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.

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