Payroll Software

What Is Payroll Software?

Payroll software helps to streamline the HR, accounting, and finance aspects of employee management. This software manages everything from bonuses or commissions to calculating employee wages after taxes. Some payroll software applications are available as a standalone solution. However, there are also larger HR or accounting software applications that have their own payroll software functionality.

One of the advantages of payroll software is that it enables any company to improve its payroll processes. In the past, only large corporations could afford to have professional payroll managers on staff to complete payroll functions effectively. Today, however, payroll software enables companies of any size to automate the full range of their payroll processes.

Many payroll software applications can track hours worked, enable employees to submit timesheets, and provide accounting teams with the data necessary to do bookkeeping and expense management effectively. Additionally, software can calculate taxes for withholding purposes in an accurate way. In the past, organizations would have to conduct substantial research to calculate taxes owed by each individual employee. On the other hand, payroll software can completely automate compliance with federal, state, and local tax requirements.

Modern payroll software can even calculate tax liabilities for employees in foreign countries. Most importantly, payroll software is highly accurate, so companies do not have to worry about making as many mistakes as they might have made in the recent past.

What Are the Main Types of Payroll Software?

Payroll software comes in many forms. Some solutions are accessed exclusively over the internet while other solutions are designed for use on personal computers. Both types of software can be advantageous in some situations. The differences between the two types of payroll software are outlined below.

On-Premise Software

Although payroll software has become much more advanced in recent years, companies have been using on-premise versions of payroll software for decades. In the past, on-premise software was usually provided on physical DVDs, but modern high-speed internet connections have made it possible for companies to quickly download software from the internet. Nevertheless, on-premise solutions continue to be useful in today's world because they enable companies to retain full control over their data.

When on-premise solutions are utilized, costs are often higher because companies have to rely on their IT teams to install and support their software. On-premise software is, therefore, generally more expensive, and it is being increasingly replaced with cloud-based solutions.

Cloud Solutions

Cloud solutions store payroll software data on remote servers that can be accessed from anywhere in the world. The advantages of cloud solutions are that businesses can deploy them immediately, and they require no installation. Therefore, professionals can do their work on their phones, laptops, or desktop computers.

Cloud-based solutions also tend to be more flexible, and they provide companies greater control over how their team members use data. The cloud also makes it easier for companies to protect their data since leading accounting software providers can afford to enlist the support of world-class security professionals.

Payroll Management Software vs. Payroll Processing Software

If you are in the market for payroll software, you should understand the difference between payroll management software and payroll processing software.

Payroll management software controls rules for determining salaries, bonuses, vacation time, hours worked, and other factors. In contrast, payroll processing software does the actual work involved in paying employees. For instance, payroll software can transfer money into the bank accounts of your employees or help your HR team to print checks.

Features of Payroll Software

There are a wide range of features that are included with the payroll software applications available in today's world. Many of these features aim to help HR professionals and accounting teams.

Accurate withholding calculations: Payroll software is very effective at calculating tax liabilities owed by each individual employee. In the past, payroll professionals often made errors when attempting to calculate tax deductions, and this led to serious problems when employees discovered large discrepancies only after many months had passed. Payroll software can also make deductions for insurance plans, retirement contributions, and other common line items on an employee's pay stub. The software can even help companies to manage making payments to the IRS, and it can automatically create W-2 and W-4 tax documents for employees.

Manage the payment of salaries: Payroll software can almost completely automate the payment of salaries for businesses. This software is highly accurate, so payroll professionals can rely on it to ensure that employees are compensated fairly for their work. If employees are paid through direct deposit, the software can automatically move money into an employee's account to avoid the need for any human intervention. Payroll professionals can also easily view a dashboard showing details about each payment made to employees.

Manage employee attendance: Many businesses struggle to keep track of attendance and vacation time for employees. In some cases, companies have overlooked employees who missed days simply because they did not have accurate data that was readily accessible. With payroll software, you can easily keep track of employee attendance and pay each employee fairly for the hours they spent at the office.

Create advanced reports: Accurate and timely reporting is crucial for payroll managers because of the importance of their work for other employees and their company. When reports are easily accessible, payroll managers can react quickly to correct mistakes that were made and improve the quality of results. Many payroll software tools can integrate directly with accounting software to create new expense items whenever paychecks are sent out. Therefore, accounting records can remain accurate by avoiding the possibility of duplicate entries. Advanced reporting also helps by making it possible to use artificial intelligence to detect employee and supplier fraud.

Reports generated by payroll software can summarize salaries, benefits, and employee leave in ways that are useful to business leaders. For instance, software can help company officers to keep careful track of headcount on any given day. Therefore, businesses can, for instance, prepare for days when many employees will be taking off by bringing in temporary help or requesting that vacation requests be modified. Data from payroll software can also be useful for marketers looking to track margins on campaigns by factoring in commissions. Reports generated by payroll software can be printed or viewed through an online platform, and they can be seen from anywhere in the world when companies use cloud-based solutions.

Regulatory compliance: Many transnational companies struggle with managing their tax compliance responsibilities across a wide range of jurisdictions. This confusion substantially drives up costs when companies hire short-term contractors or consultants to do jobs from other locations around the world. With payroll software, companies can easily remain in compliance with the law by taking advantage of accurate payroll data. Payroll software helps with tax compliance within the U.S. by accurately accounting for local and state tax liabilities. In the past, payroll managers would often have to manually call local governments or even talk to attorneys just to figure out how to accurately deduct wages from an employee's paycheck. With payroll software, companies can remain in compliance with the law by relying on data used by payroll software providers that is well-researched and updated on a regular basis.

Payroll software also helps with regulatory compliance by helping companies to automatically flag non-compliant entries with the help of artificial intelligence. Human payroll officers can then review a potential discrepancy to see if any changes need to be made. Also, many payroll software platforms are able to automatically complete tax forms and provide reminders when the time comes to file. As a result, companies can avoid having to incur the costs associated with asking for extensions or having to pay penalties for late payments.

Benefits of Using Payroll Software

• Enhanced compliance: Since tax laws change often, payroll software is an invaluable tool for many businesses. This software can help businesses to avoid fines and remain in compliance with the law across a broad range of jurisdictions. Payroll software helps to enhance compliance by giving companies information about relevant laws and helping them to file on time. The process of complying can also be sped up with the tools for automatically generating reports that payroll software usually includes.

• Avoid having to outsource: Whenever businesses outsource to a third-party provider, they risk having confidential employee data stolen. Payroll software can do many of the functions that traditional payroll companies can do, so companies can keep sensitive data within their own organization.

• Spend less time on payroll: Payroll software helps to automate most of the tasks that payroll officers are normally responsible for. The software also helps to streamline many accounting functions so that your employees can spend more of their time on the tasks that really matter.

• Improved data sharing: Employees can be given limited access to a company's payroll system to verify that their information is accurate or for their own individual compliance purposes.

Factors to Consider When Getting a Payroll System

• Total cost of ownership: If you are a smaller company, some of the features that come with world-class payroll software applications may exceed your needs. Be sure to keep costs under control by choosing a solution that matches the size and characteristics of your organization.

• Compliance assistance: Make sure that any payroll solution you are considering can help with managing regulatory responsibilities. When compliance is enhanced with the help of payroll software, businesses can make fewer mistakes while spending less time and money on compliance.

• Third-party integration: To get the most out of your payroll data, it is important that it can be easily accessed by other applications. Make sure that a solution you are considering makes it easy to sync your data with other applications used for accounting, marketing, engineering, and other purposes.

What People Use Payroll Software?

Payroll software can be used to speed up a broad range of administrative tasks that business managers are normally responsible for. Some of the people within a company who are usually able to improve their performance with the help of payroll software include:

• Finance and accounting professionals: Payroll software aims to help accounting and finance teams achieve their goals by syncing payroll data with accounting ledgers to improve the responsiveness and accuracy of reporting. Remittance tracking and tax reporting can also be managed from within a payroll software suite.

• HR managers: HR professionals can use payroll software to speed up onboarding while ensuring that employees get paid on time. Payroll software also makes it easy for HR managers to comply with tax codes and achieve their internal compliance objectives.

• Individual employees: Employees can use payroll software to view information about their next paycheck, change their withholding settings, and request time off.