Payroll refers to the reimbursement that employees are provided with in exchange for services performed at a company. General ledger refers to an organization system that tracks all of a company’s financial transactions, including expenses, assets, liabilities, revenues and equity.
Payroll software may help to organize and streamline systems which will keep the general ledger accurate and up-to-date without tedious and prolonged manual accounting.
There are many different types of payroll software available to companies for improving the efficiency and accuracy of payroll. Payroll software will generally track and process all information related to payroll such as current pay rates, hours worked, taxes, and any other deductions. This allows employees to be compensated correctly. Payroll software may allow employees to be compensated electronically or with a paper check. This can help reduce payroll errors that may harm employee morale or cost the company money.
Ideally, payroll software will be integrated with the company’s general ledger so that all payroll information is condensed and imported directly into the company’s main accounting systems. A general ledger interface may help with this integration. A general ledger interface can eliminate the need for data entry by a third party vendor or employee. Essentially, a general ledger interface can increase company efficiency and reduce costs. It is important to thoroughly investigate all software prior to purchase to ensure that the software will work with existing solutions. Additional software should simplify, not complicate, payroll systems.
Companies that employ over a certain number of workers are required to withhold taxes from employee’s paychecks. Federal income taxes, Social Security, and Medicare are typically always required to be withheld. Depending on the local laws state taxes, city or county taxes, and disability may also be required withholdings. Companies are not only required to accurately calculate the amount of withholding from each employee’s paycheck using tax tables, they are also required to properly file and pay taxes to the appropriate authority. Employees are also required to file taxes, which can become confusing and complicated if the process is not streamlined.
Payroll software can help to simplify tax withholding, filing, reporting, and payment for both employers and employees. Formulas may be automatically included in payroll software or may be entered in so that taxes can be immediately calculated and retained. This can eliminate errors and reduce the amount of company time spent on taxes after each pay period and at the end of the year. This can also simplify the process of making changes to employees’ withholding status when life changes occur.
Incorrectly filing, reporting, or paying payroll taxes can result in penalties and fees for companies. Even when errors are unintentional, they can be costly. Utilizing payroll software with a general ledger interface will help companies avoid these costly errors. Payroll software may also come with company support so that changes in legislation are communicated to the company, which can further reduce the chance of errors.
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