Read on for a payroll action overview, processing times, and how to speed things up if your payroll takes besides long .
What is payroll processing?
Payroll work is the task of calculating an employee ’ second wages, withholding taxes and other deductions, and paying employees. Processing payroll, or running a payroll, is a province all businesses with employees share .
To process payroll, you can :
- Do manual calculations
- Use software
- Outsource it
Doing manual calculations is the least expensive but most time-consuming option. Outsourcing payroll ( for example, using a professional employer constitution ) is the most expensive but least time-consuming choice. Using payroll software is the happy medium between the two, as it streamlines payroll without breaking the bank .
regardless of what method you use to process payroll, you need to understand serve times. indeed, how long does it take to process payroll ?
How long does payroll take to process?
Before you run payroll, you probably want to get an estimate of how a lot time you need to set apart for it. then, how retentive does payroll processing take ?
To answer this question, we need to break down some of the payroll serve steps. typically, payroll processing consists of :
- Collecting timesheets
- Running payroll
- Waiting for direct deposit to process (if applicable)
immediately, let ’ s go over the potential time it could take you to complete each mistreat in the payroll process .
1. Collecting timesheets
At the end of the pay period, you credibly need to collect timesheets from employees before you can add hours to payroll and calculate wages. Timesheets tell you when and how many hours an employee worked. Your employees might use digital or wallpaper timesheets .
thus when the time comes to collect timesheets, you might get a batch of this : wait. Nudging employees. physically compiling timesheets from your team .
The come of prison term it takes collecting timesheets can take hours to days, depending on how efficient your team is at meeting deadlines and whether you ’ re using time and attendance software. And if you don ’ t have a system in put ( aka deadlines, submission process, etc. ), you ’ re probably looking at a longer delay time .
2. Running payroll
When you ’ re ready to run payroll, you need to calculate your employees ’ gross wages, taxes, and net give .
Gross wages are an employee ’ mho total pay before you withhold taxes and other deductions. To calculate an employee ’ s gross give, multiply their hours worked ( using collected timesheets ) by their hourly wage. For compensated employees, you can divide the employee ’ s annual wage by the number of pay periods in the class .
The next step of running payroll is calculating the employee ’ south taxes and withholding other deductions. Be sure to subtract any pre-tax deductions before breaking out your tax calculations. then, calculate the taxes the employee owe ( for example, federal income tax, employee dowry of FICA tax, and any department of state and local anesthetic taxes ). besides, calculate the taxes you owe ( for example, employer part of FICA tax, FUTA and SUTA taxes, and any state of matter and local taxes ). After calculating taxes, remember to withhold post-tax deductions .
final but not least, subtract taxes and deductions from the employee ’ s gross pay. This gives you the employee ’ second net pay ( aka the come they take home ) .
Whew. Add that all up, and running payroll might take you :
Minutes ? Days ? What gives ! Long narrative short, your payroll action time depends on how you run payroll .
You ’ ll spend less time process payroll if you use payroll software. If you opt to do calculations manually, expect to set apart more time in your day for payroll.
3. Waiting for direct deposit
Want to pay employees with the ever-popular mastermind deposit ? capital ! But, keep in heed that there are direct depositing processing times to account for, excessively .
address deposit process times vary. typically, aim deposition takes two or three days. Some directly deposit work times can take a little as one day ( or same-day work ), and others up to four days .
Your processing meter depends on how you handle direct situate ( for example, using software ). Understand how long direct deposit takes to process before running payroll. Processing times determine how many days in advance you need to run payroll to make certain your employees receive their wages on payday .
The grand total
thus, all in all, how long does it take for payroll to process ? The grand full, complete with ranges, is :
- Collecting timesheets: Hours – days
- Running payroll: Minutes – days
- Waiting for direct deposit: 1 – 4 days
From begin to finish, your payroll process could take up to a week. For exemplar, you might collect timesheets on Friday, enter the hours on Monday, and pay employees on Friday .
3 Tips to speed up your payroll processing times
Don ’ metric ton want to deal with dense serve times ? We ’ ve got a few tricks up our sleeves to help you out, including the adopt three tips :
- Get into a groove
- Upgrade your payroll processing system
- Invest in time and attendance software
1. Get into a groove
Between the clock time it takes to collect timesheets to process direct deposit, waiting until the last hour to process payroll can land you in hot water. To avoid a disorganized work, get used to a routine. And by that, we mean to create a payroll calendar and schedule ( and stick to it ! ) .
The effective thing about payroll is that it ’ mho, for the most part, predictable. You can pay employees weekly, fortnightly, semimonthly, or monthly. Once you decide on the pay frequency, you know how much to pay employees and when payday is .
And when you know when payday is, you can figure out what day to collect timesheets and run payroll .
For case, your schedule can look something like this :
- Collect timesheets on day ABC from employees
- Run payroll on day QRS
- Pay on day XYZ
2. Upgrade your payroll processing system
manually doing calculations can slow down your payroll process by hours or even days. If you want to streamline the procedure of running payroll, consider using software .
With payroll software, you merely enter your employees ’ hours worked each yield period. The software then calculates their arrant wages, taxes, and web wages. These moment calculations not only save you the time of manually doing them yourself, but it can besides save you from taking more fourth dimension to fix any miscalculations you could make .
Shopping around for payroll software ? not sure where to start ? Download our free guide to learn what nine factors ( monetary value, features, security, etc. ) to consider .
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3. Invest in time and attendance software
If you ’ re streamlining payroll, why not streamline time track, excessively ? Time and attendance software is a fast and easy direction for your employees to enter their hours worked.
To shave down some of the time it takes you to process payroll, patronize about for a time and attendance system that integrates with payroll software. Once you approve your employees ’ hours worked, the system sends the hours straight to payroll, eliminating manual data entry .
This is not intended as legal advice ; for more information, please snap here.