Well come for group seven

payroll management system

assaignment
Level 2
Name id
Hawde Ahmed 13
Kemila Shimels 16
Rehima Aragaw 29
Rehima Seid 30
Seada Hussen 32
Yeshareg Asamnew 41
Kombolcha poly technic collage
Web development and database administration
Module title: updating and documenting operational
procedures
Assignment title: payroll management system
Group seven
Table of Contents
Acronym.......................................................................................................................................................i
References...................................................................................................................................................ii
Abstract.......................................................................................................................................................ii
Acknowledgment........................................................................................................................................iii
Introduction.................................................................................................................................................1
Objectives....................................................................................................................................................2
1 Payroll management system...............................................................................................................3
1.1 Definition of payroll management system...................................................................................3
1.2 Important of payroll management system..................................................................................3
1.3 Types of payroll management system.........................................................................................4
1.4 The function of payroll management system..............................................................................5
1.5 The benefit of payroll management system................................................................................6
1.5.1 A Payroll system benefit of employees in several wage:.....................................................7
1.6 How to choose a payroll management system............................................................................8
1.7 The six steps in managing a payroll system.................................................................................8
1.7.1 How do I do payroll management system............................................................................9
1.8 The advantages and disadvantage of payroll management system...........................................10
1.8.1 Some methods of payroll management system.................................................................11
Summary...................................................................................................................................................12
Acronym
PMS Payroll management system

PEO Professional employer organization

FICA Federal Insurance Contribution Act

EIN Employer Identification Number

APA American Payroll Association

CPP Certification Payroll Professional

i
 References

From Google chrome and library Wi-Fi.

ii
 Abstract
The actual problem is to maintain different database for an organization whose
main purpose is to issue pay-slips for their employs every month working in
various department of the origination and maintain details of all the department
employees with various grades, their designations and address detail.

In the manual system it is difficult to maintain data and generating different

report according to requesting transaction. In the present system it is becoming
difficult to issue pay-slip for all the employee every month by manually going all
the various record of the organization.ie the manager have to go through all the
records of the organization of various departments of the

ii
 Acknowledgment
First of all, we are grateful to teacher Haile for giving us this opportunity then we
are very grateful to the poly technic collage and the library and to all student who
helped us to get Wi-Fi.

iii
Introduction
Most of us take our pay checks for granted. Whether we receive a physical check or have our pay
deposited directly into our checking accounts, many of us don’t realize how much effort goes into
crating that paycheck.

A payroll department is made up of people who have to know many different knows. This laws cover
topics such as who is considered an employee, what deductions are coming out of any employees check,
which deductions have to be included for tax proposes, what taxes must be withheld, and when they
have to be deposited.

The American payroll association (APA) offers a certification for payroll professionals who pass a
rigorous 4-hours exam. This is could the certified payroll professional (CPP). While that exam covers a
board range of payroll topics, this course will focus on some of the basic. For those who are considering
or are correctly studying for the CPP exam, this course can also serve as a good foundation for what’s to
come.

1
 Objectives
There are multiple objectives behind the designing and implementation of the
module:

 To prepare the detailed salary record of all the employees is an organization

 To generate pay-in-slip through the calculation of salary
 Proper usage of man power
 To maintain allowance, deductions, loans, savings, and arrears details for the
employees
 To generate reports in user-defined formats
 To generate various important reports that provides valuable information to
the top-level management

2
1 Payroll management system
1.1 Definition of payroll management system
Payroll management system is the process by which employers pay wages to their
employees. It’s also how they demonstrate their commitment to their workers
fulfilled their obligations to government agencies and keeps financial records in
order.

A Payroll system is any means of paying employees, depositing employment’ tasks

and maintaining records of the transactions, these tasks can be accomplished via
manual processes or they can be automated with software to save time and
minimize the risk of errors.

Payroll management involves calculating and distributing salaries, handling tasks,

and insuring compliance with labor laws. Many business uses payroll
management systems to streamline and automate these tasks. Completing
payroll involves many key steps, a few of which include accurately calculating
employee wages, making the appropriate deductions, processing payroll taxes,
and accurate record keeping,

A payroll management solution systematizes these tasks, helping businesses

manage payroll operations and fulfilled their obligations to pay employees each
pay period. Depending on the businesses and its needs, payroll management
system can look like a manual solution, in house software, or outsourcing- each
explained in more detail later in this article.

1.2 Important of payroll management system

When you consider what payroll management involves such as calculating wages
and deductions, depositing and filling pay, and maintain accurate record- there’s
so much at stake, including critical obligations to appropriate government
agencies and workforces who expect on-time paydays. Payroll management
requires a system that helps mitigate errors as much as possible. Otherwise,
businesses may face fine and penalties, wage claims, or disgruntled workers.
3
1.3 Types of payroll management system
In general, businesses can chose between a few methods for managing their
payroll process, from a do-it-yourself approach to an outsourced payroll
management solution. Depending on factors such as how much control or over
oversight you want to have, cost consideration, and time commitments, you may
choose one of these payroll management systems:

 Manual payroll management: businesses with a limited budget, just a few

employees, or who want to maintain total control and over sight over the
payroll processes may choose a DIY approach to payroll management. it’s
important to note that manual or semi-automated processes, such as
spreadsheets and built-in templates, can be time- consuming and may lead
to errors that can accumulate costly fines or penalties;

Consider also that the payroll processes gets more complex as more
employees come on board. A DIY payroll system can also expense your
company to unnecessary risks. For example, keeping on top of key tax-filing
deadlines and reporting the correct amount of taxes to the appropriate tax
agencies will fall entirely on you. In contact, Payroll software can
automatically help you keep track of key dates and make the correct
calculations. Ultimately, an entirely in-house payroll processes can cost you
more in the long run than what you may initially.

 Payroll management software: payroll software offers a helping hand while

allowing flexibility owners looking to maintain oversight and control over
the processes. Payroll management software can streamline the time and
effort required to complete numerous payroll tasks, including calculating
payroll amounts, generating in- house reports, preparing and remitting
state and federal payroll taxes and returns, or simply printing, dinging, and
distributing paychecks. Payroll management software also may work well
for growing businesses since integrated payroll and benefits data may help
businesses owners to easily add and remove employees from benefits
programs, accurately calculate amounts deducted from each paycheck, and
provide employee benefits information directly.

4
  Comprehensive outsourcing: business may consider comprehensive
outsourcing, such as a professional employer organization(PEO) ,if they’re
looking to take payroll management off their to –do list or can’t afford to
hire in-house HR and payroll administrators but still need to increase
efficiencies in these areas. It can also be a good businesses strategy if you
went a higher return on investment in certain business area. PEOs offer
assistant with payroll administration and taxes, HR and benefits
administration, compliance, workplace safety, talent management, and
other HR tasks.

1.4 The function of payroll management system

At a high level, a payroll management solution should give you the flexibility to
complete the payroll process as accurately and efficiently as possible. More
specifically, key features of an employee payroll management system include the
following:

 Calculating employee wages

Based on data complied I your time tracking method, you payroll system should
be able to calculate employee wages accurately and account for wage
garnishment, benefits contributions, payroll deduction, and payroll taxes.
Through time sheets or time and attendance software, employers must accurately
track the hours worked by non-exempt employees each work weak to correctly
calculate pay. Time tracking isn’t as crucial for salaried employees because their
gross pay in the product of their annual salary divide by the number of pay
periods in the calendar year. However, some non-exempt employees may earn a
salary, in which case, there hours must be tracked to ensure any over time work is
paid, as required by low.

Once gross wages are calculated for each employee employers must process
certain payroll deductions include:

 Taxes:

5
Employers deduct taxes based on their employees ‘withholding certificates and
total taxable wages.

employers deduct taxes based on their employees'withholding certificates and

total taxeabl wages.

 voluntary deductions:

Written authorization from employees is required before an employer can

deduct retirement plan contribution health or life insurance premiums , union
dues.

 Mandatory deductions:

Employers will usually receive an official order from a government agency or

court notifying them that they must withhold IRS or stat tax levies , child support
or other wage garnishment.

 With holding payroll taxes

Employers’ payroll taxes responsibilities can be extensive

1.5 The benefit of payroll management system

If you fill stretched thin by employer responsibilities around payroll
administration, legal compliance, data security, and recordkeeping, you may
consider using a payroll management software or service provider. There’s much
to gain with payroll management software, with benefits such as:

 Time saved: payroll management software can make the process more
efficient versus taking time to input data manually every pay period.
 Reduced payroll errors: integrating payroll software with other HR and
time-tracking systems may eliminate the time-consuming and error-prone
process of repetitive data entry.
 Compliance peace of mind: keeping up with ever-changing payroll tax laws
can be challenging, and penalties for errors can be significant. Payroll
management technology keeps your payroll administration in line with
applicable regulatory changes.

6
  Money saved: consider the costs saved on printing and distributing
paychecks and generating reports for in-house and accountant use. Payroll
software performs these tasks automatically, and often digitally.
 Greater security of payroll data: most payroll providers offer systems with
security features for sensitive employee and company data. They employ
redundant backup systems, multiple server locations, and the latest
technology to protect client data.
 Employee satisfaction: An integrated payroll system with employee self-
service options empowers your staff to handle common tasks
independently, including submitting time-off requests printing tax
documents, and updating befits and tax allowance forms.
 Improving employee engagement and regulatory compliance
 Time and cost saving
 Improved employee satisfaction and reiteration
 Enhanced data security
 Real time reporting and analytics
 Accurate calculations and minimized errors
 Access to tax forms and all records kept
 Transparency and trust among employees

1.5.1A Payroll system benefit of employees in several wage:

1. Accurate payments: it's ensures employers are paid accurately and on
time avoiding payment errors.
2. Taxe deduction: the system simplify tax deduction , insuring compliance
with local and federal tax regulation.
3. Pay stubs: employees receive detailed pay stubs which provide
transparency about their earnings and deductions.
4. Online access: many payroll system offer online portas where employees
can access information conveniently.
5. Automated processes: automated reduces manual effort streamlininig
payroll calculation and reporting.
6. Data security: payroll system enhance data security safegaurding sensitive
employee information.

7
 7. Employee satisfaction: timel and accurate payment contribute to overall
employee satisfaction.

1.6 How to choose a payroll management system

The right payroll management is generally capable of delivering accurate and
timely payroll processing and tax filing service packed by expert knowledge and
integrating technology .to find such a solutions , businesses owners should ask
these questions.

1) Does the cost fit budgets or expected growth : small business with minimal
financial resources might opt for basic payroll function while organization
that ant cipate growth may be willing to spend more for robust capableity.
2) What is the providers reputation and experience level : reputable payroll
venders tend to have longstanding clients who are willing to speak about
the quality of the service they received. and the more years that a provider
has been working in particular industry . the more likely the will understand
the applicable Laws and compliance issues.
3) How secure is the service: encryption , firewalls,mulitiy factorys
authentication and pick-up practices are essential to maintaining
confiditalitey and integrity . payroll providers that take security seriously
can usually demonstrate these and any other measures they use to protect
data.
4) Is the software compatible with other programs: employers should ensure
that their payroll provider offers seamless integrations with time
tracking,HR and any other existing programs.
5) What are the reporting capableity: some payroll providers can help ensure
that mew hire reports, annual reports and other documents are filed with
the appropriate government agencies on time and include all of the
required information.

1.7 The six steps in managing a payroll system

Maintaining or creating a payroll management system for the first time many
consist of these steps

8
 1. Apply for an employer identification number (EIN)
An EIN which can be obtained from the IRS is necessary to file payroll taxes.
Employers may also need to apply for state or local identification numbers.
2. Gather employee tax documents
From W-4 and state with holding certificates are required to help
employers calculate employee payroll tax deductions.
3. Determine a payroll schedule
Common pay periods are weekly, bi-weekly and semi-monthly. Some states
may have pay frequency requirements
4. Document terms of compensation
Have clearly written policies explaining company requirements and laws for
hours worked, overtime, paid time off, etc. in addition, its necessary to
obtain each employees written con employers deduct taxes based on their
employees ‘withholding certificates and total taxable wages. Set for benefit
contributions and other voluntary payroll deduction, as well as certain
wages payment method’s, like direct deposit and pay cards
5. Choose a method for processing payroll
Business can manage payroll in house or choose to outsource the process
to a payroll service provider for optimal time savings and compliance
support.
6. Open a bank account for payroll
Separate payroll accounts often lead to better management of funds, easier
reconciliation and more accurate payroll transaction records.

1.7.1 How do I do payroll management system

Payroll management can be a difficult, time-consuming process without reliable
software to automate calculations and minimize errors. In its most basic for,
running payroll consists of these steps.

1. Calculate gross pay

For salaried employees, device the annual salary by the total number of pay
periods in the year. For hourly employees, multiple the hourly rates by the total
number worked and comply with federal and state laws for the payment of any

9
 over time or premium compensation. Note that employers with non-exempt
employees who are:

2. Withhold deductions

Calculate and withhold from gross wages any qualified pre-tax

contribution, followed by federal and state income tax. Medicare and social
security taxes, state unemployment, disability or paid family leave premiums,
Court- order wage garnishments and any other voluntary or mandatory
deductions.

3. Pay employees

Distribute net pay to employees in accordance with state wage payment

regulations and provide each employee a pay statement that adheres to state
laws, if required.

4. Remit taxes to government agencies

Calculate and deposit employer taxes (i.e., federal and state unemployment
taxes) and taxes withhold from employee wages by the specified deadlines using
the appropriate submission methods.

5. Archive payroll records

Refer to federal and state payroll record keeping laws to ensure that the
necessary documents are retained in accordance with each of the requirements.

1.8 The advantages and disadvantage of payroll management

system
The advantages of non-manual payroll management system are legion, including
time and cost saving, and improved security of payroll data. While many potential
disadvantage can be mitigated by carefully selected a strong payroll company,
some cons may include the cost of services, the need to take additional steps to
make corrections to payroll errors or obtain wage and employee data if the
information resides on the provider's server, and risk of the vendor going out of
business.

10
1.8.1Some methods of payroll management system
Depending on their budget and desired level of involvement, employers have
several options to choose from for payroll management, including:

1. Manual payroll management using spreadsheets

Employers with a few employees may opt to manage payroll using a manual
method, such as spreadsheets. The potential cost savings, however, are usually
outweighs by the pit falls. Manual DIY processes increase the risk of costly
mistakes and take time away from activities that drive business growth.

2. Payroll management software

High quality payroll software saves time and alleviates administration burdens by
automating labor-intensive tasks. Employers can rely on it to calculate cross

Wages, deductions and net pay accurately, while allowing them to maintain some
control over the processes.

3. Outsourcing

Employers that are interested in taking payroll off of their plate entirely often
engage an administrative service payroll provider or enter into co-employment
with a professional employer organization (PEO). In arrangements such as these,
all aspects of payroll administration - including tax deposits, reporting and
compliance - may be fully managed by the provider or (PEO).

11
 Summary
The payroll management system aids in the streamlining and centralization of you
company’s wage payments. The software calculates salaries, tax deductions,
incentives, and bonuses on its own, sorting out payment and deduction issues and
digitally recording them in its database.

12