HR and payroll are two very different parts of your business, but they’re both equally important to how your business operates. While the HR department is concerned with the well-being of your employees, payroll takes care of all the money-related matters that go into paying your staff members each month.
Payroll might seem like just another thing that HR needs to deal with, but there are many reasons why these two departments should work together closely. Here are the top seven reasons why integrating HR and payroll is beneficial for your business.
Access Real-Time Information
It’s important to have access to all relevant information in real-time. This allows you to see an employee’s compensation, hours worked, time off, etc. at any given moment. As a result, it makes it much easier for you to correct issues before they snowball into problems.
If your company is large enough or if there are multiple people involved in managing employees’ paychecks, having access to information will also allow everyone involved access to information so that everybody is on the same page.
Simplify Employee Compensation Processes
If you’re trying to run a successful company, then you need to spend time focusing on employees. Treating employees well may be one of your core values, but more than that, it will help keep your team members happy and engaged – which is essential to overall business success.
Additionally, putting employee compensation processes in place can streamline many different company operations – including payroll – so it’s beneficial to integrate both HR and payroll functions into your business plan.
Accurately Calculate Labor Costs
Knowing how much your labor costs are—in terms of both what you’re paying your employees, as well as overall time spent on payroll functions—will help guide many important business decisions.
When you have a grasp on what it costs to keep your team together, for example, you can make more educated hiring decisions or project whether or not new hires will save money over time.
In addition, it’s a good idea to ensure that your payroll records are organized in an efficient manner because if they’re disorganized, it could cost your business extra time and money down the road. Keeping an eye on labor costs is especially important when you’re growing quickly and trying to stay under budget.
Reduce Errors in Payroll
It’s a sad fact of life that many small businesses pay a higher percentage of tax than they do on the payroll. The Internal Revenue Service isn’t known for its customer service, but it is possible to make your tax liability as small as possible with careful planning.
If you don’t have an accounting background, HR and Payroll software package to help you manage these matters—remember, It can work faster and more accurately if they know what information to look for in your company books.
When you keep everything organized, it makes it easier for them to find any relevant data at a moment’s notice. It will also give them confidence in your ability to pay their invoices promptly.
Improve Compliance with Regulations
When an employee is hired, they are often being brought on to help with a problem. They have a particular skill or experience that your business lacks, or maybe there is a hole in your budget that needs filling.
Whatever it may be, you’re getting a new hire with certain qualifications and expectations—and not just from you. Their family needs them to provide for them in one way or another, even if that’s just having their rent paid.
Unfortunately, many people fail to consider how these considerations will affect tax liability on both ends of an employment relationship.
If you think about it ahead of time though (particularly when hiring), you can better prepare for future liabilities—all while creating more value for everyone involved.
Decrease Tax Liability
When a company has a functional separation between payroll and human resources, a lot of inefficiencies can arise that can put your company at risk for tax penalties.
One of these inefficiencies is when payroll withholds funds from employee paychecks but isn’t aware of any changes to an employee’s health care coverage.
In such cases, employees will end up receiving large tax bills due to income withholding from IRS regulations. To decrease your liability by preventing unnecessary tax withholdings, simply integrate payroll with human resources!
A number of automated solutions exist that make it easy for payroll software to interface with human resources software. Most major vendors offer some form of integration services with most including a range of pre-built integrations.
Enhance Talent Acquisition Efforts
With payroll, talent acquisition, and payroll accounting functions working together, organizations can offer a seamless employee experience to candidates from application to onboarding.
This not only provides candidates with an up-to-date understanding of their benefits but also increases the accuracy of data used in talent acquisition efforts.
It’s not surprising that studies show recruiting costs could be reduced by as much as 40 percent when processes are aligned across payroll and talent acquisition.
In addition, having a single person responsible for all payroll-related activities eliminates silos between departments which can increase employee satisfaction.
And finally, it gives you a more integrated view of your workforce – including employees who work at home or on mobile devices – so you have better visibility into how your team works today as well as where they might need support tomorrow.