A paycheck is an essential document that both employees and the human resources department await. While for employees it’s the excitement of receiving their month’s remuneration, it’s part of their many responsibilities for the HR department.
The human resources function of distributing periodic paychecks to employees is called payroll. This process can be manually performed, but several payroll mistakes can happen. Untimely salary deposits and errors in compensation calculations are two examples of such mishaps. Using a payroll software application is an excellent way to make sure this critical business process is carried out efficiently.
A decade or two ago, most companies relied on an external payroll service provider to carry out their payroll processes. With the advent of easy-to-use payroll platforms, organizations have adopted a do-it-yourself payroll management approach.
Payroll has multiple definitions. Many a time, it’s used as an umbrella term and can be defined as:
Simply put, it can be defined as the business process of paying employees. Payroll is usually seen as a tangled process involving both finance and HR teams. This collaboration between the two teams helps decide how much an employee will be paid for a particular payroll cycle. A payroll cycle is a gap between two salaries payouts.
If a business pays employees by the number of hours they worked, then the number of hours must be tracked, and that information must be used in the process of payroll. Other information like taxes withheld, overtime pay, vacation pay, and bonuses must also be considered. Once the correct amount is calculated for all employees, it must be deposited into their bank accounts.
Payroll software is a solution used to handle payroll services, including compensation, payroll taxes, benefits management, bonuses, and paid time off. The scope of a payroll software application differs based on the vendor you choose.
In short, an employee payroll management system help businesses manage and streamline their payroll processes and make sure the employees are paid rightly and timely. Since payroll is a time-consuming and monotonous process, a software application makes the job much easier for the HR department.
HR payroll systems help automate the payroll processes and make it easier for accounting teams to maintain accurate bookkeeping. They are also used to calculate payroll taxes and wages while adhering to federal and state tax laws.
One of the easiest ways to choose the best payroll software is by keeping an eye out for the most crucial features. Of course, these features may not be the primary driving force of the payroll software purchase decision, but they can help you choose the right solution that brings the most impact to your business. The following are some of the critical features included in most HR payroll software.
As the name suggests, the direct deposit feature ensures that the salary is deposited directly from the company bank account to the employees’ bank accounts. It’s a critical feature as it fulfills the most crucial aspect of payroll management, ensuring employees get paid.
Direct deposit is a win-win situation for both employees and the business. It’s because it eliminates the need to distribute paychecks, saving them time and efforts otherwise invested in the ancient process. Employees wouldn’t have to worry about losing their checks anymore, and it’s a way of protecting the environment by saving paper.
Tax calculation and filing is a tedious process that requires utmost attention. If a business relies on manual calculations, the time it takes to calculate tax is inconvenient, and there’s also a chance for calculation errors.
To counter any such inconsistencies and inconveniences, the best payroll management systems offer tax filing features. Allowing the software to perform such calculations and procedures makes it easier for companies to file taxes and stay in compliance with state and federal tax laws.
Employment laws are complicated, and the degree of complexity is increasing. It’s hard for humans to keep up with any changes or additions, and failing to do so can negatively affect your business.
It’s easier to opt for an HR and payroll software that automatically updates when changes are made in local, state, or federal employment laws. This feature will allow you to worry less about keeping up with changing employment laws and regulations, allowing you to use that saved mental energy to grow your business.
Employee self-service (ESS) capabilities help both employees and the HR department save time. It enables employees to access information quickly, which otherwise wouldn’t be possible without contacting an HR professional.
An ESS holds crucial employee information, which employees can quickly access. Information regarding paid time off, W-2 forms, and pay stubs are some commonly included. With self-service features like ESS, employees can access their payroll information and documents whenever they want to, without requiring any external help.
While most employee payroll software offers desktop-based solutions, the best among them will provide mobile applications or web-based apps with mobile-friendly features. This feature is especially critical for business owners or HR professionals who work on the go.
An application with mobile-friendly features makes it easier to run payroll and view reports without needing a laptop or desktop in the vicinity. With employee self-service (ESS) portals becoming prevalent, it becomes even more critical to have a mobile-friendly user experience.
Accounting integration eliminates the need for double data entry and can help accounting teams save a considerable amount of time. Any transaction made will be automatically added to the general ledger, which can help save the time wasted on manual data entry work. Integrated accounting also eliminates the chances of miscalculation.
Time-tracking integration is a similar concept that can significantly reduce the workload of both HR and accounting departments. In companies that pay employees per hour, it’s inconvenient to track hours manually. For that, time tracking software solutions are used, and they are integrated with the payroll system, making it easier to calculate wages.
Reporting or business intelligence features help businesses gain valuable insights into the payroll process. It offers businesses a high-level overview of workers’ compensation, budget, taxes, and other crucial payroll information. The generated reports can help companies uncover trends and patterns in payroll management and use that information to enhance the process.
An online payroll software application makes it easier for employers and employees to access payroll information. It’s also one of the best ways to enhance data security and is helpful when working remotely.
A cloud-based payroll program makes it possible to store payroll data online. This will allow employees to submit their attendance, download payslips, and edit their personal information without contacting the HR department. Furthermore, a cloud-based payroll solution can make it safer to store and share sensitive employee data online.
A payroll system can help companies save time and hassle by automating the process of payroll. Tracking employee attendance and processing payment becomes simpler, and it also eliminates the chances of human error.
Although saving time and money is the most significant benefit, here are some advantages of using a payroll platform.
When you invest in a payroll system, you invest both your time and money. This includes the resources spent on buying the software and also on training the employees to use it. As a result, you must choose the right payroll accounting software that can assist your company for an appreciable number of years.
The market has an abundance of payroll software for small businesses and large organizations alike. Due to the burden of choice overload, it might seem impossible to choose the right one. To get you started, here are some things to consider before buying payroll software.
Of course, there are many free payroll software solutions available with a limited number of features. Even if you opt for a paid one, most software companies will offer you a free trial or demo for a stipulated time. Make sure you utilize this offering as the free trial period is a great way to analyze whether a specific software will cater to your business’s needs.
A free trial gives you a clear picture of whether the solution will create the impact you expect and is also an excellent opportunity to compare different options without spending a penny.
The payroll system must eliminate existing challenges of payroll management and not create new ones. Regardless of whether your business has a payroll management system or it’s the first time you’re adopting one, the software must easily integrate with existing HR and accounting systems.
Similarly, the solution must have an intuitive interface, allowing employees to quickly and easily learn to use it. The payroll system must seamlessly import data from existing systems and enable stakeholders to see its actual value quickly.
Having a robust payroll software solution alone won’t do the trick. Instead, it would be best to have consistent support from the software vendor to unlock its full potential. Even after the software sale, the vendor must be responsible for clearing your queries and offering quality assistance.
Payroll, in itself, is a complex process. If you opt for a software application you don’t understand, it will make things more difficult. While 24/7 customer support is the norm, opt for a software vendor that offers a fixed number of hours, weekly or monthly, to help you fully utilize the software. Check out the review sections of different software to understand how responsive the vendors are.
Like in any other business decision, pricing is crucial in deciding which software to opt for. Software vendors might try to entice you to buy a costlier product with unnecessary bells and whistles that you might not use.
Make sure you have enough clarity about the must-have and nice-to-have features before making the purchase decision. This will allow you to steer clear of unwanted additional features that will add little to no value.
Although most payroll software vendors list the pricing on their websites, make sure you take a closer look at their pricing model. In most cases, you’ll find software with pricing that’s either fixed or variable as per the use.
If the software has fixed monthly pricing, then it’s easy to predict how much you need to invest in the tool. Each employee subscription will cost you a fixed amount per month. Fixed monthly pricing also means that it includes the fees for all features that come with the software. This means that even if you don’t use a particular software feature or an employee doesn’t use the software, the company still has to pay that fixed amount.
On the other hand, the variable per use model comes with a predefined fee for each employee, and any additional feature is treated as an add-on. This means that you can easily opt out of specific features that you don’t require. Variable pricing will also allow you to start using software with the lowest price as you need to pay only for the specific features you use.
The payroll data is confidential and must be stored safely. Since the payroll process demands multiple departments to access employee data, the need for high-level security features becomes even more critical.
However, all parties involved in the payroll process wouldn’t require the same level of data access. This means that the payroll system should have features that can allow companies to set permission levels based on the designation. Opting for a solution that offers two-factor or multi-factor authentication can help solidify data security.
Choosing your company's Payroll and Compensation software is a complex process. To help HR departments compare and benchmark all Payroll and Compensation software, we have selected a list of 76 companies providing SaaS tools for HR.
Payroll and Compensation software is often combined with other HR functionalities. If your company is in need of complementary HR features, make sure to take a look at those frequent combinations:
Payroll is an HR department’s function of periodically distributing paychecks to employees. On the other hand, employees receive compensation, which is the total cash and non-cash payments that they receive from the employer for the work performed. This gives payroll one definition more – the total compensation an employer must pay to its employees on a given date.
Yes, there are plenty of free payroll software applications available. But, they’ll have limited functionality in most cases and will require you to upgrade to gain the whole experience. However, using free software is a great way to test whether a particular solution is meant for your business.
Managing employees’ benefits, paying them, and filing payroll taxes correctly is time-consuming and tedious. There’s also a chance of making many costly mistakes, which can damage your business. To counteract such incidents, it’s better to invest in a payroll system.
Yes, you can. But it’s a risky option that can lead to financial losses. It’s because manually performing payroll requires accounting expertise. The tax penalties imposed on any accounting mistake you make will be considerable, and so, it’s better to opt for a software application.
A payroll management system allows employers to manage employee salaries. Many aspects of payroll, including salary structure, deductions, and allowances, can be easily modified with such a tool. A payroll application also makes it easier to generate payslips and make direct deposits to employees’ accounts.
The primary purpose of a payroll system is to efficiently management payroll. It helps companies to ensure that employees are paid the right amount at the right time. It also makes it effortless to stay compliant with tax laws and regulations.
The two main goals of the payroll system are to ensure that the employees are paid the right amount at the right time.