It’s the end of the month, and you need to make sure every employee gets their paycheck on time.
However, you may have made mistakes before with hours worked, missing overtime pay, or incorrect tax deductions.
Many businesses have similar issues with payroll management that lead to errors.
At TROIS Collective, we know this can increase frustration for any company.
That’s why we’re sharing our Payroll Management Guide, which our HR Partners have effectively used with multiple teams.
This 2025 guide will explain the key parts of payroll and show you how to set up effective systems and best practices.
Payroll is the total amount a company pays its employees during a specific time, usually on a set payday. The payroll process includes:
With effective payroll management, you'll ensure that employees are happy and paid on time, while remaining compliant with the law.
Making mistakes—whether unintentional or not—regarding deductions for benefits or paying employees late can harm your reputation as an employer.
On the other hand, good payroll management helps a company stay financially stable.
To avoid costly fines and legal issues, businesses should ensure their payroll processes are efficient and comply with local, state, and federal laws.
Many people think payroll is just the job of the HR department.
The HR team handles employee records, tracks attendance, calculates benefits and deductions, and ensures everything complies with labor laws.
However, depending on the size of the company, payroll management may involve different teams:
The payroll management process usually consists of several important steps, each crucial for guaranteeing that employees are paid accurately and on time.
Gathering and recording detailed employee information is required for good HR management.
This process includes information like the employee's full name, contact details, and identification numbers.
It also involves sensitive data such as bank account details for direct deposits, as well as tax information needed for payroll processing.
When deciding how to handle payroll for your business, consider three main options: managing payroll yourself, using payroll software, or hiring a professional payroll service.
Each option has its own benefits and drawbacks, depending on your specific needs.
We suggest implementing a reliable system to monitor employee hours, whether through time sheets, punch cards, or automated time-tracking solutions.
It is important to track the hours each employee works.
This includes overtime, sick days, vacation days, and other types of leave.
To determine the gross pay for each employee, we'll rely on their timekeeping and salary details.
For those who are hourly workers, calculate their pay by multiplying the hours they’ve worked by their hourly wage.
Meanwhile, for salaried employees, you can find their pay by dividing the annual salary by the number of pay periods in a year.
Making deductions from gross pay is an important step in processing payroll.
In Canada, the law requires certain payroll deductions.
These include income tax, Employment Insurance (EI) contributions, and Canada Pension Plan (CPP) contributions. There might also be deductions for pension plans, group insurance, or RRSP savings plans.
In the United States, required deductions usually include federal and state taxes, Social Security contributions, Medicare, retirement plan contributions, and any other legally required or voluntary deductions.
Timely payments are important.
Employees can choose how they receive their wages, whether it’s through direct deposit, a check, cash, or a payroll card.
Make sure to file payroll taxes on time and follow local, provincial/state, and federal rules. This includes submitting both quarterly and annual tax returns.
Employers need to keep track of payroll tax deadlines to avoid penalties.
It's important to keep clear and accurate payroll records. These records should include:
Make sure to include any other information that is relevant to your company.
There are several effective ways to manage payroll.
The best option for you depends on your needs and the size of your company.
In this method, a person or team handles payroll by hand.
This approach is common in smaller businesses because it requires low initial costs, but it can take a lot of time and may lead to mistakes.
One main benefit of manual payroll is the cost savings.
However, consider how much time you spend on the payroll process.
Many businesses turn to payroll software to streamline their payroll processes.
This type of software can effortlessly calculate wages, taxes, and deductions.
It typically offers features like direct deposit, tax filing, on-demand pay, and report generation.
While this option can save you a lot of time, it does come with a steeper price tag.
Many businesses opt to outsource their payroll to external service providers, such as TROIS Collective.
These firms concentrate on payroll management, ensuring compliance with tax laws and regulations.
Effective payroll management is essential for any organization, especially in 2025.
First, stay updated on tax laws and employment rules.
We also suggest investing in reliable payroll software; Look for features that help with automatic calculations and tax compliance.
Good software automates many tasks, reduces errors, and saves time.
Accurate record-keeping is also crucial. Keep organized records, including payroll registers, time tracking data, and tax filings.
Therefore, regularly check and reconcile payroll processes to spot and fix any issues, ensuring the payroll information is correct.
And to avoid communication issues, create clear, written payroll policies regarding pay periods, overtime, bonuses, and leave.
Also, provide your employees with easy access to payroll information, such as pay stubs and tax documents, through an online portal.
In 2025, businesses should make payroll management easier by following best practices, reducing mistakes, and using automation software.
We strongly recommend partnering with an HR expert if you find that your company is struggling with payroll management, as this issue can lead to a range of problems for your business.
At TROIS, we are here to assist you.
