Payroll Processing: What Happens During the Payroll Process?

Here are the steps that are involved in payroll processing: total time worked calculation, earnings computation, and paying up staff members. There may be a need to calculate deductions, overtime, and the net pay that will be the payroll process’ end result.

Also Read: The Difference Between Hiring Experts and Using a Free App for Payroll Outsourcing

The time that’s needed in completing the process can vary, depending on the size of the company and number of employees. Take note: this has to be done once or even four times a month. If you opt for the manual processing of payroll, it is not the best use of your time as it takes longer. Streamline the process by hiring experts to do it for you.

Collection of Records for Time Worked

In order to accomplish the correct processing of payroll information, it’s started with the collection of time worked for each employee in a pay period. An employer in the United Arab Emirates may make use of a time clock, timesheet, scheduling system or timekeeping system in capturing the time worked of an employee electronically or on paper.

If time worked is recorded manually, there may be a need to spend at least thirty minutes in adding up the total work hours of each employee including the overtime. Doing the payroll processing in-house, this can take several hours or even an entire day if there is a handful of staff members. If you want your employees to receive payments due on time and to avoid getting penalized by the authorities from late salary payments, then you need to begin adding up time cards as soon as possible.

If you are on the lookout for a way in automating the time tracking process of your company, then hire a payroll outsourcing company. The firm will do the collection of time card data for you, saving you hours each pay period.

Calculation of Earnings and Deductions

The process of calculating paychecks is the same regardless of whether the payroll is done by manually or electronically. If a software is used, the steps may happen in just a click of the button. The keystrokes, specific steps, and calculations will depend on the software that is used.

If payroll processing is done manually, this can take some time. When adding hours that are reflected on each time card, there will be additional hours that have to be updated on the timesheet each day. Also, the hours worked have to be verified and compared against the information in a time card to make sure that each employee is paid for the right number of hours in every pay cycle. Different payroll systems have different ways in verifying data.

To get the gross pay, multiply the pay rate to the total hours worked. If there is more than one staff member, then yes, you are correct with your assumption that it is a time-consuming activity. You will need to make sure that you are using the regular pay rate of an employee for regular hours and a different pay rate for the overtime hours. Additionally, you will need to add variable pay such as commission, bonuses, and other payments. Gross pay, in general, is the sum of regular pay and overtime pay.

For manual processing of payroll, determine the deductions=, which may include insurance and benefits, that have to be deducted from the gross pay of an employee every pay period.

Paying Employees with the Chosen Payment Method

Employee payment methods may be paper cheque, pay card, direct deposit, or cash. As soon as you process payroll, you would want to write cheques or forward payment information to financial institutions for direct deposit. The payroll account of the business has to have funds, of course. How long the entire process takes will depend on whether the work is done manually or electronically, and the number of employees to be paid.

Additional Task: Maintenance of Payroll Records

UAE legislation makes it imperative for businesses to retain payroll records. There are payroll information that has to be retained including full employee name and full mailing address among others. To be safe, employers have to keep copies of pay stubs of employees after the payroll processing.

If you would rather outsource the task of processing payroll each pay period, we suggest you talk to our payroll team today. Initial consultations are free, so call now!

What is the usual payroll cycle?

Every business needs to decide the payroll schedule based on the employees and outfit of the business. In the United Arab Emirates, common frequencies are semi-monthly, weekly, biweekly, and monthly. Why does a company pay employees once every two weeks?

You may also read: Reasons to Outsource Payroll Processing of a Business

Paying all employees once every two weeks allows the employer to process the payroll of the business only twice in a month, reducing the time that is spent on processing of payroll. It also reduces teh chances of errors in payroll from occurring.