If you’re just beginning to consider whether or not you need payroll software, then you probably have a pretty good idea of what processing payroll looks like. But you might not have a complete understanding of what exactly payroll software is or what it does. So, what is payroll software?
Pretty much exactly what you’d expect. Simply put, payroll software can be described as an application that streamlines and manages employee payments.
You value your employees. After all, they work hard and you couldn’t run your business successfully without them. Because of this, you know the importance of paying them a competitive wage and ensuring that they receive their paychecks regularly without any hiccups. Consequently, the biggest job that a payroll solution accomplishes is accurately calculating paychecks. Payroll systems can easily track the number of hours worked, account for rate of pay and calculate what an employee should be paid for the pay period.
The most effective programs can track time and attendance, allow employees to submit time-off requests, calculate pre- and post-tax deductions, manage expenses and much more. While it may sound like it’s time to say goodbye to your payroll staff, there may be more to consider. If you have more than 10 employees, you may want to keep your payroll specialist on your team to monitor and keep the system up to date.
While payroll software can certainly do most things, it still won’t take the place of your smiling payroll specialist. Understanding the needs of your business and the capabilities of various software systems will help you to determine which vendor will best serve your business and how to implement it.
Automate core payroll tasks
Fortunately for accounting and HR departments, this type of software can do most of the heavy lifting when it comes to payroll. From conveniently storing basic employee information to keeping you up to date with the most current tax laws, there isn’t much payroll software can’t do for you.
Payroll solutions are able to automatically calculate wages and taxes. Many systems allow you to customize these features to meet your specific payroll processes, allowing users to process payroll effortlessly. These systems can also help track employee costs, store and locate employee records, generate forms and send you reminders when it’s time to approve payroll.
Some of the essential tasks that a payroll system can help with include:
- Payroll Management
- Tax Filing
- Financial Management
- General Forms
Synchronize core HR tasks
Some payroll systems are included as part of a human resource information system (HRIS), which provides tools to help manage a wide range of HR activities. Despite the varying capabilities of different software and the fact that there will still be things leftover for you or your payroll specialist to do, payroll software is still an incredible time-saver.
There are a variety of HR tasks that influence payroll. From record keeping to synchronizing time and attendance tracking, many solutions are able to streamline the payroll process by integrating additional HR functions into the system.
Some of the HR tasks that payroll software can help with includes:
- Time and Attendance
- Benefits Enrollment
- Employee Lifecycle Management
- Personnel Tracking
Increase Employee Job Satisfaction
Perhaps the biggest benefit of payroll software is increased employee retention. The process of filling an open position within your business is time consuming and often labor intensive. Once you’ve finished interviewing and vetting your candidates, you offered the job to the best candidate in the hope that they accept. If they did accept, it was likely due to the promises you made them. One of those promises is compensation in exchange for their work. While delivering on this basic promise may appear to be easy, failing to do so can be detrimental.
A study by the Aptitude Research Partners found that 49% of U.S. workers will leave their job after just two paycheck errors. That’s not a lot of room for mistakes when you stand to lose your hand-picked employees. Payroll software eliminates the possibility of human error that could result in inaccurate paychecks or other costly payroll mistakes. Simply the assurance of accurate paychecks delivered on a regular basis can be enough to keep your employees happy with their role in your business.
For many businesses, tracking items such as the hours employees work, their rate of pay and accounting for additional factors such as sick or overtime pay can quickly turn into a mountain of information to enter manually into an Excel spreadsheet – with plenty of room for costly error. A simple typo or misplaced decimal when entering data manually can wreak havoc on finances. Fortunately, these types of mistakes are entirely unnecessary and easily avoided with the use of payroll management software.
When you use payroll software, you can rest easy knowing that you’re paying your employees accurately, acting in accordance with current tax law and tracking all of the relevant financial information. It’s also nice to know that your HR and accounting department won’t be wasting time correcting payroll errors. The American Payroll Association estimates that this kind of efficiency can result in an up to 80 percent reduction in the cost of payroll processing costs.
Additionally, this kind of software can help you to avoid costly penalty fees that result from inaccurate bookkeeping. The early 2000s witnessed the Enron scandal that resulted in a slew of stricter financial regulations. These regulations (like the Sarbanes-Oxley Act of 2002) proved to have an important impact on the future of payroll. Payroll software can track all of your data, ensuring that you’re paying exactly what you should be paying in taxes and helping you to avoid costly non-compliance penalties.
Customize payroll processes
Utilizing a payroll software system allows for quick changes to be made in house without hassle. Even after you’ve input your initial withholdings and deductions. In the event that a change needs to be made later on, authorized users have immediate access to the system and can make the required changes without contacting a third party. With a cloud-based system, users can even update information from the comfort of home so long as they have clearance to access the system. Additionally, the use of an in-house system ensures that critical employee and business information is secure.
What Should My Budget for a Payroll System Be?
As with all things, pricing will vary based on the vendor and how advanced the solution’s capabilities are. If you’re looking for a more basic system, it might be possible to find a free solution that meets your needs, while a more advanced system will cost more. When shopping for a program to implement, you’ll want to be aware of what your specific needs are and which vendors can offer features to meet those needs. This knowledge can help guide your search and help define a price range among vendors.
However, there are a few things you’ll want to look out for when comparing the prices of different solutions. Especially when opting to use cloud-based software, it is important to be aware of additional fees. You’ll also want to be sure you aren’t overpaying for a system that offers more features than you really need. Furthermore, be aware of the capabilities of the system, and don’t overpay for a system that has abilities you won’t be using if you can avoid it.
How Long Will It Take to Implement the Solution?
While many of these systems strive to be user friendly, there is still a learning curve. The more advanced features that a software possesses, the more there is to learn and the longer it will take to become totally efficient using the system.
Fortunately, many vendors offer demos of their products in addition to a variety of self-learning tools. These tools can help you get started with the system as well as answer questions along the way.
How Do I Select a Payroll System?
Regardless of the size of your business or what your payroll needs are, it’s likely that payroll software can help. There are plenty of payroll software options to choose from; at this point, it may be just a matter of picking the right one. Some of the most important considerations will be the size of your business, your preferred deployment method and your budget for the software. But there will certainly be other considerations you won’t want to compromise on that are specific to your business. Compile a list of what you need from payroll software and keep it handy when shopping around so you know which product checks all the boxes — and be aware which ones check too many extra.