Last Updated on February 14, 2024 by Asfa Rasheed
Many reasons exist for why an online payroll system is important today. Automating payroll is one of them, as it can save time and prevent human error. However, the other reasons are time-saving and compliance with regional and local laws. So, let’s explore each one individually. If you’re not sure which one to choose, read on to learn why payroll software is essential for today’s business. We’ll also touch on some of the best options available.
Table of Contents
Automating payroll
When you use payroll software, you no longer have to worry about a multitude of repetitive tasks that may otherwise get overlooked. These tasks may include preparing and filing employee taxes. You can even collaborate with a bookkeeper or payroll administrator remotely with this type of software. It also provides centralized storage for all employee payroll data, ensuring that no confidential information is lost. You can also assign permission levels to different users. You can give employees full access to payroll figures or set them up to view it only through their team.
You may have started your business just a few years ago and have grown accustomed to processing payroll manually. However, the process can be difficult and time-consuming, and you may need to automate payroll with online payroll software. Online payroll software can simplify the process by integrating it with your time tracking system. By automating payroll with online payroll software, you’ll be able to save up to 80% on payroll processing costs. And because most payroll software has system integration capabilities, you can integrate your time tracking software with your cloud-based payroll software, allowing you to transfer data seamlessly between the two.
Eliminating human error
While online payroll software can greatly reduce the chance of human error, it is far from foolproof. A number of businesses fail to prioritize learning about their software and use it incorrectly, which leads to human error. In addition, most of these organizations rely on paper documents and long-outdated tools to maintain payroll data. This can lead to costly mistakes that go unnoticed for years – and hundreds of hours of analysis time.
Human error occurs when employees make mistakes due to a lack of attention to detail or shortcuts. It can happen to the most experienced employees or to new employees unfamiliar with IT software. For example, the company that runs Amazon Web Services had a four-hour outage in early 2017 because an employee accidentally removed a large number of servers. The outage cost the company $150 million in lost revenue and impacted several S&P 500 companies.
Time-saving
Online payroll software streamlines payroll processing by calculating employee pay and deductions while offering remote access and direct access to paystubs and tax forms via an employee portal. It also integrates with accounting and attendance systems, automating tasks like timesheet compilation and tax calculations, freeing up time for more strategic work.
HR and payroll software’s role extends beyond simplifying payroll tasks. It enhances HR management by automating routine operations, allowing HR professionals to focus on employee engagement and development. This shift towards strategic HR management underscores the critical value of HR and payroll software in modern business practices, making it indispensable for efficient operations and a productive workplace.
Compliance with local and regional laws
Most payroll systems comply with local and regional laws, but it’s still essential to understand these laws for your business. Many of these laws address minimum wage, overtime, income taxes, and new hire reporting. Compliance with these laws may involve systematizing wage rates, documenting decisions, and reviewing job descriptions. For example, the Davis-Bacon Act requires employers of federally funded jobs to pay employees of different sex the same wages and benefits for work of similar nature.
The right payroll software will help you comply with local and regional laws. Online payroll software vendors should offer comprehensive training modules and automatic updates. Also, vendors should incorporate changes to local and regional laws. You should also be able to use software that can accommodate more employees and more complex payroll calculations and keep pace with changes in tax regulations. Once you’ve selected the right payroll software, you’ll enjoy peace of mind knowing that compliance is easy.
Read More: How Payroll Software Can Help Grow Your Small Business
