Payroll data is highly coveted by cyber criminals today. Should it fall into their hands, the consequences will be horrific. The information will either be quickly sold to third parties or used to commit identity or digital theft. Companies which fail to secure their employee’s time and labor data and other salary information could find themselves hit with multiple lawsuits and crippling fines. As a consequence, many HR departments have looked for new ways to secure data, with cloud computing being one of the most popular. Below are some tips for effectively securing cloud payroll.
International expansion is a fundamental requirement for any business to become a multinational corporation. While this presents significant opportunities, it also increases responsibilities, one of which is managinginternational payroll. Below are some best practices for this process.
One strategy used by payroll departments is to lower costs and boost productivity is documenting various department processes, finding components which are nonproductive and then altering or eradicating them entirely. Below are some reasons this method is effective, and ways in which it should be done.
Employees don’t like to be left out of the loop, particularly when it comes to pay cycles. An employer that plans on making a switch should communicate early and frequently, so that employees are aware of what is happening. Most businesses will switch their pay cycles for greater efficiency.
When preparing to change pay cycles, employers should utilize the 5 Ws, which are why, where, what, who and when. Employees should know who is affected by the change, why the change is being implemented, when it will go into effect, and where. People are naturally wary and resistant to change, so it is critical for employers to alleviate anxieties and demonstrate that the switch is important for everyone.
Proposed changes should also be posted to bulletin boards, websites, brochures and other places where employees are likely to read them. Announcements could also be made at company meetings. Changes regarding the delivery dates of paychecks and the days within a pay period will usually result once the new pay cycle is initiated. Employers should understand the calculations that can occur whenever a pay cycle is switched.
A team will need to be formed which will be responsible for planning and executing the next pay cycle. This team will typically consist of members from departments such as finance, information technology and human resources. It is also helpful to include an ombudsman in the group who will not be affected by the change and can therefore make suggestions which are unbiased.
The team will next need to assemble a calendar which demonstrates dates for payment, as well as cutoff times for processing and direct deposit. Everyone on the team should unanimously agree on milestone as well as checkpoint dates. Details are important for this process, as the group will need to assess the effects of moving pay dates backwards or forwards, and should review the deductions and earning codes so that communication can be facilitated regularly and early.
Many states have laws on the books regarding the switching of pay periods, so it is important for employers to be aware of this. It is one of the reasons why many businesses switch to bi-weekly payments from semi-monthly payments, due to requirements from FLSA and other state laws. Some states only allow bi-weekly payments at the maximum, so employers should find out what rules apply to their area of operations.
Another factor to consider is benefits deductions, and the way in which they should be managed. Employees will have concerns regarding deductions from dental or health insurance benefits, so employers must decide how they will approach these. Some choose to switch to twenty six periods, while others choose to skip the deductions for the first payroll or remain at twenty four periods and skip the third payroll two times a year.
It is important for employers to establish a process for recording the noncash and cash payments to ensure that the correct taxes are withheld for expat employees. A number of businesses employ individuals who live overseas, and it is important to ensure that their payroll is properly managed.
Electronic systems which are used to record the payments which are made to expats must account for the payroll systems which are used in their host countries. This includes transactions which are accounts payable as well as expense reports. The job positions within the company should be specified which are responsible for offering data which is related to the compensation of expats, as it allows for accumulation tracking and procedural documentation.
The problem with using the names of employees as opposed to job positions within the procedural documents is that any requests which are made for payroll could be incorrectly sent to parties that are no longer responsible for tracking the payroll data of expatriates.
Compensation accumulation is one of the most important aspects of expatriate payroll management. It allows for payroll filings to be accurately completed and is essential for the completion of expat tax returns. Furthermore, compensation accumulation makes it simple to build an administration process. If a company doesn’t do a great job at this, or lacks formal procedures, compensation accumulation will be problematic to say the least.
Procedures and systems for audits which are used for expat payroll must be able to recognize and eradicate any errors in regards to data collection, as these will cause problems that necessitate the filing of adjustment forms or paying extra to fix. It is best for these audits to be performed at regular intervals.
Payroll staff must be responsible for carefully reviewing the taxability for the various payment types which are tracked for compensation accumulation, and they must be able to recognize the payments which must be taxed differently due to the host country where the expat is based and the home country where they originate. This is necessary to guarantee compliance with the nation’s tax code as well as their filing requirements.
A number of employers outsource the compensation accumulation for expats to third party firms, but should carefully scrutinize the ability of these vendors to account for the procedures and tax laws for both the home and the host country when payment data is processed. A vendor that does not correctly track the nuances between host and home country taxation could cause mistakes which the business that hired them will end up being responsible for.
Businesses that develop plans for expat payroll must recognize that treaties may exist between host and home countries which could determine how the expat employees are taxed. Employers must carefully study double taxation laws, which in many cases will use a 183-day period as the maximum number of work days within a year that an employee working overseas can go without being taxed by the host country.
Technology is truly miraculous. It has brought us wireless computing, networking and greater access to information than our ancestors could have dreamed of. However, this technology is not without its downsides. Payroll fraud has become a serious problem for businesses of all sizes, and it is being fueled by technological advances.
Fraud involving payroll occurs in many different ways, and as technology continues to advance, criminals will come up with new ways to exploit it. This is why employers must be vigilant, keeping abreast of industry changes and implementing the proper measure to ensure that sensitive data is never compromised. Some fraud is connected to attendance or time, while others involves the counterfeit of benefits, or gaining access to balances and checks for processing.
Fraud can be either external or internal, meaning parties outside the organization attempt to gain access to unauthorized information, or it may be internal, where employees within the organization leak information or use it for their own benefit. Many argue that internal fraud is the most dangerous, as this comes from individuals which the company trusts, who have greater and easier access to information than nonemployees.
While smartphones have provided a number of benefits to both employers and employees, they are also being used to commit payroll fraud. This is possible with the camera that is now installed in most of these devices. An employee can surreptitiously take photos of checks using their smartphone, which can then be used for deposits.
Smartphones have many other capabilities, which are why many high security buildings and installations require them to be placed in a container near the entrance, as visitors are prohibited from carrying them around the premises. Due to the fact that employees working in payroll have access to sensitive documents, companies should consider prohibiting them from carrying their smartphones into these secured areas, as this prevents them from taking photos of documents.
Employers that handle their payroll in house should review their security measures carefully, particularly when it comes to password protocols. Both copiers and printers should be situated in areas that are secure, and access to them and the payroll department itself should be restricted. It is highly recommended to implement an automated clearing house if you don’t already use one.
Processing Payroll Through A Third Party
Many small businesses choose to use a third party firm in order to process their payroll. This saves them time and energy, but also places them in a position where a mistake made by the payroll processor could have disastrous consequences. Those who use third parties for their payroll should learn about the security measures they have in place to prevent fraud, and should not do business or provide their payroll data to firms that do not have or maintain adequate security protocols.
Payroll is without a doubt one of the most confidential things that small and large businesses are responsible for managing. Should this data fall into the wrong hands, the consequences can be both far reaching and detrimental. Therefore, knowing how to secure payroll processing is essential, and below are some tips which will show you how to do it.
Payroll data entails information involving your employees, such as their Social Security Number, birth dates, home address and bank account numbers. Clearly, if this information is acquired by identity thieves or other criminals it leaves both you and your employees vulnerable to payroll fraud and identity theft. There are two ways in which payroll is compromised, and this is either internally or externally.
Your employees are arguably the greatest potential threat, since they have direct access to the information, particularly if they work in the HR department. Even employees who do not have access to payroll may still attempt to steal it from their co-workers. Even if you believe your employees can be trusted, research shows that small businesses are much more susceptible to payroll fraud than larger institutions. External threats involve criminals and groups that attempt to acquire information through phishing, malware or computer hacking.
Payroll should be processed in a secured room that only authorized employees have access to. The room should be locked and also have security cameras present which show who enters the room and when. By restricting payroll to only a handful of employees, if the data becomes compromised you can quickly narrow down the most likely culprits.
The computers which are used for payroll processing should be equipped with the latest firewalls, and should be regularly updated. Any passwords which are used to secure the computers should be robust, and should be changed regularly with employees who have been recently terminated denied further access. Computers responsible for payroll processing must also use a professional, corporate level anti-virus scanner to ensure they do not become infected. Every company computer should use filters for email spam and employees should be kept up to speed on phishing schemes.
You will also want to regularly perform an audit for payroll. An internal audit is one which is conducted by someone within the organization, while an external audited is carried out by someone outside the company. The purpose of an audit is to ensure the process and numbers are accurate. Employees must also be instructed never to share their personal details with others, even their co-workers. Some companies still maintain their payroll data in physical paper documents, and while these are protected from cyber thieves, you still have to worry about traditional theft. Therefore, physical payroll documents should be placed in filing cabinets which are locked and only accessible with certain keys. Only specific people should have keys to these cabinets and a paper shredder should be used when physical documents need to be disposed of.
Eventually even the best employees will find themselves dealing with problems outside of work, which are significant enough to interfere with their duties. This will typically come in the form of illness, a death in the family, or another catastrophic event that will require them to take time off work. The employee may find that the savings they have is not sufficient to cover the emergency they’re dealing with. In this scenario the employee may request a payroll advance from you to help them, but before you grant it to them here are some things to consider.
The advance is a loan which is provided to employees. It is taken out of wages that you intend to pay them in the future. It differs from the typical loans that are given between friends or family members. Whereas a friend or loved one may back you back at some future time once they get the money, there is no specific time in which this is expected.
An advance from an employer, on the other hand, is much more formal. There will be repayment terms which you’ll be expected to meet, with consequences if you do not. The repayments will usually be taken out of your future earnings, and you can use an entire paycheck to pay it off or spread the payments across multiple checks to keep some funds in your pocket. No employer is required by law to give such advances to their employees, but there are a number of best practices that should be followed.
Favoritism should be avoided when it comes to issuing these advances. In other words, if you’re willing to give it to one employee then you should also be willing to grant it to all of them. Generally, it is best to maintain a policy which is established so that everyone can be held to the exact same standards. For example, employees should work for you for a minimum time period before you’re open to granting them a loan, such as 12 months.
You should also set limits on how much an employee can request. It obviously doesn’t make much sense to issue an employee an advance which is substantially higher than their monthly or quarterly earnings, because then they can quit and you will never get the money back. Limits should also be placed on the number of times that an employee may request an advance within a single year.
Also, another critical factor to keep in mind is that when you issue an employee an advance, the deductions that you take out of their check must not result in them earning less than the federal or local minimum wage, otherwise you would be in violation of the law. You should also consider charging interest on the advance for the simple courtesy of providing the service along with the paperwork that you will be required to process.
Many small business owners desire to improve their payroll processes as much as possible. This ensures that employees get paid on time and in the correct amounts. Below are some tips that will help you achieve this.
Payroll is one of the most important functions a business is responsible for, and it is critical to make sure it is done correctly. As such, many businesses choose to either outsource the process to a third party firm or use payroll software to streamline the process. Below are some things you should know about both options.