As a company grows, it becomes necessary to find a permanent solution to payroll processing. With the many details, regulations, procedures, and filings involved with payroll processing, delegating payroll responsibilities to an existing employee, or trying to take care of it yourself, becomes an unsatisfactory option. Some business owners or managers try to solve the payroll puzzle by hiring an in-house payroll clerk. This solution is probably better than trying to manage payroll yourself, but it has some serious drawbacks.

HR Overhead Costs

When you hire a payroll clerk, you take on numerous new overhead costs. First off, there's the cost of hiring, which includes advertising the job, reading through resumes, interviewing, and getting your new employee integrated in your payroll system. There's training to consider, which could involve off-site training, courses, and conferences to get your new employee up-to-speed with current payroll regulations. Your new payroll clerk needs a place to work, equipment, and software. Additionally, you'll need to consider the costs you incur with a new employee: benefits, insurance premiums, your portion of CPP contributions and EI premiums, and paid vacation and sick days.

Vacation/Sick Days

Payroll never sleeps. Your employees need to get paid, and your government remittances must be submitted continually, whether or not your payroll clerk gets sick, takes a vacation, or needs personal time away from the office. Remittances must be sent in on time if your company is going to avoid fines levied by the CRA, and a single payroll clerk managing payroll processing for a whole company may have a hard time meeting every single deadline. Outsourced payroll processing, on the other hand, can manage payroll no matter what. They can guarantee that everything will be done in a timely fashion, and they don't require vacation days or sick leave.

Turnover

A good payroll clerk may get a firm grasp on everything it takes to manage your payroll effectively. Getting to this point takes time and consistent effort because payroll is complicated, and the regulations change from year to year. What will you do when your expensive, painstakingly trained payroll clerk gives notice and leaves your firm? You'll be back at square one, looking for a new employee who doesn't understand the ins and outs of your company and may require substantial training before you can feel comfortable with the state of your payroll again.

These problems can be avoided by turning your payroll processing over to an outsourced payroll processing company rather than hiring your own clerk. With outsourced payroll processing, you don't have to worry about adding to your HR overhead costs. Payroll won't require any square footage of your office space, it won't require that you buy any new equipment or specialized software, and you won't have to pay additional employee benefits. You also won't have to worry about the state of your payroll when someone wants to take a vacation. You'll just know that it always gets done faithfully, no matter who is in (or out) of the office. Finally, there are no turnover worries when it comes to outsourced payroll processing. Although your contact at the outsourced payroll processing company could change from time to time, your payroll will always be handled professionally and in a timely manner. Compared with outsourced payroll processing, hiring your own in-house payroll clerk may be the more expensive option.

On the surface, your payroll clerk may not seem to be one of the most important players in your company. The payroll clerk doesn't make big decisions, doesn't interact with clients, and doesn't tangibly affect your bottom line. But hiring the wrong payroll clerk can have a huge impact on the way your company runs. Whether you realize it or not, your payroll clerk has great responsibility when it comes to keeping you compliant with government agencies. Therefore, your company's legal status and reputation are in the hands of your payroll clerk.

But how do you know if you've hired the right payroll clerk? What kinds of questions do you need to ask to ensure that you're putting your trust in the right person?

Questions to Ask a Potential Payroll Clerk

When interviewing candidates or payroll processing firms to handle your payroll, ask open-ended questions that will allow them to elaborate on their experience. This helps you to get a better grasp on their capabilities, education, and experience.

1. How do you ensure that payroll is completed on time?

A good payroll clerk is organized enough to have tried-and-true systems in place to ensure that each payroll step is completed in a timely manner. The detail in the candidate's description to this answer will help you to understand his or her depth of experience.

2. Do you have experience with submitting payroll deductions to the government?

This question is very important because proper deduction remittance is key to your company's compliance and legal standing. The candidate should mention federal withholding, Employment Insurance, CPP, workers’ compensation, and, in Ontario, EHT.

3. Tell me how you handle payroll year-end requirements.

Not only must payroll clerks handle the paycheque-to-paycheque clerical work, but they also must handle year-end governmental requirements like T-4 slips and direct reporting of filings to authorities.

4. How do you make sure that payroll is in compliance with the Employment Standards Act and the Canada Revenue Agency?

Legislative changes result in policy changes at the Canada Revenue Agency, and it's the responsibility of Canadian employers to keep up with these changes. When you hire a payroll clerk, you expect that person to keep up with these changes for you. If the person you're interviewing can give you specific information about the Employment Standards Act, you're in good hands.

5. What do you do when you need to communicate with someone at the CRA?

It's inevitable: questions will arise from time to time about situations unique to your company that involve the CRA. If your potential payroll clerk doesn't know how to reach someone who can answer questions, you could find yourself in a small crisis. Hiring a payroll clerk with a history of communication with tax authorities puts you in a great position. You'll be able to get questions answered in a timely manner and minimize your chances of non-compliance.

6. How can you help us with other human resource issues?

It never hurts to hire a payroll clerk who understands the ins and outs of human resources. Having an employee on board who can handle Ministry of Labour claims, Workplace Injury Claims Management, standard employment agreements, and employee orientation and training will be a great boon to your company, helping you to navigate some of the trickier employee issues common to Canadian businesses.

Once you find that perfect payroll clerk or outsourced payroll provider, you'll be able to delegate all of your payroll-related tasks, knowing that your company's payroll is on-time, compliant, and properly remitted.