Yes.
It has been my experience that employees that are the worst at math can do payroll calculations. It is absolutely vital that you know how it works and the applicable laws. A payroll error will result in havoc, front facing with the employee(s) and especially bad optics to a Company.
I have been an accountant for approximately 20 years and have seen a lot. During the .com period of the early 2000s, I had a client that was preparing to go public and had not paid their payroll taxes in years. The CEO was more focused on building a house while taking on more and more funding versus negligently not remitting payroll taxes. Not limited to the employee Federal and State tax deductions! I experienced this during my 1st year in public accounting and I was not sure what to expect. Very poor move and although I do not know the end result, I am confident it did not work out well for the Company.
There are a couple of key takeaways:
- You need to understand how payroll works. How to physically process it and how the labor distribution is performed to match labor expense with objectives and Company management reporting. I am not interested in making a career out of this (too monotonous for me), however, I do think it is important to have a deep understanding of the process and expense to explain at a macro-level.
- There is a multitude of pension, commuting and health care benefits. Be familiar. Each area requires attention and have different impacts (internal and external facing).
- Pension – small companies should have safe harbor plans for tax planning opportunities (volunteer for summer 401k audits in public accounting, it is a great learning experience)
- Commuting – there are several pretax benefits that are important to employees, frequently administration is the only expense to the company, however, employees expect and value these benefits.
- Healthcare – this requires a high level of attention and extremely important. Learn it for your own benefit and the benefits of others. Know what other companies in your vertical contribute on behalf of the employees.
It is easy to get payroll right and wrong. Getting it wrong has some potentially significant consequences. Pay attention and learn, it is critical.