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What is payroll software?
Payroll software automates the process of managing employee salaries, wages, bonuses, and deductions. It also tracks time off, vacation accrual, and benefits. Payroll software is available as a standalone application or as part of a larger software suite such as HR or accounting software.
The benefits of payroll software
- Improve compliance: Tax rules and regulations frequently change. Calculating taxes can be confusing, and missing deadlines may mean hefty fines and penalties for employers. Payroll system helps companies stay compliant with current state and federal laws by providing information and reminders about compliance requirements. Some payroll software can also automatically generate reports for filing requirements.
- Eliminate the need for outsourcing: Using your own payroll program helps eliminate the risk of giving employees' confidential and private information to a third party and gives you full control of your financial data.
- Offer self-service features and transparency to employees: Employers can give staff limited access to payroll information through payroll software. Employees can access their payroll information using individual accounts on an employee self-service site.
- Save time: With automated features in payroll programs, employers can speed up every aspect of the payroll process, as well as reduce errors.
Typical features of payroll software
- Time tracking: Track timesheets and manage attendance for payroll processing.
- Payroll management: Track attendance, salary levels, benefits, reimbursements, leave, advances, taxes, and policies and processes for employee payroll.
- Tax management: Process tax-related transactions and ensure compliance with state and federal taxes.
- Reporting/analytics: View and track pertinent metrics and generate payroll reports such as salary statements, benefits reports, and leave summaries.
- Direct deposit: Digitally deposit payroll amounts from company accounts into individual employees' bank accounts.
Considerations when purchasing a payroll system
- Integrations: Your payroll solution should integrate with other software solutions you use such as accounting and HR. Integration with these solutions ensures that data is consistent across systems. This is especially important as businesses grow and payroll processes get more complex.
- Full cost of the software: Choosing a payroll system that suits your budget and requirements is of utmost importance. Sometimes the price listed on a vendor website does not represent the full cost. The solution may come with hidden fees such as separately-charged features or fees for setup, system upgrades, paychecks, or training and support. It's important to know the vendor's payroll services pricing model in order to save you from unnecessary surprises.
- Regulatory compliance: As there are strict tax filing deadlines and hefty fines for missing a tax deadline, payroll software should help you comply with tax laws, social security requirements, and local regulations. It also should update automatically when tax laws and requirements change. A payroll system should also be able to set the right wage deductions and tax adjustments for each employee.
Relevant payroll software trends
- AI can answer employees' questions: Artificial intelligence (AI)-driven software and AI chatbots can be used in payroll system to answer employee queries. AI can also help classify employees into their correct tax bracket. All of this saves time for HR staff.
- Integrated systems provide a better data picture: Integrating payroll system with other systems such as accounting and HR gives better control and visibility of data and processes. It reduces data duplication and redundancy, which allows organizations to get a clear picture from a single source of data. Payroll integration with human capital management systems will allow organizations to achieve a greater perspective on their workforce .