What Is Payroll Management Process? 5 Reasons to Use Payroll Software

Any business that has more than one employee must have a payroll
system. Paying employees consistently and with no delays not only
impacts their morale, but it also reflects the company’s financial
stability. Moreover, it is a requirement for compliance with
federal and state laws. While this is a complex process, having an
efficient system helps streamline and centralize the payroll
method. But first, let’s discuss what is payroll management
process?

In essence, the payroll management process refers to the
administration of an employee’s financial records which includes
the salaries, wages, bonuses, deductions, and net pay. These
records must be maintained and kept by the employer for federal
requirements, especially when it pertains to payroll taxes such as
Income Tax Withholding Records, Social Security (FICA) Records, and
Federal Unemployment Tax (FUTA) Records.

In the U.S., the most common pay length period is every two
weeks. A survey shows 36.5% of
private companies^[1]
give payments to their employees bi-weekly. It is followed closely
by weekly payments with 32.4% of businesses. Establishing your
payroll period is one of the fundamentals of managing your payroll
system. This organizes the process and fosters consistency for your
employees. It impacts your business with the following:

1. Morale of employees. Late payrolls make
   employees question the business’ financial integrity. If they feel
   their job is not stable and secure, they may underperform which
   decreases the workforce productivity and quality of your
   organization. This factor also includes their net worth and total
   compensation with bonuses and benefits.
2. Lower tax bills. Appropriately and
   consistently accomplished payroll minimizes state and federal
   taxes. On the other hand, doing it inaccurately can result in hefty
   fines. Hence, ensure the proper amount of FICA taxes is withheld
   from each payroll and secure your employees fill out their W-4
   forms correctly.

No matter the size of the organization, managing the payroll
system is crucial. Those with fewer employees can use a one-write
system. New business owners who are not knowledgeable in the
process may find the procedure challenging because of the various
federal and state laws requirements that must be complied with.
Hence, some businesses outsource their payroll services to ensure
compliance with all applicable laws. Those who prefer to do it on
their own, however, purchase an automated payroll system because it
is cost-efficient and time-saving.

Payroll software is one of
the first HR software^[2] solutions small
business owners must implement for their growth as it covers the
basics for future HR processes, according to a survey of software
buyer interactions. Systems for “time and attendance” and “personal
tracking” come next, respectively. Forty-two percent of payroll
software buyers are SMEs with 1-50 employees as they understand the
potential roadblocks it eliminates such as inaccurate paychecks and
vexed tax authorities.

5 Reasons to Use a Payroll System

After discussing what is payroll management process, it’s
important to look at solutions that help streamline it. Aside from
outsourcing, a business can implement a payroll software to
accomplish their payroll processes. This is to ensure compliance
with legal and tax requirements and to simplify the method of
paying employees. For more information on popular solutions check
out our guide to top 20 payroll software for payroll service
providers and accountants. The following are reasons to consider
having a payroll software for your business:

1. It is time-saving. One in every three
   businesses spends 80 hours on managing federal taxes including
   employment taxes. This is equivalent to two weeks’ worth of
   full-time work. Calculating the payroll may seem as straightforward
   as adding up a number of hours worked with the employee’s rate.
   However, taking into account factors such as vacation leaves,
   overtime, and benefits makes it complicated. Moreover, the federal
   taxes with its own requirements have to be applied in every
   payroll. While you still have to input specific variables, a
   payroll software automates and optimizes the entire process that
   saves a significant amount of time compared to manually doing all
   the calculations. Repeating payroll tasks are also saved in the
   system so you won’t have to create a new format again and again
   manually.
2. It maintains payroll
   information. Federal, state, and local laws must be
   implemented when paying employees along with their compensation and
   deductions. This information must be kept for each employee for
   accuracy in computation. Many payroll packages have customizable
   payroll modules that maintain these data. It eliminates the need
   for consulting various data sources because all information is
   compiled in one place. They also offer features that optimize pay
   periods, the method of payment (such as direct deposit and manual
   checks, among others), benefit deductions, and the work
   requirements for employees. This allows owners and managers to
   create a system that optimizes auditing and guarantees the
   employees understand the company’s policies.
3. It is cost-effective. Most payroll
   systems are cloud-based solutions hence you will only have to
   subscribe to the service in order to use it. Additionally, its
   upgrades are provided automatically in most cases. There is no need
   for investing in hardware such as servers and physical software
   packages. Without outsourcing or hiring more employees to handle
   the payroll management, it can save you money in the long run.
4. It is secure. The security standards of a
   payroll software are solid. Employee data is kept confidential
   which can be implemented by ensuring tight controls. This means
   specific access codes and administrative rights are only provided
   to the appropriate users to gain entry in the system. Meanwhile,
   employees can also log in and track their hours, leave allowances,
   payroll deductions, fringe balances, and other benefits in their
   payroll profile. This boosts their morale and reduces the work of
   payroll administrators.
5. It optimizes the process. Repeating
   payroll tasks lead to boredom and can result in human errors.
   Computers mitigate this issue and guarantee payment information is
   accurate. Moreover, these data are archived in the online database.
   If your computer breaks down you won’t risk losing all your data
   because you can still access it on other platforms as long as you
   have your login details. Business owners and managers get a graph
   financial data to help them with forecasting payroll expenses. This
   includes calculating potential salary increase and determining how
   it can impact your company’s financial status to make necessary
   adjustments.

Key Features of a Payroll Software

Here are some of the key features of a payroll software:

• Automatic payrolls
• Invoices and quotes
• Tax forms
• Reporting tools
• Vendor and contractor payments
• Integrations
• Basic tax filing
• Compliance
• Employee access
• Bank connections

Examples of Payroll Systems

If you are ready to try out some payroll software solutions
after learning what is payroll management process, you may start
looking at these leading products in the niche:

1. Gusto^[3]. This online payroll
   service suits small businesses. Its users find it saves them time
   up to 75% for processing payrolls. It is easy to setup with
   instructions in plain English that’s helpful for users with less
   technical knowledge.
2. Xero^[4]. A full-service
   accounting platform that takes care of invoicing, inventory, bank
   connections, and bank reconciliation, among others. Its payroll
   automation services is an integral part of their productivity
   kit.
3. ADP Workforce
   Now^[5]. It is a compact HR
   management tool with a suite of solutions for the payroll
   management of midsize businesses. One of its unique features is
   being fully COBRA-compliant.
4. Dayforce
   HCM^[6]. This payroll suite
   offers a rich set of features that take care of payrolls, taxes,
   and workforce management. It has effective multi-tasking
   capabilities and HR tools.
5. Wave^[7]. It is considered one of
   the most compact payroll software suites that is available for free
   with payroll automation and expense management capabilities. It
   suits small and developing companies.

Category: B2B News^[8]
Tags: Payroll
Software^[9]

Any business that has more than one employee must have a payroll
system. Paying employees consistently and with no delays not only
impacts their morale, but it also reflects the company’s financial
stability. Moreover, it is a requirement for compliance with
federal and state laws. While this is a complex process, having an
efficient system helps streamline and centralize the payroll
method. But first, let’s discuss what is payroll management
process?

In essence, the payroll management process refers to the
administration of an employee’s financial records which includes
the salaries, wages, bonuses, deductions, and net pay. These
records must be maintained and kept by the employer for federal
requirements, especially when it pertains to payroll taxes such as
Income Tax Withholding Records, Social Security (FICA) Records, and
Federal Unemployment Tax (FUTA) Records.

In the U.S., the most common pay length period is every two
weeks. A survey shows 36.5% of
private companies^[1]
give payments to their employees bi-weekly. It is followed closely
by weekly payments with 32.4% of businesses. Establishing your
payroll period is one of the fundamentals of managing your payroll
system. This organizes the process and fosters consistency for your
employees. It impacts your business with the following:

1. Morale of employees. Late payrolls make
   employees question the business’ financial integrity. If they feel
   their job is not stable and secure, they may underperform which
   decreases the workforce productivity and quality of your
   organization. This factor also includes their net worth and total
   compensation with bonuses and benefits.
2. Lower tax bills. Appropriately and
   consistently accomplished payroll minimizes state and federal
   taxes. On the other hand, doing it inaccurately can result in hefty
   fines. Hence, ensure the proper amount of FICA taxes is withheld
   from each payroll and secure your employees fill out their W-4
   forms correctly.

No matter the size of the organization, managing the payroll
system is crucial. Those with fewer employees can use a one-write
system. New business owners who are not knowledgeable in the
process may find the procedure challenging because of the various
federal and state laws requirements that must be complied with.
Hence, some businesses outsource their payroll services to ensure
compliance with all applicable laws. Those who prefer to do it on
their own, however, purchase an automated payroll system because it
is cost-efficient and time-saving.

Payroll software is one of
the first HR software^[2] solutions small
business owners must implement for their growth as it covers the
basics for future HR processes, according to a survey of software
buyer interactions. Systems for “time and attendance” and “personal
tracking” come next, respectively. Forty-two percent of payroll
software buyers are SMEs with 1-50 employees as they understand the
potential roadblocks it eliminates such as inaccurate paychecks and
vexed tax authorities.

5 Reasons to Use a Payroll System

After discussing what is payroll management process, it’s
important to look at solutions that help streamline it. Aside from
outsourcing, a business can implement a payroll software to
accomplish their payroll processes. This is to ensure compliance
with legal and tax requirements and to simplify the method of
paying employees. For more information on popular solutions check
out our guide to top 20 payroll software for payroll service
providers and accountants. The following are reasons to consider
having a payroll software for your business:

1. It is time-saving. One in every three
   businesses spends 80 hours on managing federal taxes including
   employment taxes. This is equivalent to two weeks’ worth of
   full-time work. Calculating the payroll may seem as straightforward
   as adding up a number of hours worked with the employee’s rate.
   However, taking into account factors such as vacation leaves,
   overtime, and benefits makes it complicated. Moreover, the federal
   taxes with its own requirements have to be applied in every
   payroll. While you still have to input specific variables, a
   payroll software automates and optimizes the entire process that
   saves a significant amount of time compared to manually doing all
   the calculations. Repeating payroll tasks are also saved in the
   system so you won’t have to create a new format again and again
   manually.
2. It maintains payroll
   information. Federal, state, and local laws must be
   implemented when paying employees along with their compensation and
   deductions. This information must be kept for each employee for
   accuracy in computation. Many payroll packages have customizable
   payroll modules that maintain these data. It eliminates the need
   for consulting various data sources because all information is
   compiled in one place. They also offer features that optimize pay
   periods, the method of payment (such as direct deposit and manual
   checks, among others), benefit deductions, and the work
   requirements for employees. This allows owners and managers to
   create a system that optimizes auditing and guarantees the
   employees understand the company’s policies.
3. It is cost-effective. Most payroll
   systems are cloud-based solutions hence you will only have to
   subscribe to the service in order to use it. Additionally, its
   upgrades are provided automatically in most cases. There is no need
   for investing in hardware such as servers and physical software
   packages. Without outsourcing or hiring more employees to handle
   the payroll management, it can save you money in the long run.
4. It is secure. The security standards of a
   payroll software are solid. Employee data is kept confidential
   which can be implemented by ensuring tight controls. This means
   specific access codes and administrative rights are only provided
   to the appropriate users to gain entry in the system. Meanwhile,
   employees can also log in and track their hours, leave allowances,
   payroll deductions, fringe balances, and other benefits in their
   payroll profile. This boosts their morale and reduces the work of
   payroll administrators.
5. It optimizes the process. Repeating
   payroll tasks lead to boredom and can result in human errors.
   Computers mitigate this issue and guarantee payment information is
   accurate. Moreover, these data are archived in the online database.
   If your computer breaks down you won’t risk losing all your data
   because you can still access it on other platforms as long as you
   have your login details. Business owners and managers get a graph
   financial data to help them with forecasting payroll expenses. This
   includes calculating potential salary increase and determining how
   it can impact your company’s financial status to make necessary
   adjustments.

Key Features of a Payroll Software

Here are some of the key features of a payroll software:

• Automatic payrolls
• Invoices and quotes
• Tax forms
• Reporting tools
• Vendor and contractor payments
• Integrations
• Basic tax filing
• Compliance
• Employee access
• Bank connections

Examples of Payroll Systems

If you are ready to try out some payroll software solutions
after learning what is payroll management process, you may start
looking at these leading products in the niche:

1. Gusto^[3]. This online payroll
   service suits small businesses. Its users find it saves them time
   up to 75% for processing payrolls. It is easy to setup with
   instructions in plain English that’s helpful for users with less
   technical knowledge.
2. Xero^[4]. A full-service
   accounting platform that takes care of invoicing, inventory, bank
   connections, and bank reconciliation, among others. Its payroll
   automation services is an integral part of their productivity
   kit.
3. ADP Workforce
   Now^[5]. It is a compact HR
   management tool with a suite of solutions for the payroll
   management of midsize businesses. One of its unique features is
   being fully COBRA-compliant.
4. Dayforce
   HCM^[6]. This payroll suite
   offers a rich set of features that take care of payrolls, taxes,
   and workforce management. It has effective multi-tasking
   capabilities and HR tools.
5. Wave^[7]. It is considered one of
   the most compact payroll software suites that is available for free
   with payroll automation and expense management capabilities. It
   suits small and developing companies.

Category: B2B News^[8]
Tags: Payroll
Software^[9]