Even in a small business, HR and payroll is a very sensitive area that requires knowledge not only of the law but also of financial matters. Employee documents must be stored properly and all payroll obligations settled correctly. What other duties does the HR department have, and can you run it yourself?
What do HR and payroll involve in a company?
HR and payroll in a company is the area of activity related to managing staff and handling matters concerning employees' pay. It covers a number of tasks and processes, for example:
- Recruitment and selection – the process of bringing new employees into the company, including publishing job offers, conducting job interviews and choosing the best-matched candidates.
- Hiring and onboarding – the formal procedures for taking new employees into the team, including concluding employment contracts, preparing employment documents and introducing new employees to the company's structure and organisational culture.
- Pay management – setting employees' pay conditions, including salaries, bonuses, allowances and other financial and non-financial benefits.
- Keeping employee records – creating and storing documents related to employment, such as employment contracts, payrolls, working time records, social insurance registrations, etc.
- Working time records – monitoring employees' working time and checking attendance, leave, overtime and other forms of absence.
- Payroll settlement – calculating employees' pay, including taxes, insurance contributions and other deductions, and making salary payments.
- HR management – employee development, training, periodic appraisals, promotions, terminations and other aspects of developing and retaining employees in the company.
Well-managed HR and payroll are key elements of how a company functions, because they concern the most valuable resource of any organisation: people. Proper staff management can help increase productivity, employee engagement and the company's operational efficiency.
Who usually runs the HR and payroll department?
The HR and payroll department is usually run by HR and payroll specialists or a team of employees dealing with this area. These people may have different job titles, depending on the company's organisational structure and size. The HR department may be run by a specialist in HR, i.e. a person responsible for matters related to employment, recruitment, employee records, working time records, training and employee relations. The company may also employ a specialist in payroll, i.e. a person responsible for calculating employees' pay, settling payroll, calculating insurance contributions and taxes, keeping payroll records and answering employees' questions about their pay. In practice, HR and payroll is often entrusted to the firm that handles the company's finances.
Can you run HR and payroll yourself?
Of course, it is possible to run HR and payroll yourself, especially in smaller companies or sole proprietorships. In many cases the business owner can manage staff and payroll matters on their own, particularly in the early stages of the business, when the company has few employees.
However, running HR and payroll yourself requires the right knowledge and skills, as well as time devoted to a variety of tasks related to staff and payroll management. A person who decides to run HR and payroll on their own should be aware of the following:
- You need knowledge of the current regulations on employment law, taxes and social insurance in order to settle employees' pay correctly and meet legal requirements.
- Keeping employee records, calculating pay, preparing tax and insurance returns and other personnel administration tasks require appropriate administrative and organisational skills.
- All HR and payroll activities require accuracy and timeliness to avoid errors and potential financial penalties for late settlement of taxes and contributions.
- Running HR and payroll yourself effectively can be made easier by using suitable tools and software for staff management and payroll, which can help automate many processes.
Running HR and payroll yourself may be feasible for people who have the right knowledge and skills and enough time and resources, but bear in mind that as the company grows it may become necessary to hire specialists or use external accounting firms.
In these circumstances, a much better solution is to choose an accounting officewhich will comprehensively handle not only the finances of the whole company but also HR and payroll, with the right expertise and experience.
