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  • Benjamin Elliott

3 Facts You Didn’t Know About The Payroll Process

3 Facts You Didn't Know About The Payroll Process

There are multiple stages, regulations, and compliance requirements involved in the payroll process. If you really want to master this function, then it's important to understand all the ins and outs that payroll may involve.

The more acquainted you become with the nitty gritty elements, the more you will understand it, and the easier it will become.

And of course, if you use the right tools to help you manage payroll, you can take all the stress and effort out of a time-consuming process.

Here are a few facts to help you learn more about the payroll process and how it works.

The Three Stages Of The Payroll Process

When looking at a step-by-step payroll process, there are many different actions involved. However, the entire payroll process can be broken down into three main steps, or stages.

Understanding these stages is essential for understanding how to process payroll accurately.

Stage 1: Pre-Payroll Activities

Before you even start to process payroll procedures, you’ll need to put some planning in place. This stage generally involves defining your payroll policy, gathering inputs for payroll, and validating these inputs.

Stage 2: The Actual Payroll Process

This is the main part where you actually calculate the payroll for employees. This involves determining employee hours, determining gross and net pay, and gaining approval on these calculations.

Stage 3: Post-Payroll Process

There are still multiple important steps to take care of after payroll has been calculated. This includes going through statutory compliance of payroll, performing payroll accounting, authorising and scheduling the actual payout, and finishing off with payroll reporting.

Each of these three stages needs to work together for a seamless payroll operation.

Of course, the easiest way to manage this is to automate the process using the right payroll software. Not only will this save time, but it also enhances accuracy across each payroll stage.

Top 3 Facts You Didn’t Know About The Payroll Process

Most Employees Get Paid Every Two Weeks

Businesses can process payroll at any period they want to, but some payroll process periods just seem to work better.

Different employers use different pay periods to compensate their staff. This could be weekly, bi-weekly, semi-monthly, or monthly.

Interestingly, around 37% of private businesses pay employees every two weeks, while 32% of private businesses pay on a weekly basis.

If you thought monthly payments were the norm, then think again. In fact, only around 11% of employees actually get paid on a monthly time period. 20% of businesses pay bi-monthly, or twice per month.

Benefit Contributions Form An Important Part Of Employees’ Pay

Employee benefits are a useful way for companies to attract quality talent and retain their top employees. This is why many employers include benefit contributions as part of their compensation packages.

In terms of the payroll process, it's important to understand how these benefit contributions fit in as they are deducted from an employer's wage or salary.

This commonly includes things like health insurance, retirement plans, or paid leave. After the right documents have been submitted, employees may then be eligible for reimbursement on these benefits amounts that were deducted.

For example, an employer might offer educational benefits to employees to encourage them to continue learning. If an employee takes a course related to their job, the employer compensates the employee for that course.

When looking at the payroll process, it's important to understand the difference between benefit contributions and benefit deductions. Benefit deductions, like retirement contributions or life insurance, have a cost for employees.

Both employers and employees will generally pay a portion of the monthly cost of health insurance. And retirement plan payments will work as a percentage of the employee's income.

Employees can take out certain benefits, which are called “tax deferred” where employees pay taxes when they withdraw funds. Employers will need to take the taxable benefits out of an employee's gross pay after they have made tax deductions.

There Are Three Ways To Manage The Payroll Process

The process of payroll in a company can be a complex administrative task. It's important to understand the three different options that companies have for managing the payroll process.

Choosing the right approach can save a lot of time and create efficiencies for your finance team handling the payroll aspect of the business.

First, there’s manual payroll processing. This is when you do everything yourself, by hand, and make all calculations yourself. Many small businesses take this route, which can be a time-consuming and confusing process. If you make mistakes, they could be costly.

Then there’s outsourcing your payroll to a professional. This costs money and requires you to hand over important payroll data. However, the outsourced payroll professional will take care of all the work for you.

If you don't want to take on the payroll process yourself or want to ensure you avoid payroll mistakes, this may be a suitable option.

The other option is to use the right payroll software. Payroll software is generally cheaper than hiring an accountant, and it can help to speed up processes, save time, and enhance accuracy.

Payroll software can automate manual tasks, maintain a digital record of all payroll actions, and accurately calculate tax deductions and wage calculations for you. If you’re a small business looking to scale your payroll process, then using the right software is generally your best bet.


It’s no secret that the payroll procedure is vital to every business and requires intricate skills to ensure that it runs smoothly with minimal errors.

If you want to streamline the way your payroll structure operates, then having a solid grasp of the entire payroll cycle and using the right tools and tactics to automate it will make a big difference.

This can make managing your business’s payroll a much smoother experience.

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