<aside> 🇺🇸 This guide is geared towards a US audience. General concepts can be applied across countries. I encourage you to research provisions within countries your company operates.

</aside>

Building your Payroll Foundations

Where payroll sits in an organization can vary widely. In the early days, this may often sit with one of the founders of the company. Or perhaps a chief of staff type role. Then, as the organization develops, it likely may sit with a dedicated resource in HR or accounting as part of their overall job duties. And, as time progresses, you’ll find yourself with dedicated resources.

No matter how things are set up or your current headcount, you want to ensure that you have sound operating practices related to payroll. It’s never too early to start building your payroll playbook.

Applying a Process Mindset to Payroll

Payroll is a fact of life in companies. While payroll is much less onerous than it was years ago thanks to better software, it still requires management.

With payroll, when everything is running properly, no one notices. No one says ‘Thank you!’ for their regular payroll hitting their bank account on time. But you definitely are likely to hear about it when something is amiss.

With this guide, my hope is to share a handful of things that you can do to build better operating procedures around your early stage payroll functions.

With payroll, documentation is your friend

For many small companies, payroll is often run by a single person. Others may have access to it, but they don’t know what they don’t know. Do yourself a favor and document how it works (even if it’s on ‘autopilot.’ That way you can take a vacation in peace.

Principles for Payroll

With most things, I feel that it’s good to have a few ‘core’ operating principles. When you’re evaluating the success of the function (beyond things like ‘how many error free payrolls were there), looking at how you held up to your principles is a good place to start.

Here are a few that I’d recommend at your foundations:

• Transparency in process, trust in stakeholders: everything you do should be above board. Trust that people are having you do the right thing. But don’t be afraid to speak up.
• Fix mistakes the right way: mistakes happen. Never ignore a mistake. And never take a shortcut to fix it. Solving the right way is more important.
• The payroll train doesn’t wait: your goal is for payroll to run on time. Don’t compromise timely posting. If there was a failure of process upstream, payroll is not to blame.
• Document with clarity: keep clear and consistent notes that a colleague three years from now could use to explain what happened to an auditor asking a random question.
• Communicate the unexpected: no one likes surprises with payroll. If someone’s hours weren’t captured, their bonus will be paid late, their direct deposit didn’t set up properly, let them know.
• Know the legal environment: payroll comes with all sorts of compliance considerations. Ensure you’re keeping up with tax filings, double checking final paycheck rules and that you’re using payroll codes appropriately. Educate the business when needed.