With all things being modernized, leaving your company’s human resources or payroll management to a Software-as-a-Service (SaaS) tool may seem like a long shot at first. Imagine not relying entirely on manpower to manage your people and their income distribution.
As a matter of fact, there are some small businesses that have done well without the use of payroll software and opt for manual methods of handling their payroll. However, if you are planning to expand your business and be able to free up some time for other equally important matters, then payroll software might just be the best solution for you.
As a beginner entrepreneur, you might find yourself riddled with several, unfamiliar questions pertaining to payroll management. What is a pay period? How much tax is being deducted? These questions may overwhelm you if you do not know where to look for answers. Here, you will find more information that can guide you towards making the right choices when it comes to your payroll system. This, of course, happens after you are done with onboarding through human resource management.
First off, you need to be able to differentiate between your pay period and your payday. A pay period covers the days included in a certain payment schedule. This can be biweekly, bimonthly, weekly, or monthly, depending on your business needs. After that comes the payday. A payday is a set number of days from the last day of your pay period and this is when your employees receive their hard-earned money. A payday is scheduled a few days after your pay period to make room for processing, deductions, and review of accuracy.
Next is the collection of tax and other contributions. The common practice is that the employer collects the federal income tax, Medicare payroll tax, and social security tax based on the employee’s status. Different rules apply to different localities, so it is best for you to at least know the basics of employment taxes in the US, for example.
After you have collected the taxes and the contributions, it is time to pay and file them. Most of the time, tax payments are made monthly, so you might want to take note of that, as well. Do remember that for small business, though, there might be a difference in the application of tax laws.
Not to be mistaken with a time and expense software, where does payroll software come in? Simple – it makes it all easier and faster. It keeps track of your payroll needs and provides you with an overview of all data collected which will automatically compute salaries, deductions, and more. Here are some of the most specific benefits of having a payroll software:
- Offers customization and user-friendliness
Most of the time, people get intimidated by new tech and they are not to blame. New means different and adjustments have to be made, new skills should be acquired, and a new type of learning must occur. It is like going back to square one. With the use of payroll software, you can choose the kinds of features you are going to have and the benefits that go along with them. This means you have full control over what you want or do not want out of this kind of software. Some of the added features bring so much to the table, while others may not be completely necessary.
For instance, you have the ability to use a payroll-specific timekeeping system that lets you monitor the employees’ attendance. You can see their leaves, overtimes, tardiness, and absences all in one platform. Whatever it is that may affect their hours and pay, you can see through this tool. Not only that, it also makes the necessary adjustments for you. All you need to do is set up or dictate the constants such as the hourly rate, deductions for tardiness and absences, bonuses, overtime rates, and others and the tool will compute everything for you.
A payroll software is also linked to a bulk of information from the local internal revenue office, equipped with updates regarding tax payments and filing information. You will always stay in the loop and be able to make necessary adjustments easily.
Furthermore, the tool can also provide reminders to the employees when they sign in to the system. Reminders such as tax filing, releasing of payslips, banking holidays, and more, can prove useful not only to the employees but also the employers. They can track the needs of each worker and help manage their finances.
- Saves you time and money
One of the biggest concerns of any buyer is whether the product or service they are planning to purchase will be worth their dollars or if it will only cause more trouble than its worth. Payroll software, when chosen carefully, can and will save you both time and money.
Instead of hiring a third party payroll provider, you can simply manage everything through a single software. Aside from the regular subscription fee or one-time payments, getting payroll software is much more affordable than hiring a third party provider to do it for you.
Before, employees need to set appointments in order to discuss their payslips or even try to correct any errors. With payroll software, that amount of time is freed and becomes available for more productive endeavors such as skills training, coaching, or research.
Additionally, payroll software can also perform other relevant tasks that would previously use up a lot of time such as generating a year-end report. The same can be said about accounting software, an equally useful tool, but payroll software caters only specifically to salary distribution. It can also provide you with valuable future insights that can help you make informed decisions whenever necessary. You can make budget adjustments, or view the overall cost of one employee. It allows you to make in-depth analyses of certain costs in staffing and your overall business organization.
- Promotes transparency
Knowing how an employer comes up with an employee’s salary for a given pay period can mean a lot to that employee. He can make sure that computations are correct and that his taxes and contributions are all paid for. This builds value in the employer-employee relationship. It strengthens trust.
If the employee can see his total hours and compare it against the money he brought home, he can visibly see that his being a performing or outlying employee has a direct impact on what he reaps. Indirectly, having payslips available and accessible to employees all the time can help make them better at what they do. If they wish to take home more money, then they will make the necessary adjustments to work longer hours, beat deadlines, and more.
It also has the self-service feature that allows employees to make requests or set appointments to a payroll personnel should he need to discuss a relevant matter. Everything can be accomplished with the click of a button.
- Provides security
On a personal level, giving out your financial information to a third party can be detrimental to your credit standing. The same risks apply to businesses that hire third-party payroll providers. Unless their payroll provider is a legitimate and popular one but guaranteed to be more expensive as well, they make themselves vulnerable to having their information and those of their employees stolen and used for identity theft and other fraudulent crimes.
Having payroll software eliminates that possibility, or reduces it by a huge margin. There is no need for you to spend time outsourcing your payroll services. Everything occurs in-house. Of course, having your own IT maintenance system is preferable but you can do without it since you do not have to give out information to another company just for you to be able to do your payroll management.
- Reduces human error
Yes, machines are far from perfection, but making mistakes is definitely easier to do when you are troubled, fatigued, or sometimes overworked. Additionally, it removes the possibility of corruption and falsification of data. For example, the payroll system can be setup so that it performs validation measures that will deny access to those who failed, with no exceptions.
Also, you can integrate your payroll software to your accounting software to make everything available in one presentation or platform. The two systems can provide what each other lacks in order to generate a more comprehensive year-end report, for instance. With everything readily available and in one place, the employer can have a better view of the business’ finances and take appropriate steps because of it.
Payroll software is non-discriminating. There is no possibility that it will be affected by factors which often affect human beings.
- Gives customer support and services
Finally, there is no better way to learn about software than straight from the company’s mouth. Payroll management software offers customer support that can help employers and employees with issues pertaining to software or payroll-related matters.
Choosing a payroll software can definitely be a tough job but, equipped with the right knowledge, and if you are up for it, you might just find exactly what your business needs and more.
For more information, you can compare payroll software to see reviews of the top sellers in the market.
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