Compensating your employees or contract workers is an essential part of any business. However, the payroll process can be complicated and time-consuming. If done incorrectly, your business could incur penalties from the IRS. Payroll software can help alleviate the process, ensuring you comply with the laws and pay your workers fairly and on time.
What is payroll software?
Payroll software is an efficient and reliable way to manage, organize, and automate paying your employees. Organizations of all sizes can use payroll software to help save time, generate reports, reduce risk, and track payroll-related information.
Common features of payroll software
When it comes to payroll software, most services will often include these features:
- Compensation management — Compensate your hourly, salaried, or contract employees via check or direct deposit on a weekly, biweekly, and monthly basis. Additionally, you can export the data for accounting software.
- Tax filing — This feature helps calculate federal, state, and local taxes, which typically include Social Security, Medicare, unemployment, and disability insurance. It can also help you stay in compliance with current tax laws.
- Generate reports — This feature allows you to track payroll information over time and quickly produce useful reports associated with tax liability, employee summaries, time tracking, and more.
- Benefits administration — Track one-time or recurring benefits, such as time-off, health insurance, retirement plans, and education assistance.
- Employee portal access — Your employees can usually access the software to edit their personal information, payment preferences, and other details. They can also access and print forms like their pay stubs or W-2.
What are the benefits of payroll software?
Workforce management can be complex, but robust, integrated, and properly configured payroll software can alleviate some of the pressure of running an organization. Here are some of the ways your organization can benefit from payroll software:
Saves time
Typically, the human resources (HR) department is responsible for payroll, which can take a lot of time if they manually enter pay stubs or make payroll calculations. The automation of payroll software helps free up time for HR, allowing them to focus more on planning, budgeting, and other business-forward initiatives.
Saves money
Payroll software is designed to carry out all your small business payroll processes. If your organization decides to invest in one, you wouldn’t have to worry about hiring a manager or outsourcing. As a result, your organization could save a lot of money by spending it on additional salaries or fees.
Minimizes the risk of errors
One of the main drawbacks of traditional payroll processing is the high probability of human errors. Whether inaccurately inputting data or accidentally deleting formulas in a spreadsheet, these mistakes can wreak havoc on your finances because you could be subject to penalty fees for inaccurate bookkeeping. Not only that, it wastes valuable time and resources correcting these errors.
Payroll software helps drastically reduce the possibility of human error, allowing you to pay your employees accurately, comply with current tax laws, and track relevant financial information.
Increases security
Maintaining hard copies or spreadsheets with sensitive information is not secure at all. If it gets into the wrong hands, your organization may suffer financial and reputational damage. Payroll software helps ensure only the right people have access to the appropriate information for their roles. When you invest in payroll software, you’ll benefit from increased security measures, such as password protection, conditional system access, and data encryption.
Helps employees
Payroll software is beneficial not only for your business but also for your employees. With payroll software, your employees can be confident they’ll get paid correctly at the right time. Additionally, many payroll software services offer user-friendly interfaces that make it easy to view payment history, adjust personal information, and change payment preferences.
Helps with taxes, compliance, and regulations
A crucial part of the payroll process is managing employee taxes. Payroll software can help you navigate the complexity of taxes, compliance, and regulations. Many services ensure accurate, timely payments and tax deductions by locality. They can also automatically adjust to different rules and regulations if employees move or offices open or close. When it comes to mergers and acquisitions, you can transfer employee information easily and automatically generate one-off payments.
Offers customer support
Many payroll software services offer 24-hour support when needed, especially if an issue arises within your business operation. An expert can help your HR department understand the system’s workings and provide tips for a streamlined process.
Does My Business Need Payroll Software?
Payroll software is a financial investment, so it’s understandable to question whether you should spend money on this type of solution, especially if you’ve just started your business. Consider the following factors below to help you make the right decision for your organization:
- Budget — Many services offer monthly or annual plans, but you’ll most likely save the most by paying annually. Consider your budget to see what would work best for your organization.
- Specific challenges or needs — Does the software support your employees in every region? Does it integrate with your other business systems? Is it easy to configure? Ask yourself these and similar questions to help you find a service that best suits your needs.
- Organization size — You might handle payroll manually if you only have a few employees. However, as your business grows, so does the complexity of your payroll. Consider your projected growth and how payroll software can streamline it.
- Type of industry — If you’re in a heavily regulated industry, payroll software can help your organization stay compliant with federal and state legal regulations.
Ultimately, any business with employees or workers can benefit from payroll software. It helps ensure your team members are paid accurately and on time. Plus, it saves valuable time and money by automating the payroll process. If you’re still unsure, many services provide a free trial or demo, so you can test the software before completely investing in it.
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