Many small businesses spend extensive and numerous hours on human resources (HR)-related tasks, most notably payroll processing. According to a recent survey, small businesses can spend up to 41 hours a year on tax calculations and payroll processing alone. These hours add up quickly and small business leaders are seeking solutions that can optimize their time, operations, and overall efficiency.
Shifting to automated HR software, including online payroll software, is a direction that many companies are heading as it brings various benefits for employees, leaders, and employee productivity at large. For employees, payroll software offers a variety of self-service options with immediate access to their payroll information in real-time. For business leaders, payroll software offers automated, highly accurate, and timely results for all aspects of payroll processing.
What is payroll software?
Payroll software is a form of technology that offers digital and automated solutions to traditional payroll processes and overall payroll management. Automated payroll systems that utilize technology enable overall management of employee data, including wages and compensation, so payroll can be processed accurately and efficiently.
Tax filings, onboarding, direct deposits, and IRS-compliant solutions are all built within robust payroll software. That means that members of your HR team can complete any of these tasks through a singular software solution. In addition to the benefit of automation, payroll software offers companies secure platforms where employee information, payroll data, bank accounts, and human resources data are protected through encryption and secure servers.
Companies, including small businesses, have more choices when it comes to how payroll is processed at their company. Small business owners can manage their payroll information through payroll outsourcing, manual payroll systems, or through the implementation of online payroll software.
This article will outline the benefits of using cost-effective payroll software systems and how these systems can help your company save money, follow tax laws, and process payroll with user-friendly technical support.
What are the benefits of using payroll software for your small business?
Prevention of payroll mistakes
Human error is a common challenge for many companies that process payroll manually, usually with a bookkeeper. Payroll tasks are numerous and can be quite complex, making it difficult using manual accounting to catch errors. If even one calculation is off, other parts of the payroll system, including wage calculations, tax calculations, and direct deposit amounts, can be incorrect. Additionally, it can be time-intensive to locate the origin of the calculation error and subsequently correct the error and re-run the program to ensure it was corrected. Payroll software systems eliminate this issue through the benefit of automated calculations and verifications to catch any potential calculation errors.
Software systems designed for payroll services include built-in verification checks. Verification checks automatically scrutinize paychecks, payslips, stubs, and payroll files to ensure that all calculations are correct for each employee. Built-in verification checks help reduce mistakes that might otherwise occur when payroll is completed manually, especially when it comes to wage and tax calculations. Bookkeepers and HR employees are then able to work on other tasks with the assurance that the risk for payroll errors is reduced.
The primary benefit of integrating payroll software in your small business or company is the time that is freed up for business leaders to focus on other operational needs of the company, and for employees to have the bandwidth to work on other tasks. Payroll management systems offer extensive automated features that save bookkeepers, accountants, and executives from the various time-consuming tasks that manually working on payroll requires. With a few clicks of a button, your team can generate the required information for wage reports and other employee-related data.
Payroll software includes the benefits of accounting software so that payroll can be calculated for any time frame desired, like weekly, monthly, annually, etc., using existing templates to make the process go faster. Instead of worrying about issuing physical paychecks or pay stubs, employees can access their wage information online. This benefit enables accounting team members to focus their energies on macro-level accounting needs, such as profitability, cash flows, monthly performance, etc.
With online payroll software, your small business will no longer have to hold on to physical documents with sensitive information. Instead, the information can be stored securely. Encryption is often available with payroll software systems and can be securely saved on server systems.
Additionally, for companies that have used payroll outsourcing systems, internal payroll software removes the risk and uncertainty of sharing the information with a third party. As your company makes this transition to online payroll software, your information technology (IT) team can provide you guidance on how to ensure the highest IT security standards for the protection of your information and data.
As mentioned before, one of the primary benefits of adding payroll software is to promote accurate payroll calculations. Automated payroll systems include regular updates for tax compliance and tax adjustment purposes. As a result, a company can be assured that with the latest tax updates, the most current forms will be used for required filings.
Automatic updates are critical for businesses that are in a growth stage because calculations can become more complicated as the number of employees increases. The good news is that payroll systems are able to manage these complex calculations and offer a multitude of intrinsic capabilities, including monthly payroll reconciliation, so that you have a wider overall view of the payroll picture as it impacts revenue, expenses, as well as the departments’ and company’s budgets.
Speed with reliability
Another benefit of using payroll software is the impacts of automation on your overall payroll process. Automation supports your payroll process with both speed and reliability. You can have the peace of mind that the numbers reported for your payroll are accurate, calculated correctly, and reflect the state of your employees’ work in real-time.
Payroll software can generate reports quickly that show metrics related to employee hours, wages, taxes, and overall performance, in addition to other relevant employee wage and tax information. The feature of report generation adds essential functionality for overall business strategy and decision making. The ability to see metrics on demand (instead of having to wait a longer period of time for the reports if using an outsourcing service or completing payroll manually) allows for quicker and more informed decision making by business leaders.
Professional services costs add up quickly when using an outside payroll service. Moreover, if you keep payroll in-house but use manual processes, you will need to hire an employee with the necessary certification, training, and expertise in finances and payroll. However, by using payroll software, you won't necessarily need to hire someone with the same level of expertise or know how. There could also be the opportunity for cross-training where the entire payroll process can be taught to other members of the human resources team who may not have previous experience in payroll calculations, payroll management, and payroll processing.
Cost-savings are inherent in a company's one-time investment into a payroll service that will benefit the company long-term. The cost of payroll software will bring unlimited opportunities for monthly payroll processing, thereby lowering costs for the business over time.
Payroll software companies will often include customer support services if additional guidance or consultation is needed. Usually, customer service support (along with software tutorials) are included in the payroll software package. Employees will have access to trained representatives who can help with any software issues.
The availability of customer support allows for an extra layer of back-up when completing the payroll process. Some employees may have less experience with software and will need more support in learning the workflows and functions of the online payroll software. Instead of having to invest valuable training time, companies can rely on the customer support team from the payroll software company that they choose to go with.