Background of the Study
The manual process of payroll system comes with a step by step procedure, first is to establish a timecard system where employees fill out a timesheet or use a time clock. Use timesheets that contain unfilled slots for regular, vacation, personal or sick time. Create a separate filing system for all timecards submitted. If employer have salaried employees, create a log with the salary amount each employee should be paid each pay-period (Grace, 2012).
According to the definition of Roos (2005) a payroll system involves everything that has to do with the payment of employees and the filing of employment taxes. This includes keeping track of hours, calculating wages, withholding taxes and other deductions, printing and delivering checks and paying employment taxes to the government. In addition, payroll system enables the employer to process its payroll through a computerized system. As stated by McGraw (2009), payroll is the sum of all financial records of salaries for an employee, wages, bonuses and deductions. Payroll plays a major role in a company for several reasons. From an ethics in business viewpoint payroll is a critical department as employees are responsive to payroll errors and irregularities: good employee morale requires payroll to be paid timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions, and to ensure the withholdings and deductions are remitted in a timely manner.
A payroll system is the method used by payroll professionals to pay employees for their services. Regardless of the type of system used, there are basic functions that must be performed--calculation of hours worked, deductions, personal information and benefits. Payroll system allows the employer to perform the tasks necessary to ensure accurate and timely paychecks. Through the payroll system the employer creates procedures that coordinate the payroll department with these other departments. In addition, it assists human resources with tracking employee's benefit days, such as vacation time, personal time and sick time. Payroll system often has the ability to automatically transport employee punches/swipes from the timekeeping system into the payroll system automatically (Trias, 2011). It is really inescapable fact that having a manual procedure in creating payroll system takes a long time to finish a certain task because of the many steps and processes that should be taken. There is the collection of data such as daily time record, remittances, and individual manual calculation of payroll. Individual data is transferred through sheets, encoding and double checking after calculating. All this process requires labor and effort to complete the task (Quidgara, 2009).
A manual payroll system requires that the payroll be processed by hand and is therefore a considerably slower procedure than an automated system. The former makes payroll processing simpler, and reduces errors, which are more likely with the manual system (Grace (n.d)).
Manual payroll system requires payroll processing to be done completely by hand. Therefore, time card, wages and payroll, tax computations, wage garnishment and voluntary deductions are done manually. Furthermore, paychecks and pay stubs are handwritten or printed on a typewriter. The main disadvantage with this system is its high room for errors. The more manual computations the payroll representative has to make, the more errors she’s prone to make. Furthermore, it’s time-consuming because to ensure the payroll is accurate, she has to triple-check the data before printing checks. Even then, it’s possible to miss errors. Paper filing is required with this system, which can create clutter. Furthermore, if the payroll representative does not understand how to calculate payroll taxes manually, erroneous tax withholding, reporting and...