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Record retention is complex and time consuming. However, in addition to complying with various federal and state laws, keeping good, well-organized records can be very helpful in documenting and supporting an organization’s employment actions.
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This special report will discuss how you can ensure your records are in good order, and establish a record-retention policy.

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6. Tips for Better Recordkeeping
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January 31, 2014
Time for the talk … about payroll

There comes a time when you start to notice certain changes. You may feel awkward, become hyper-aware of what everyone else is doing, and feel a bit insecure. Don’t worry, these changes are normal.

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We’re speaking, of course, about the time when your payroll begins to seem troublesome. Have you reached that point in your business’ development? We spoke recently with Janet Klamm, director of product management, time and attendance services for payroll provider Paychex ( She says that the moment this awkward phase in a company’s history occurs may be different for each company.

“Many times a company will start out and they don’t want to handle payroll at all, so they come directly to an outsourcer,” Klamm says. “Of course, we love that. There are also people who will tinker with their payroll for a while, doing it manually.” Manual processing, she says, can range from using a desktop computer with a spreadsheet system like Excel® to methods used back when adding machines were commonplace.

“The manual systems people use really run the gamut,” she reports. “Sometimes they are using what we used to call Dome books, which is basically green bar paper, manual spreadsheets. Sometimes people look things up in the IRS tables every time, the old-fashioned paper book. There is quite a plethora of ways people do payroll manually, and pretty much every way you can think of, someone is doing it.”

As you examine your own payroll practices, perhaps at a point where you’re tempted to begin outsourcing, try asking yourself a few questions that may help you decide.

Do you know what to do when situations arise—or at least how to easily find out?

The day may come when the company receives a friendly notice from a government agency (or an employee) that a payroll calculation was incorrect—or another complication, like a wage garnishment, presents itself. “There are situations, like a wage garnishment, that can be intimidating,” Klamm says.

“Garnishments are written against the employer, telling them that they have to withhold money from someone’s pay. That’s a little intimidating. And garnishments use legal language, so they are not always the most clearly expressed documents in the world.” Will you know what to do?

Other situations may come up that make your seemingly simple payroll processing more difficult. “Maybe now you have personal use of a company car; what do you do with that?” Klamm muses. “If you’re offering benefits, you need to figure out whether or not they’re taxable and to what extent. If you’re in multiple states, there are complications.

“In certain areas, in fact, multi-state payroll is pretty prevalent, like if you happen to be near the border of a state, or in New England, where many states are close together. In that case, you need to know the rules not only for your own state, but in the states where your employees live. There are many complexities that come up.”

Generally, Klamm says, there is a trigger moment when it occurs to the company that they are in over their heads. “That’s when they call us,” she says.

Does the provider you’re considering have established relationships with agencies involved in payroll?

One of the key advantages to outsourcing payroll is that when one of these challenges presents itself, you won’t have to spend time researching the answers. Because they are steeped in the rules and regulations all day, every day, providers already have the information you need. What’s more, says Klamm, the very large providers have established relationships at the government agencies involved.

“Because of the relationships we have with the agencies,” she says, “we are often able to help a client work through the process of trying to resolve their issues. We can and do work directly with the agencies on behalf or our clients.”

Does your potential payroll provider have an individual assigned to you?

Personal service can be an important factor in developing trust in a business relationship. Klamm recommends using a company that assigns responsibility for each client to one individual. “When you have an assigned payroll specialist for each client, they take accountability for that client, to make sure they are satisfied,” she says. “When you’re dealing with a call center environment, you lose that one-on-one relationship. Assigning responsibility to one payroll specialist helps us get to know the client, and make sure their needs are satisfied.”

What’s your risk tolerance?

“People have different levels of risk tolerance,” Klamm says. “For people who are risk averse, payroll outsourcing is a very attractive option because it takes them out of the mix in terms of having to understand the regulations, and places that burden onto their vendor.

“One risk is you want to make sure the checks you’re calculating are accurate. Another risk is all the government agencies you have to deal with, all the rules and regulations that you need to adhere to when you’re filing taxes. So between wanting to be accurate and wanting to file correctly, there are a lot of opportunities for mistakes.”

Speaking of filing taxes, the intimidation factor there is very high, too. “People get confused because the forms and the instructions are very complicated,” Klamm says. “You might not know what a particular word means, or how to classify certain wages. It can be very confusing. Being in the industry, we tend to know what those things are, but to the average person, it’s kind of a foreign language.”

Sure, you can turn to the IRS or state instructions. “But those can be difficult to comprehend,” continues Klamm. “Having a payroll provider take care of these things really takes a lot of that burden away. It frees you up so you don’t have to worry about it, which is huge, and allows you to spend your time doing other things.

“If an employee has a question, you can just pick up your phone and ask your payroll specialist, and they can help address it. Otherwise you’re on your own, looking it up on the Internet or asking your friends—basically left to your own devices.”

Are you viewing payroll as an opportunity to make stronger employee relationships?

If it ain’t broke, don’t fix it. But, even if it isn’t broken, you may be able to get more benefit from payroll than you currently are. Paper checks can be a hassle, for the employee and the company. They get lost; they get stolen. There are options, but they tend to be difficult to execute for most employers. For example, you can implement direct deposit. For employees who do not have a bank account, you can even issue paycards. And, believe it or not, these options can serve to strengthen your relationships with employees.

Companies that use paycards or direct deposit find that employees appreciate these services, Klamm says. “Not only do you get away from the hassle of paper checks, you can also provide the benefit of easy online access for employees to their pay stubs. So you can give the employee information and they can access it on their cell phone, for example, with our mobile application. They don’t have to be in the office to get a paper check, and they still get access to the data because they can view it online through their mobile device.

“That’s a nice nuance that can make that employer/employee relationship stronger. It’s a way to offer some niceties to your employees that make your company an attractive place to work.”

We hope this little talk hasn’t made you feel uncomfortable. But there is a time in the life of every company when these things need to be discussed. Someday, you’ll thank us.

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