Payroll software is a cloud-based solution for businesses to easily and securely make payments to employees. By automating the payment process, this software can help companies both big and small save time and effort on the integration and management of payment processes.
But it’s about more than just making people’s lives easier. Payroll software can also help businesses maintain compliance with tax laws and other relevant financial institutions, not for both legal and practical purposes.
By automating this process, human resources personnel will have more time and capacity to spend on more complicated tasks that really require human intervention, improving overall business function and professional efficiency.
What is Payroll Software?
Payroll software streamlines all payroll tasks, from calculating wages and including bonuses, over time, salary rates, hours worked and more to handling tax, insurance and retirement plans.
Of course, taking all these factors into account makes the process pretty complicated, so by using an automated payroll software system, businesses can simplify the process significantly while increasing efficacy and accuracy.
Furthermore, the software also includes additional features that can be incredibly useful, like the means to view tax forms, update personal details, access pay stubs and more.
Types of Payroll Systems
Payroll systems come in three main categories, depending on the needs of the business in question. They’re pretty self-explanatory, but each type offers distinct features to users.
1. In-House Payroll: Most commonly used by large companies, in-house payroll software is managed by personnel within the business and it’s often customised, at least to some extent, to suit the company’s specific needs. It’s a bit more expensive than general systems at the outset (due to development, implementation and staff training), but it can make things more cost-effective and cheaper in the long run.
2. Outsourced Payroll: Outsourced payroll can be used by both small and large companies. It offers businesses the luxury of not having to deal with payroll issues because the tasks are farmed out to a third-party provider that handles everything.
3. Cloud-Based Payroll: Managed online, as the name suggests, cloud-based payroll systems allow businesses to enjoy flexibility, because the system and software are accessible from anywhere at any time. Cloud-based payroll systems can be both in-house and outsourced.
Primary Functions of Payroll Systems
Different types of software will include various functions, depending on how expansive it is. Small companies tend to require less complex features than large companies, but that doesn’t mean that can’t (and won’t) make use of a broad variety of services.
The primary functions of payroll systems include:
- Wage Calculation: It may sound basic, but calculating every employee’s exact wage can be complicated and time-consuming. It involves taking into account hours worked, individual hourly wages, salary rates, overtime, bonuses and more. Using payroll software to do this will save loads of time and reduce the opportunity for errors to creep in.
- Time Tracking: Instead of tracking hours and days worked manually, this can be done by means of payroll software. This allows HR to easily track plenty of employees’ hours, sick leave, vacation time and overtime without having to spend hours following up with people and making calculations.
- Tax Deductions: Dealing with tax calculations can be a nightmare, but payroll systems can help handle tax issues at various different levels, making sure everything is happening within the law.
- Managing Benefits: Software can automatically keep track of and deduct contributions to things like retirement funds, health insurance and any other optional extras.
- Facilitating Direct Deposits: Not only does the software how much you need to pay employees, it actually has the ability to facilitate direct deposits straight into employees’ bank accounts.
- Reporting and Auditing: Payroll software provides a great means of internal financial tracking, and it can also help create reports for things like tax filings, audits and more.
These core functions of payroll software demonstrate the ways in which these types of platforms can be so useful for companies. Not only will they save HR personnel a great deal of time, but they’ll also help improve accuracy and reduce human error.
Undoubtedly, the use of payroll systems is significantly more important for large companies with hundreds (if not thousands) of employees, because without it, managing wages and employee finances would be a massive undertaking.
But even for smaller businesses with limited staff, payroll software still has plenty of benefits to offer.
Benefits of Using Payroll Software
The reason we use any type of software in business is to improve efficiency and performance, and the same goes for payroll software. Payroll is one of the most important parts of regular business operations, because it’s all about money, so safety and security are imperative.
The primary benefits of using payroll software in your business include:
- Efficiency: Using software for payroll helps free up valuable time for HR staff so that they can spend time on other things.
- Accuracy: No matter how competent and efficient employees are, there’s always an element of human error that’s unavoidable. But when you’re using automated payroll software, you can eliminate the potential for errors, increasing accuracy.
- Compliance: While doing the payroll process manually, compliance issues need to be monitored manually, but when you’re using software, the system will do it for you, keeping track of your activity and ensuring that everything you do is compliant and within the realms of the law.
- Security: Payroll software is developed with security at the forefront of its design, so it can be significantly safer to manage all payroll processes by means of payroll software rather than just having employees do it manually.
Why Use Payroll Software?
Payroll software exists to improve business operations and make employees’ lives easier. It’s there to enhance security, improve efficiency, increase accuracy and ensure compliance, making it fairly easy to argue that it’s a worthwhile investment.
Whether you go for an outsourced payroll system or your own customised in-house software, payroll software is sure to make a big difference in your business operations.
