Businesses and their payroll departments typically experience stress during year-end reporting, especially if they’re still using manual payroll systems.
There is a lot of work involved with creating an accurate end of the year reports, and simple errors can become costly down the road. Because of this issue, most businesses invest significant time in calculating and double-checking their reports before disbursing their information to the appropriate recipients.
Fortunately, investing in a payroll management system can greatly improve a company’s time investment, as well as presenting several other benefits along the way.
Ensuring the Appropriate Forms
Preparing and filing taxes can be a complicated process. Unless a company has a dedicated accountant or CPA, navigating the complexities of various tax forms and regulations alone increases the likelihood of making a mistake. Because filing the wrong IRS tax forms can lead to audits and penalties, it’s a good idea to use a payroll management system to determine which forms are needed.
Payroll systems not only help ensure accurate payroll records, but these systems also interpret company data to make choosing the right tax forms a simpler endeavor.
For example, with a dedicated payroll management system, employers can take a look at their employee roster and compare it with workplace insurance offerings to determine whether they need to file a 1094-C or 1095-C, a 1094-B or 1095-B, or none of the above.
When it comes to confirming employee and company information, a payroll management system is a useful business tool. Because payroll systems keep a database of company information, this ensures that each piece of data is correct and up-to-date before the beginning of the year-end reporting, giving you the assurance that the tax information you present is correct as well.
Payroll systems do a great job of maintaining correct data, even when said data is integrated with third-party systems.
Compared to manual reporting, a payroll management system can perform more accurate work in less than half the time.
A payroll management system is highly customizable. Because of this, companies can ensure that special circumstances are considered while they’re composing year-end reports.
Payroll systems can accurately account for company bonuses, confirm the inclusion of manual (hand-written) paychecks in income calculations, remind employees to update their W-4 information if a life change occurs, and scan through company information to determine whether special circumstances require additional reports.
Not every business will have the same needs. Because of the customizable features included in most payroll software, businesses of all industries and sizes will want to regularly update their programs to keep their company’s income information secure and organized.
It is human to make mistakes, especially during a time that’s as challenging as year-end reporting. Fortunately, a payroll system can help reduce the time that a payroll department has to invest in tax calculations. In addition to that, it can also ensure a higher degree of accuracy in the final calculations by cross-checking the information stored in its database.