features include biometric authentication (using fingerprints or facial scans) to verify employee identities during clock-ins or outs, GPS tracking, geofencing and mobile time punches.
Understanding time-tracking methods before committing to a new payroll system ensures alignment with operational requirements. It also serves as a proactive measure against common time-tracking issues like time theft, buddy punching and inaccurate time records.
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FAQs
A payroll system implementation checklist is a comprehensive guide outlining the necessary steps and requirements for successfully implementing a payroll system within an organization.
It ensures that all aspects of the implementation process are considered and addressed systematically.
The short answer is it simplifies knowing what you need to set up a new payroll system.
Implementing a payroll system involves multiple stages and requires careful planning and execution to avoid process disruptions.
A checklist serves as a roadmap to navigate through the complexities of implementation and minimize potential errors or oversights.
Start by conducting a thorough assessment of your organization’s current payroll processes and identifying specific requirements and goals for the new system.
Then, break down the implementation process into actionable tasks and organize them into a checklist format, ensuring that each task is clearly defined and assigned to the relevant stakeholders.
When selecting a payroll system, consider these factors:
- Scalability to accommodate future growth.
- Integration capabilities with existing systems.
- Compliance with local tax laws and regulations.
- User-friendliness and ease of use.
- Availability of support and training resources.
- Cost-effectiveness and return on investment.
Implementation duration can vary depending on factors such as the complexity of the organization’s payroll processes, the size of the workforce and the chosen payroll system.
While some implementations may take a few weeks, others could span several months. It’s essential to set realistic timelines and allocate sufficient resources to ensure a smooth implementation.
Common challenges may include:
- Data inaccuracies or inconsistencies.
- Resistance to change from employees.
- Technical issues or software glitches.
- Integration complexities with existing systems.
- Compliance concerns with tax regulations and reporting requirements.
Prioritize effective communication and collaboration among all stakeholders, including HR, finance, IT, and employees.
Invest in comprehensive training programs to familiarize users with the new system and provide ongoing support throughout the transition process. Additionally, conduct thorough testing and validation to identify and address any issues before the system goes live.
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Next Steps
With every requirement essential, your payroll implementation checklist needs to be perfect. Fortunately, our free payroll system requirements template simplifies the process by helping you customize a features list and matching your needs with the most suitable products.
Which payroll system requirement is a must-have for your business? Is there a feature you need that isn’t on our list? Let us know in the comments below!