Easy Steps for Payroll Readiness During Tax Season

A business woman focused on work at her desk.

It’s only the second month of the year, so why are we talking about taxes so soon? Because it’s one of those important tasks that can creep up on you and absorb all your precious time, especially if you haven’t been meticulously tracking payroll throughout the year.

But what’s HR got to do with it you ask? Well, human resource specialists aren’t legal tax experts, but we play a pivotal role in administering payroll and taxes. These are two priority topics we discuss with companies into the new year.

Tasks, such as preparing T4 slips, making payslip amendments, tracking overpayments, preparing compensation packages, ensuring pay transparency compliance, and determining employee benefits structure affect payroll.

True North HR Consultants offer customized fractional HR services that support business payroll tasks so you’re always prepared for tax season. We’re also knowledgeable in a variety of legislation, such as compensation, employment standards, employee benefits, and pay transparency, and can review and create policies to ensure compliance.

In this article, we will talk about the important role HR plays in keeping a company’s payroll on track for tax season.

We specialize in helping businesses deal with tedious payroll tasks that are required for tax season. Contact us today to learn about how our fractional HR services can make your payroll seamless.

Understanding HR’s Role in Tax Preparation

The human resources department handles all business affairs from hiring, onboarding, maintaining, to firing, etc.

Another important role HR plays is the administration of salaries and related documents needed during tax season. In Canada, tax slips are issued by the last day of February each year so employees can file taxes for the preceding year.

Where HR professionals aren’t the ones who file taxes, we work closely with the finance department on all related matters. We also make sure businesses are compliant with all related payroll legislation.

Employees can be classified in several ways, such as full-time, part-time, contractors, etc. Employee categorization can also vary according to compensation packages.

HR Tasks in Payroll Management

In many ways, HR becomes the oil that keeps the company machinery going. HR experts do more than prepare tax slips at the end of the year.

Understanding and implementing labour laws

HR experts have in-depth knowledge of labour laws and standards, which they use to keep the company compliant and avoid penalties. It’s also the HR team’s responsibility to constantly monitor changes to legislation to ensure company policies are being updated as required.

Fielding employee queries

Payroll calculation is a technical task done by people with extensive knowledge in the field. HR staff members are the go-to experts whenever employees need help understanding exactly how their payroll amounts are calculated.

Preparing payroll data

Most companies use payroll systems that allow them to track payroll activities all year. HR experts are highly skilled at managing such systems to record and report back on data gathered. This information can feed into long-term business strategy.

Handling employee benefits

HR professionals can help companies understand employees’ needs to determine the most efficient and effective benefits packages.

Managing fair compensation practices

HR staff are also well versed in fair compensation laws and can guide companies around such practices. Fair wage policies show staff that the employer values them.

Other HR staff tasks in payroll

As the workforce diversifies, companies need to stay on their toes to attract, hire, and retain top talent. HR experts can do this by preparing proper job descriptions, determining fair wage practices, and researching the best employee benefits packages according to specific staff needs.

Here’s what else HR professionals will look after among other payroll tasks.

Organizational changes that impact company tax benefits

Sometimes corporate reorganization can lead to changes in payroll, which leads to changes in the tax benefits a company receives

Some companies have a global workforce, leading to unique payroll needs.

Bonuses, overtime, and vacation pay

Businesses that miss out on calculating these crucial payment categories can get in trouble. But at True North HR, we track all payroll categories closely to make sure you don’t end up paying any penalties.

Other employee benefits to track

HR also keeps an eye on any fringe benefits your company offers employees.

  • Education-related reimbursements
  • Gym memberships
  • Employee loan discounts
  • Any other cash benefits
  • Vacation accrual and time off used
  • Severance pay
  • Parental or bereavement leave impact on pay

Technical Payroll Matters HR Looks After

Human resource experts take the long-range view and use their skills to keep companies compliant with all compensation and labour policies. HR specialists will constantly track new legislation and learn how it should be implemented so companies do not end up paying heavy penalties.

The HR team:

  • Makes sure the company’s compensation policies are up-to-date
  • Keeps the business compliant with pay transparency legislation
  • Determines overall compensation strategy and treatment according to law
  • Works with C-suite to determine what the income policies should cover as required by legislation
  • Prepares expense-related rules for companies

Keeping Payroll Procedures Updated

  • In the three years or so, companies have had to think on their feet as they’ve had to allow most employees to work from home. Working from home meant staff members could claim expenses in home utilities in their taxes. That may not continue to happen for some companies now, but whatever the policy change, it needs to be communicated clearly and openly to employees so they know how it will impact their taxes.
  • Similarly, employees may be using personal technology items, such as phones or laptops, for work, expenses for which can be tax deductible.
  • During the pandemic, a part of the workforce has turned to gig work. That means companies may have fewer people on full-time payroll, but contract work hours still have to be tracked by HR.

What to do After Tax Season?

First of all, take a deep breath. You made it through.

Secondly, start preparing for next year’s tax season now so you reduce your chances of rushing to get things done.

  • Consider using a good payroll platform that will help you track all related activity
  • Sit down with your HR team to review your compensation policies
  • Have a chat with your HR department about labour law updates
  • Put some thought into how you can strengthen your offerings so your employees feel valued

Handling all this on your own can be a bit challenging, especially with all the policies that are subject to changes in laws and legislation. Reach out today for fractional HR support in staying on top of your payroll and taxes.