Did you know there are over 190 pieces of federal and provincial legislation when it comes to payroll?
Payroll covers hiring and firing, salary, leave dates, benefits, bonuses, employment records, statement of earnings and other topics. Payroll and human resources solutions are critical functions for every healthcare practice.
Small businesses often spend over six hours a month on payroll functions when they do the payroll internally. If the clinic manager has not had training to manage the payroll and learn the employment standards rules like overtime and holidays, it can take many more hours! Clinic managers can quickly be overwhelmed by the responsibilities of managing payroll.
Common Payroll and Human Resources Errors
Doing payroll by hand can save you money. But it can create problems, too, like
- Incorrect calculations – it’s easy to make errors. Even small miscalculations can cause problems later when you are preparing tax reports.
- Time consuming and time critical tasks.
- Record keeping is hard – paper payroll deduction calculation forms, employee work schedules, bookkeeping, employee files, and time cards and holiday request forms in many places – and not always easy to find when you need it.
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You can choose to do your payroll internally, outsource to a reputable company, or a bit of both.
Payroll administration in a small healthcare practice includes all the activities necessary to process payroll, including schedule employees, maintain related records, filing tax reports and voluntary deduction reports, processing involuntary deductions such as levies and garnishments, preparing accounting transactions and documents, documenting and updating procedures, and preparing management reports and employee payroll reports.
In your healthcare practice, you need to identify a few key individuals who have signing authority for the payroll process. In many practices, the clinic manager and the lead physician are authorized to manage the operational tasks (e.g. scheduling, time sheets, calculating worked hours) and the bookkeeper prepares the paycheques, payroll remittances to Canadian Revenue and maintains individual employee payroll record keeping.
An outsourced payroll processor can assist you to automate these tasks.
Employers have significant responsibilities to manage payroll. There are strict employment laws and regulations – in fact, there are over 190 pieces of federal and provincial legislation related to employment legislation. Carefully documenting all the actions related to advertising, recruiting, hiring, dismissal, and wages and earnings is a critical step to meet these requirements.
It is important to have a consistent and efficient payroll process from the end of each worked pay period to providing the paycheque. Use this summary of the key steps in the payroll cycle as a checklist that you can use right away to implement appropriate payroll administration process in your healthcare practice.
Key Steps in the Payroll Cycle
- Employment Records
An employer must maintain an employment record for each employee. Start this when you hire the employee. (See the Hiring Resource Guide for templates for letter of offer, employee records in addition to the 9 Key Steps to Hiring). The letter of offer includes the employment status (e.g. full or part time), number of hours worked, rate of pay, pay period, start date, probation period, etc.
In the employment record, you also need to maintain key information about each employee including their full legal name, address, date of birth, and Social Insurance Number.
With each paycheque, the employer must provide to the employee a written statement of earnings (pay stub). The employee record maintains a cumulative reporting of all statement of earnings and remittances.
- Time Calculation
Review and calculate the employee’s work hours. There are many ways to do this however it is important that the payroll administrator verifies that the time is correct and authorizes the payroll payment.
- Wage and Deduction Calculation
Wages are payment for work that has been done. This definition excludes overtime pay, vacation pay, general holiday pay and termination pay. The employer must deduct the following from an employee’s earnings: Federal and provincial income tax; Employment Insurance premiums; and Canada Pension Plan contributions.
Deductions can be calculated manually or using payroll or accounting software.
- Paycheck Processing
In Alberta, an employee must be paid all wages, overtime and general holiday pay earned in a pay period It is important to have a consistent and efficient payroll process from the end of each worked pay period to providing the paycheque.
You can choose to pay by manual cheque or direct deposit.
Remember that the employee’s employment record needs to be updated for each payroll period.
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- Payroll Accounting
The payroll transactions must be entered into the business’ bookkeeping. Calculate employer paid benefits and taxes and distribute to the government and insurance company.
Employer’s Responsibilities
Employers are responsible to prepare end of the year reports to their employees for income tax reporting. If an employee leaves the practice, takes a leave of absence (e.g. maternity leave), or has a workplace accident, the employer must be able to produce a Record of Employment that summarizes the hours worked, wages, and earnings.
Be realistic about your skills and expectations for healthcare practice. Many small practices don’t have human resources and payroll experts in their practice. It is unfair to assume that the new clinic manager has all the skills necessary to manage this responsibility independently.
This is an appropriate opportunity to outsource routine payroll tasks. Use the most appropriate resources for the task. Outsourced payroll and human resources vendors, bookkeepers, and human resources consultants can assist you. Many clinic manager associations and healthcare professional associations provide continuing education and in some cases, member services, to support your practice.
Many clinic manager associations and healthcare professional associations provide continuing education and in some cases, member services, to support your practice. The Employment Standards Took Kit for Employers is a great easy-to-use resource that you can download from the Government of Alberta.
New or Existing Practice?
If you are opening a new healthcare practice or have an existing healthcare practice and want to reduce the time you spend managing payroll and human resources, you need to attend this FREE webinar with Dania Moazzam, Small Business Consultant with Ceridian.
Register for this FREE 30-minute Practice Management Nugget Webinar with payroll and human resources solutions expert Dania Moazzam. She will help you reduce the time and stress of scheduling employees, payroll and human resources and laws that you need to follow for your healthcare practice.
Register for this free webinar here
The perfect lunch break for busy practice managers – only 30 minutes and it’s free!
Practice Management Nuggets Webinars is a regular interview series with practice managers, healthcare providers, or trusted vendors who support healthcare practices. Topics include things you need to know to help you start, grow, fix, or maintain your healthcare practice. The events will be short – about 30 minutes – with nuggets of information that you can use right away.
And best of all – this is a free, no cost opportunity for you and your staff to hear from experts on a variety of topics how they made their clinics and businesses a success! Register now to receive a weekly update of the Practice Management Nugget Webinar guest speaker. Even if you can’t attend register anyway and we will send you the replay. Replays will be available for only a limited time.
Practice Management Nuggets’© series is hosted by Jean Eaton (Your Practice Management Mentor) of Information Managers Ltd.
