CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A payroll is a company's list or records of its employees, which is
often used to refer to the total amount of money that a company pays to its
employees.
A payroll system is software
which organizes and arranges all the tasks of employee payment and the filing of
employee taxes (Wikipedia). These tasks may include keeping tracking of hours,
calculating wages, withholding taxes and deductions, printing and delivering
checks and paying employment taxes to the government.
Payroll software plays several roles for the user, the employees and the
company, such as: giving you supper easy ways to manage employee calendar (e.g,
sick
leave, absences and overtime), gives you latest tax updates
you when by notifying you when the updates arrive,
allows you to quickly and easily generate payslips for all your employees,
serves as a reminder. Payroll also makes deductions from
employees’ wages for taxes, wage garnishment, health and life insurance,
spending accounts and retirement investments. Payroll works with your
accounting department to ensure that wage deductions and other payroll expenses
are paid and properly reported.
1.2.
Statement of Problem
Manual
systems of payroll always put pressure on people to be correct in all aspect of
their work. With manual systems the level of service is dependent on
individuals and this puts a requirement on management to run training
continuously for staff to keep them motivated and to ensure they are following
the correct procedures. It can be all too easy to accidentally switch
details and end up with inconsistency in data entry or in hand written orders.
This has the effect of not just causing problems with customer service
but also making information unable be used for reporting or finding trends with
data discovery. Reporting and checking that data is also a problem and
can be time consuming and expensive.
Other
problems caused by the manual payroll system are:
Ø Inconsistency
in data entry, room for errors, miskeying information.
Ø Large
ongoing staff training cost.
Ø System
is dependent on good individuals.
Ø Reduction
in sharing information and customer services.
Ø Time
consuming and costly to produce reports.
Ø Lack
of security of data.
Ø Duplication
of data entry.
1.3.
Objective of Study
The
objectives of this study is to design a computerized payroll system for an
organization,
Ø To
design a computerized system for calculating basic salary and allowance of
staff.
Ø To
design a computerized payment platform.
Ø To
design a system that accurately stores employee data and retrieves payment
history when needed.
Ø To
design a computerized system for tracking vacation time, maternity and
paternity leave.
1.4.
Significance of the study
The
study will aid in reducing errors, fraud, increase speed and also aid growth in
organizations if successfully implemented. Manual payroll systems in
organizations will be totally eliminated with this computerized system in
place. The study will also serve as a guide to other student researchers who
may want to conduct further research on the subject matter. Findings and
recommendations from this system will aid in developing newer versions to serve
optimally.
1.5. SCOPE/LIMITATION OF THE
STUDY
The
scope of this study is centered on the design and implementation of an epayroll
system.
Limitation
Financial constraint- Insufficient fund tends to obstruct
the efficiency of the researcher in sourcing for the relevant materials,
literature or information and in the process of data collection (internet,
questionnaire and interview).
Time constraint- The researcher will at the same time
engage in this study with other academic work. This consequently will cut down
on the time devoted for the research work.
1.6.
DEFINITION OF TERMS
A
payroll:
is a company's list or records of its employees, which is often used to refer
to the total amount of money that a company pays to its employees.
A payroll system:
is software which organizes and arranges all the tasks of employee payment and
the filing of employee taxes.
Payslips:
a
note given to an employee when they have been paid, detailing the amount of pay
given and the tax and insurance deducted.
Employer:
a
person or organization that employs people.
Employee:
a
person employed for wages or salary, especially at nonexecutive level.
W-4
tax form: is a form completed by an
employee to indicate his or her tax
situation (exemptions, status, etc.) to the employer. The W-4 form tells the employer the correct amount of tax to withhold from an employee's
paycheck.
Internal
Revenue Service (IRS): A United States government agency that is
responsible for the collection and enforcement of taxes.
Social Security Administration
(SSA): is an independent agency of the United States federal government
that administers Social Security, a social insurance program consisting
of retirement, disability, and survivors' benefits.