A Complete Guide to Choosing Payroll Software
May 12, 2021
Payroll, or ensuring employees receive their wages and any other benefits they are entitled to on time, is an essential component of every business.
Many businesses choose to process these payments using payroll software, which, if effective, can save your business time and therefore money.
If this is a route you choose to go down, we’re here to walk you through the process of selecting the right payroll software for your business. Meanwhile, we’ll also explore the advantages that payroll software, particularly integrated payroll systems, can bring your company.
Without further ado, let’s get started.
What is Payroll Software?
First of all, let’s make sure you’re familiar with the basics.
Ever found yourself Googling “what is payroll management software?”
While it might be obvious for some, it’s important we explain the definition clearly so that we can continue with the rest of this guide.
On a basic level, payroll management software is a technology that allows HR departments to manage, automate, and organize employee salary payments to compensate for their work.
However, it’s never quite that simple. These days, payroll management software also carries a certain level of legal responsibility. It’s responsible for organizing payments of payroll taxes on the employer’s behalf and making sure that workers are paid compensation for any overtime they work, among other things.
Payroll management software can also bring many advantages for your business, which we’re going to explore next.
What Are The Advantages of Using Payroll Software?
We can guess what you might be thinking. Why spend money on a software solution instead of designating payroll tasks to your HR team, who can process them themselves?
Like with any other automated solution, payroll software removes human error. If your HR manager or business accountant is processing salary transfers for several days at the end of each month, there’s a high possibility that they might make a mistake somewhere along the line. And depending on the gravity of the mistake, it could end up being costly for your business.
However, if your payroll software processes salaries automatically each month, then mistakes aren’t something you have to worry about.
Laws around payroll, which vary from state to state, are also always subject to change. Your HR or finance department will need to stay on top of these regulations if they choose to process wages manually in order to avoid litigation. However, if your company invests in payroll software to do this automatically, your employees won’t need to assume this extra burden.
Finally, there’s nothing more important than ensuring your employees get paid on time. Missed paydays can cause mistrust and encourage your employees to lose confidence in your company. Using payroll software, it won’t matter how busy your HR staff are approaching the end of the month, because salaries will all be automatically processed for them.
Questions to Ask When Implementing a New Payroll System
If you choose wisely, your payroll system could combine several manual jobs and replace them with one automatic process. A lack of consideration, however, could wind up creating more work for you and your team.
One way to make sure your payroll system includes everything you’re looking for is to make a checklist of everything your ideal payroll software would typically include.
Here are just some of the payroll features you should be looking out for:
Although this may seem like it goes without saying, it’s vital that your payroll software can pay your employees exactly what they are owed. If this process is done manually, there are often too many links to rely on in the chain for employees to always be paid the correct amount. By using an automated payroll system to do this for you, your company can eliminate this problem.
2. Automatic Updates
There’s nothing worse than having to manually punch an employee’s pay rise or bonus into your payroll system if they get a promotion. The perfect payroll software would automatically update your employees’ wages if and when they are awarded a promotion by their manager at the click of a button.
3. Flexible Pay
This is especially applicable if your business employs part-time or contract workers. Just because not all employees follow a typical 9-5 doesn’t mean they shouldn’t be paid on time or accurately. Your ideal payroll software should be able to accommodate employees who work flexible schedules, not just full-time ones.
Perhaps one of the most important factors to consider when investing in new payroll software is that it is easy for your team to use.
You should be looking for a clean, simple layout, that even the least tech-trained employee can use with ease.
Another hugely important payroll software requirement is security. It goes without saying that payroll processing involves huge quantities of personal, confidential data — bank account numbers, personal addresses, and even salary figures — which would be very vulnerable in the event of a data breach.
When acquiring payroll software, make sure it complies with International Security Standards, uses two-factor authentication wherever possible and preferably holds an ISO/IEC 27001 security certificate.
6. Reports Feature
The ability to download company-wide and personal payroll records is essential for filing taxes and reviewing business budgets. Pre-formatted reports are ideal for paying taxes. Downloadable reports are also important to show if your company is being audited.
7. Employee Portal
When it comes to payroll, your employees should be able to access the software themselves so that they can upload any necessary documentation, as well as view and download essential documents like payslips and Form-16s. Giving employees access to payroll software is also helpful when it comes to tracking time and attendance, or requesting vacation time, which brings us to our next point.
What are Integrated Payroll Systems?
Integrated payroll systems merge employee payroll with other HR activities, such as time and attendance tracking for employees, processing the vacation requests they file, and any sick pay they might be owed.
Here at Timerack, our time and attendance solutions can be integrated into 24 different payroll systems using different simple application programming interfaces (APIs) that sync employee data in real-time.
What’s more, if your existing payroll provider isn’t included on the list, as we can also build custom REST API integrations into any payroll provider on request, as you can see below:
Want to try out our time and attendance and payroll integrated solutions for yourself? Book a free demo today.
What are the Benefits of Integrated Payroll Systems?
One of the disadvantages of non-integrated systems is the manual transfer of time and attendance data from one system to another. This can be a time-consuming, and therefore costly process for your business.
By using an all-in-one approach that integrates time tracking and payroll, your business can save its most valuable resource — time — creating a better work-life balance for your employees.
Say, for example, your employees have to manually file invoices or paper time cards in order to be paid each month. If these are not synced to payroll, the process of paying your employees will typically take twice as long. It will also involve margin for human error.
However, using cloud-based time and attendance solutions such as biometrics or mobile apps with geofencing that can sync employee data to payroll software, employee hours will update automatically and they will be paid accordingly.
What’s more, by integrating your payroll software with time and attendance solutions that monitor employee engagement as well as their hours, your business can also set up automated employee bonuses according to engagement data.
Finally, for businesses that outsource their payroll to third-parties, having synced employee payroll and attendance management systems also gives third-parties access to data they previously might not have had. This makes it easier for them to do their job accurately.
What are the Disadvantages of Integrated Payroll Systems?
While it’s difficult to pick out the drawbacks of integrated time tracking and payroll software, cracks would definitely begin to appear if your company was to choose an integrated payroll system with security problems, for example.
Given that an integrated payroll system opens up access to a much wider pool of personal information, there’s more at stake if any of it were to be lost due to a data breach or fraud.
Problems can also arise if there is not enough synergy between the HR platforms and payroll software, which can lead to misunderstandings and potential financial losses.
However, if your business chooses an integrated payroll system like the all-in-one approach we offer at Timerack, there is no need to panic — we’ve got all of this covered.
There are many different factors to keep in mind when choosing payroll software, but don’t forget that the time you set aside to make that decision can save you more hours (and money) in the long run.
And if your business is looking to save even more time and money, integrated payroll systems that sync time tracking and payroll are an even better long-term solution.
When it comes to payroll, there’s no room for cutting corners. Integrating employee payroll and attendance management systems reduces the margin for human error by synthesizing multiple manual jobs into one automated solution.
If you’re looking to optimize payroll for your business once and for all, get in touch with us and get a free demo of our time and attendance and payroll software.