Are you new to the world of HR and Payroll? We’ll share some tips that can help make your job a little easier. Learn about the roles and responsibilities for both departments, how they work together with payroll, as well as payroll functions and procedures.
The human resources and payroll functions of any organization are as vast and complex as the company itself. Each company handles a variety of recruitment, staffing, and other human resource activities that affect their employees and themselves. So what exactly is the difference between HR and payroll?
While payroll deals with compensating employees, human resources takes care of employee relations. Although the two departments have distinct roles in an organization, they also share functions that are crucial for the organization’s success. Integrating human resources and payroll can reduce paperwork, allows automatic updating and reduce difficulty in providing consolidated reports.
What is the Function of Payroll?
Payroll refers to the process by which employees receive their salary. Functions involve balancing and reconciling payroll data and depositing and reporting taxes. The payroll department takes care of wage deductions, record keeping and verifying the reliability of pay data. The payroll department delivers payroll checks, maintains compliance with tax laws, records paperwork for new hires and edits existing employee files. Payroll professionals are also responsible for calculating reimbursements, bonuses, overtime and holiday pay.
What is the Function of HR?
Managing people within the organization, the human resources department aims to bring out the best in employees, thus contributing to the success of the organization. The primary responsibility of the human resources department is to hire new employees, and this involves attracting the right candidates for available positions. After they bring on new employees, HR professionals must make sure the employees deliver according to expectations.
The HR department is also responsible for motivating employees, and to this end, they reward employees by developing compensation packages that may include holiday or midyear bonus awards and salary increments. HR also develops training programs and ensures that employees follow a general direction by reminding them of the organization’s goals.
Where the Two Functions Overlap
Many payroll activities are related to HR issues so the payroll and human resources departments must coordinate shared functions. This includes recruitment, salary increases, bonus payments, benefit deductions, vacation leaves and firing employees. The human resources department must be sensitive to the time devoted to payroll processing because as the champion of employee relations, they’ll face issues directly if paychecks aren’t processed correctly and on time.
The payroll and HR departments are also privy to confidential employee data, including financial information, social security numbers and home addresses. The two departments must work together to ensure that this information doesn’t fall prey to unauthorized individuals or companies.
The Great Divide
Payroll functions are covered by either the finance department or human resources department in most organizations. Essentially, payroll is number-driven and calls for knowledge of tax laws and accounting. Thus, many respondents believe it should be positioned with the finance department.
At the same time, payroll is also considered a function of HR because it pays and deals with people. Take, for example, maternity pay. The HR side is that the company must preserve the employee’s rights and abide by federal and state anti-discrimination and maternity laws. At the same time, the employee must receive compensation, a finance function, in accordance with the company’s policies.
Payroll mistakes can happen faster than you think. For a moment, think about the employees for whom monthly salary is the only source of income. Imagine what if the salary is not paid accurately or there is a delay in releasing salary. Such irregularities can take a toll on the morale of the employees and ultimately affect the business productivity.
While ensuring accurate and timely payment of salary is important, adhering to the various laws and regulations such as labor law, PF, PT and other statutory compliance is also critical. Non-adherence with these laws can attract serious legal and financial consequences.
To make sure that your employees are happy and you are law compliant, you need to have a proper understanding of what payroll is and how to run payroll effectively. We will start with the basics of payroll.
What are the Stages to Processing Payroll?
A payroll officer needs to do careful planning. There are always ongoing tasks that need attention and a constant need to monitor changes to withholdings, contribution to social security funds, etc. The entire process can be split into three stages, pre-payroll, actual payroll and post payroll activities.
Pre-Payroll Activities
Defining Payroll Policy
The net amount to be paid is affected by multiple factors. The company’s various policies such as pay policy, leave and benefits policy, attendance policy, etc. come into play at that time. As a first step, such policies need to be well defined and get approved by the management to ensure standard payroll processing.
Gathering Inputs
Payroll process involves interacting with multiple departments and personnel. There can be information like mid-year salary revision data, attendance data, etc.
In smaller organizations, these inputs are received from a consolidated source or fewer teams. However, in a larger organization, the task of gathering data may look overwhelming. If you are using a smart payroll software having integrated features like leave and attendance management, employee self-service portal, etc. inputs collection process does not remain a problem.
Input Validation
Once inputs are received, you need to check for validity of the data concerning adherence to company policy, authorization/approval matrix, right formats, etc. You also need to ensure that no active employee is missed out and that no inactive employee records are included for salary payment.
Does payroll fall under HR?
It depends on the way your organization is structured. Some managers think that, because payroll deals directly with employees, it’s best suited as a part of HR. However, others may think that the finance and accounting wing of an organization is better built to tackle payroll because of their numbers expertise.
Ultimately, the way you organize your business is up to you. However, some of the ways that payroll and HR interact are good to keep in mind as you finalize business plans or consider an expansion.
How does payroll interact with HR?
No matter how your organization is structured, it’s important for payroll to work closely with HR. That’s because there are many areas where HR and payroll administration can overlap, such as:
- Negotiating pay
- Negotiating and administering employee benefits
- Bonuses
- Complaints about pay
Ultimately, however, these two departments take different approaches and serve different functions when it comes to these and other issues. Let’s break it down.
Payroll functions
Payroll functions tend to be more administrative and straightforward. A good payroll department ensures that employees’ pay is correct, delivered at the right time, and documented correctly. Here are some of the payroll functions you can expect to task payroll departments with:
- Processing pay during each pay period and ensuring the right amount goes to the right employee
- Using payroll software to manage employee data
- Managing W-2s and W-4s for employees, including deductions, withholdings, and withholding allowances
- Complying with IRS tax laws, paying payroll taxes, and filing taxes
- Employee time tracking
- Managing deductions to 401(k) contributions and insurance premiums
- Reviewing timesheets at each pay period to ensure that hours, rate, and pay align for each employee
- Verifying new hires’ salaries and ensuring that terminations are fully paid out
HR functions
On the other hand, human resources departments tend to take a more holistic approach. Their functions not only encompass employee pay and benefits but also relations between coworkers. HR professionals are trained in conflict resolution, managing negotiations, and other interpersonal-oriented business needs. Some essential HR functions to keep in mind include:
- Talent acquisition when your company is expanding
- PTO, sick leave, and other time off policy administration
- Processing salary changes for raises and new employees
- Verification of employee information, such as address, phone number, and Social Security information.
- Benefits enrollment for employees using company health insurance
- Conflict resolution between employees and management
- Conflict resolution among employees
- Onboarding new employees and running new employee orientation programs
Having solid HR services at your business can help improve employee retention and overall employee experience. They can also help with everything from data entry to running innovative webinars. The bottom line is, HR professionals are versatile.
How to improve how HR and payroll work together at your business
Having a robust payroll department and a fine-tuned HR department is critical. However, it’s also critical that these two branches of your company work together in a synergistic and effective way. Here’s what you can do to ensure your HR and payroll teams know exactly how to work well together.
Maintain clear communication
Every part of a business should maintain clear communication. The relationship between payroll and HR is no different. HR professionals and payroll professionals should maintain constant and clear lines of communication to ensure no information falls through the cracks.
You might have weekly meetings where different professionals can share updates, or a channel on a business messaging platform like Slack. Or your workplace might simply have a shared HR-payroll work environment where coworkers can openly talk to each other. Whatever makes the most sense for your business, it’s essential that these two departments know what the other is up to.
Establish a centralized data management system
Another way to facilitate HR-payroll relations is to have one shared system for all employee information. A solid HR software platform that can house payroll data, for example, is a great way to make sure everyone’s on the same page. Whenever an HR or payroll professional needs access to critical data, they can simply log on to their shared database.
As an added bonus, using one platform as both your payroll and HR system will likely save your business time and money, too.
Ensure roles are clear to employees
Lastly, one of the easiest ways you can ensure no one is stepping on anyone’s toes is just to make roles clear to everyone. When hiring for these roles, be sure they know what their responsibilities will be and who to check in with periodically.
When everyone is working together like clockwork, mistakes should happen less often and work can be done faster. One of the best ways to reduce errors and improve efficiency is by opting for an all-in-one payroll, accounting, and HR solution.
Streamline HR and payroll
QuickBooks Payroll paired with intuitive HR outsourcing can be one of the most effective ways to streamline your workflow. QuickBooks payroll is built to take the hassle out of payroll processing, reduce human error, and make essential payroll processing easy to complete in minutes. Some of the benefits you can expect from QuickBooks Payroll and HR services include:
- Ready-made tools and templates: Job descriptions, onboarding checklists, and employee handbooks can all be customized to help your workers perform better.
- HR and payroll together in one place: With HR tools and one-to-one assistance from our partners at Mineral, you can save time, stay compliant, and expand your business.
- Legal compliance: At no extra cost, get up-to-date information on state and federal pay and overtime regulations, as well as the basics of hiring, firing, and employment laws.
- Get in touch with a professional: For help with essential HR concerns, contact a Mineral adviser by phone or online. We can also build personalized handbooks and rules made specifically for your business.
- Stop worrying about taxes:QuickBooks payroll can file and pay your payroll taxes so you can get back to focusing on what matters most: your business.
- Self-service functionality: With an intuitive design built to put the power in your hands, you can gain the insights you need and tackle tasks with confidence.
- Automatic integration: Once you’re set up in QuickBooks Payroll, it’s easy to get started managing your business finances with QuickBooks Online accounting software. Just a few simple clicks get you the automation and insight you need to succeed.
Opting for a combination payroll and HR system is a great way to improve workflow at your workplace. Plus, with a shared suite of tools in their hands, your payroll and HR professionals will be ready to work together. Whether you need help setting up payroll or managing your business finances top to bottom, QuickBooks is here to help.
Conclusion
Human Resource and Payroll functions form the foundation of every business. As such, it is important to understand what these two departments entail and how they interact with one another.