KNOWING WHEN TO AUTOMATE AND UPGRADE YOUR PAYROLL PROCESSING

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1 KNOWING WHEN TO AUTOMATE AND UPGRADE YOUR PAYROLL PROCESSING Executive Briefing

2 KNOWING WHEN TO AUTOMATE AND UPGRADE YOUR PAYROLL PROCESSING Many business owners and managers believe automating payroll only makes practical and financial sense for larger organizations. While that may have been the case in the past, it is simply not true anymore. In recent years, leading vendors have developed payroll solutions designed to meet the varying needs for businesses of all sizes. And these needs are complex. Gone are the days of straightforward payroll processing. Today s world is one of layered earnings, multiple deduction codes, complex reporting requirements and mobile access needs. And stiff penalties if regulations and processes are not closely adhered to. As an employer, it s important to remember that it s essential to deduct and remit Canada Pension Plan (CPP), Quebec Pension Plan (QPP), Employment Insurance (EI) premiums and income tax from amounts you pay to your employees along with your share of these amounts to the Receiver General. Even businesses with a single employee can experience these challenges. THE PAYROLL PROFESSIONAL IS THE FIRST LINE OF DEFENSE In most cases, the payroll practitioner has access to sensitive data that offers them exclusive insight into: Departmental labour budget trends and overuns If preferential treatment is being shown to specific employees Labour data across various unconnected departments ENSURE REGULATORY AND LEGISLATIVE COMPLIANCE HR and employment legislation has become more complicated as the penalties for noncompliance grow ever more significant. Monitoring complex and ever-changing Canadian laws can be a full-time job in itself. Businesses that automate payroll not only free themselves from that burden, but also minimize the risk of costly penalties for late submission, late payments and noncompliance. In times when companies are consolidating or growing through acquisition, it s not uncommon for a payroll practitioner to oversee multiple payroll applications, purchased and maintained by independently operated branches. In addition to a payroll system, these branches may operate a proprietary time and attendance solution. It s important to remember that growth requires the need for a single application to aggregate and accurately report on all of the separate branches payroll data.

3 Penalties, interest, and other consequences The average penalty is 10% of the tax amount penalized. Sample offenses include: Late remitting / failure to remit Failure to obtain your employee s social insurance number (SIN) Failure to maintain or provide adequate records Failure to deduct Failure to make a payment to a Canadian financial institution (Thresh hold 2 remitter) Failure to complete the TD1 Failure to file the Record of Employment (ROE) Failure to pay amounts deemed to be held in trust Failure to honour a payment One of the most significant benefits of automating payroll is guaranteed compliance. For businesses with limited resources, the risk of manual, inhouse payroll processing isn t worth the potential consequences. As of January 1, 2010, businesses that file more than 50 year-end tax forms (T4s) must do so electronically or face penalties. A list of sample fines can be found in the chart below: Number of Information returns (T4 slips)* Penalty $ $ ,500 $1,500 2,501 or more $2,500 *Source: Canada Revenue Agency REDUCE THE AMOUNT OF TIME AND MONEY YOU SPEND ON PAYROLL Many business owners fail to realize just how much time and money they expend on payroll. The direct and indirect costs of in-house payroll are significant enough that simply automating payroll processing can reduce the administrative burden they face by up to 40%. Automated payroll also costs, on average, 30% less per paycheque than in-house payroll processing. Automating payroll ensures businesses are no longer burdened with complex payroll calculations, such as CPP/QPP, EI, garnishments, and those found specifically in a unionized environment. Even seemingly minor options available as part of a payroll solution, such as direct deposits and electronic pay stubs, can free up a significant amount of time and resources for businesses. There are always better ways for businesses to invest their time and money than by printing and delivering paper cheques and pay stubs. By automating its payroll, the Dr. Wandzura Medical Professional Corporation was able to slash the amount of time wasted processing payroll to just 30 minutes from 3 hours, a savings of 83%. Office Manager Leeanne Wandzura used the extra time to establish a user activity audit program, ensuring the security of client information. FOCUS ON GROWTH, NOT ADMINISTRATION When business owners and employees are not spending time completing any of the tedious, manual processes associated with in-house payroll, they are free to focus on building a better business. Automated payroll enables business owners to invest their savings of time and money in other areas, often achieving a wish list of accomplishments they would never have been able to tackle otherwise. Of course, obtaining the most significant benefits depends on choosing the right solution. Technology is changing even more quickly and dramatically than payroll. The transition from basic phones to smartphones took only 10 years. And with the introduction of mobile technology and smartphone applications, payroll processing may soon catch up. Change is constant and businesses, especially those with limited resources, need to be prepared.

4 IDENTIFY UNIQUE NEEDS AND CHOOSE AN APPROPRIATE SOLUTION Small and mid-sized business owners interested in taking advantage of the benefits of automated payroll first need to decide exactly how much of the process they wish to automate. Vendors offer everything from software programs that are little more than glorified calculators to fully automated payroll solutions that completely replace a business owner s payroll department. Most business owners choose a payroll solution that falls in between. 1. Basic Automation Key Performance Indicators for efficiency and effectiveness Number of manual cheques being issued outside of normal payroll runs Scheduling accuracy Employee turnover/retention Overtime costs Paycheque corrections Operational manager satisfaction Remittance accuracy Government reporting compliance (T4, ROE) Standard government remittance services (CPP/QPP, EI and taxes) Deduction processing (Statutory and non-statutory) Processing for garnishing wages Printing of cheques or easy, environmentally friendly direct deposits 2. Automation for Growing Businesses Payroll preview capability to validate data before processing Online management reports Year-end payroll processing Year-end tax form production Electronic pay stubs from or self-print pay stubs Canada Payroll Savings (government bonds) program support 3. Automation for Businesses with Complex Payroll Needs These leading solutions make it easier to complete more complex tasks that are not part of an average payroll run. Business owners and payroll professionals should look for vendors that are capable of providing additional, uncommon but critical services. These services, which can typically be purchased as needed, include off-schedule processing, stop payments, cheque tracing, and more. Features to look for include: Mobile payroll access Employee self-service Single sign-on Role-based security Mass compensation, status, organizational, deduction and contribution changes Complex union calculations Blended Pension plans RRSP deductions Report generation Cycled recurring deductions and contributions Integrated HR screens Whether you are automating for the first time or upgrading your existing payroll solution, it s important to determine if your business would benefit from additional capabilities.

5 KNOW WHEN TO UPGRADE In order to achieve the greatest possible benefits of an automated payroll, business owners should upgrade their solution whenever the needs of their business change or expand. Vendors make this easy by offering payroll solutions that provide scalable options, thorough service level agreements, privacy safeguards and a host of valuable payroll and HR management services. Businesses with larger employee numbers may require more complex capabilities that make little difference for businesses with two employees. When considering if your company requires a more robust payroll application, explore the following capabilities: Role-based security: this enables business owners to control which employees have access to specific payroll functions. Data entry employees who are not authorized to see any payroll data and the highest-level approvers who are responsible for hiring (or terminating) employees can use a single software program. For example, a data entry clerk at a branch in Montreal can enter in the hours employees at that branch work. The only data the clerk sees are the hours entered. These hours can then be approved by a manager in Toronto, who can see hours, salaries, and more. Mass changes: the ability to make changes to groups of employees in the amount of time it takes to change a single employee profile can make payroll so much easier. Mass hires, layoffs and terminations are straightforward when managing a seasonal workforce. Mass contribution and deduction changes expedite everything from increasing the cost of the employee coffee fund to processing raises. For example, a seasonal fishing lodge can lay off its entire workforce at the end of the season with just a few clicks. The following year, the workers can all be rehired en masse just as easily. Integration: integrating payroll with other HR processes, such as Time & Attendance tracking or simply being able to download payroll data in a general ledger can also contribute to increased savings. Even the simplest advantage, such as being able to view HR records like employee certification/training, education, and emergency contacts using your payroll solution can make a positive difference. For example, a manager can easily compare the salaries of employees in a specific department based upon their individual educational qualifications. Lessening the burden of manual payroll administration not only saves time and money, it frees businesses to focus on strategic initiatives. It represents a competitive advantage for companies, improving efficiency and ensuring legislative compliance. And with today s variety of scalable services, you ll be able to focus upon a secure solution, easily implemented and tailored to meet your business s unique requirements. FOR MORE INFORMATION ABOUT OUR FULL SUITE OF HUMAN CAPITAL MANAGEMENT SOLUTIONS, PLEASE CONTACT CERIDIAN AT OR VISIT

6 CERIDIAN HAS A FULL SUITE OF PEOPLE AND PAYMENT SOLUTIONS TO SUPPORT YOUR TALENT. FROM HIRE TO RETIRE... HIRE RETIRE RECRUITING TALENT ENGAGING TALENT DEVELOPING TALENT DEPLOYING TALENT PAYING TALENT Dayforce HCM A single, real-time application for managing and processing payroll, tax, benefits, workforce management and HR, with one employee record, one user experience and zero interfaces. Recruiting Solutions LifeWorks Employee Assistance Programs Web or On-Site Payroll Solutions Employee Background Screening Services LifeWorks Wellness Solutions Training & Employee Development Programs Dayforce Workforce Management Managed Payroll Solutions Applicant Tracking System HR Advisory Services International Payroll Services Managed Pension Payments Analytics and Reporting Easy-to-use reporting solutions that generate accurate, reliable, and secure data across your entire organization. ABOUT CERIDIAN CANADA Ceridian Canada is a human resources solutions provider that helps customers optimize their workforce, reduce costs and save time by finding, paying, developing and engaging their talent. With over 40 years of experience, proven expertise and recognized service excellence, Ceridian Canada is a trusted partner to 43,000 Canadian customers. Ceridian s solutions include payroll, Dayforce Human Capital Management, HR information services, recruitment and staffing services, Employee Assistance Programs, training and more. With offices from coast to coast, Ceridian Canada provides services to more than three million Canadians. Ceridian Canada was established in 1968 and is based in Toronto, Ontario. Ceridian Corporation. All rights reserved