If you have staff, you need to pay them. This is called payroll –Managing the monthly payouts of your employees
Few small businesses opt for manual payroll processing, keeping all the payment details in a spreadsheet or other document. While others outsource their payroll process to any 3rd party payroll vendor.
These options may be valid, however, there are other options too. That is you can easily use a payroll solution to get payroll processed by your in-house team.
How to choose a payroll software
Payroll isn’t as simple as it sounds. You must pay your employees regularly, of course, but there’s a lot more to it than that. Small business operations might include:
Automatic payroll calculation
Run payroll in a few clicks and automatically generate pay-slips online with a thorough breakdown of taxes, allowances, and deductions.
Embrace diverse salary structures
Create multiple pay slabs for your staff, leads, and managers and associate the right template with each employee.
Pay employees on time every time
Transfer employees' salaries directly to their bank accounts with timely online transfers and readily available bank advice.
Straight-forward statutory compliance
Steer your business clear of compliance penalties. We handle your statutory compliance including (PF, PT, ESI, LWF and IT) and make filing easy with tax reports.
Encourage employee self-service
Enable seamless collaboration between employees and your payroll staff and reduce the burden of employee requests.
Fine-grain admin privileges
Invite your qualified staff to process payroll but maintain control with user roles and role-based access
Employee hikes, increments, and appraisals
Attract and retain the right talent with the right rewards. Revise the CTC and pick the date from which the hike in pay will be reflected in the pay slips.
Salary history and designation
Follow your employees' career progress by tracking their salary revision history and designation changes. Automatic updates in the self-service portal keeps employees informed too.
Streamlined employee self-service
Reduce your payroll costs and data entry efforts by delegating routine document tasks to your employees. Employees can do things on their own from the client portal.
Systematic employee exit management
Enter your departing employee's last working day along with the full and final settlement date to process the pay automatically. You can encase unused leaves, send their final pay slips, and Form-16 to an email address of their choice.
Automated gratuity settlement
Acknowledge efforts of your long serving staff. With automated gratuity calculation, let your parting employees reap their rewards immediately.
This is a lot to think about, which is why every business needs to carefully consider how it manages payroll.
The cost of compliance
If you’re running a business, then you need to know about the statutory compliances. This means keeping your business in line with government legislation and regulations. It includes taxation, reporting, employment laws, and payroll.
Compliance takes time, and time is money – your money. This is particularly true for small businesses, where owners often must juggle several different hats, such as director, bookkeeper, HR manager, and sales lead. If you work out how many hours you spend keeping on top of compliance, the answer might surprise you.
So it stands to reason that anything that saves you time can also save you money. Quality software can certainly save you time. But can it save you enough time to offset the cost of buying it? We’ll look at that question next.
What worth will a payroll software bring to your business?
While some accounting systems come with payroll built in, other payroll software will cost you extra. The important question is whether that’s a price worth paying for your business. In other words, will payroll accounting software save you more money than it costs? Here are four questions to ask yourself.
- How much will the software cost you?
Research the market. Find out how much different software costs, bearing in mind some will require regular updates or monthly subscription fees. Some software lets you have unlimited extra users free of charge, which could save you a lot of money.
- How much does payroll work cost you now?
This is the other part of the equation. One way to estimate this is to add up the total amount of time spent by you and other people in your business doing payroll work. Look through the list of payroll tasks earlier in this guide and add up the time you spend on them. Assign an hourly rate to this work. Multiply the two together and calculate the yearly cost of payroll-related tasks for your business.
- Will the software help your business stay compliant?
When you have payroll and accounting as one solution, it reduces the risk of errors that are common with manual data entry. With automated and connected software you’ll have peace of mind knowing that you’re compliant.
- Why can’t I manage payroll on a spreadsheet?
It’s common for businesses to use Excel for payroll, but spreadsheets are often riddled with errors. For people who know how to work spreadsheets to their full potential, these programs can perform highly complex calculations. But many businesses forget that it’s a complex application and don’t restrict it to those with expertise. As a result, many organizations use spreadsheets to help with payroll and find it more difficult than they expected. With regulatory compliance factored in, your business will be susceptible to financial penalties if you don’t move from Excel to proper accounting and payroll software.
You may also hurt the company’s reputation among employees if you continue to use a spreadsheet. There are a few reasons this may happen. One being that there are constant changes to complex regulations and any problems can cause issues between the business and the employee. Another is the fact that spreadsheets do not guarantee reliability. Unlike payroll software, your data will not be automatically backed up if you lose it.
Choose payroll accounting software wisely
Just as with any other type of purchase, it’s important to shop around to get the right payroll accounting software to suit your business. Some of the features that could be valuable to you might include:
- Tax calculation features
You won’t want to have to manually work out the tax owed for each employee. Make sure the software can do all this for you and that updates are automatically handled each new financial year.
- Full tracking and recording
A complete audit trail of every transaction is vital in order to meet Australian compliance requirements.
- Anytime, anywhere access
Cloud-based software can be accessed from anywhere, using a laptop, smartphone or tablet. This helps you run your business from anywhere, at any time. If the software is fully cloud based, this also means less IT support work for you.
- Multiple levels of access
You might want to allow managers or employees to input their hours into the system (with checks), but keep all other details secure for your eyes only. Good online accounting software will let you do this.
- Application and approval for leave
Wouldn’t it be great if your staff could apply for annual leave using the payroll system, and you could approve it with a couple of mouse clicks? The best software will let you do this, saving time and paperwork.
- Scalable architecture
You probably want your small business to become a large business in time. So there’s no point buying software that won’t grow with you. Make sure to choose a package that can easily be scaled up to suit your growing requirements.
Here are four ways that illustrate how payroll software can improve your productivity:
Saving time. Payroll complexity increases as a business grows. As your number of employees increases, processing payroll in-house will take more time, and that will cost you in terms of man-hours and physical costs. According to the 2015 report from Training Magazine, larger companies spend about 17 times as much as midsize companies on payroll, and midsize companies spend about three times as much as small ones. If you’re able to move your payroll to a software platform, you can shave hours every week from the process and make it easier to collaborate with the accountants and bookkeepers who help manage your finances.
Keeping an eye on hours worked and wages paid. Tracking employee hours is a time-consuming part of calculating payroll manually. Many payroll software programs include a time-tracking module or add-on where you can keep track of when your employees work. At the end of the month, your payroll software will calculate these hours automatically, saving your staff plenty of time and reducing the likelihood of calculation errors and arduous administrative work. Plus, you can determine at a glance if your staff is showing up late, clocking out early, or missing too many days. The best payroll software platforms will guarantee accuracy and reduce your chances of an expensive IRS audit or fine.
Taking the guesswork out of payroll taxes. This is a tricky job and perhaps the area of payroll processing most vulnerable to errors. Every tax item follows a unique set of payment and reporting rules, making it far too easy to slip up and calculate the wrong amount. Even the smallest error can cause IRS penalties and compromise your employees’ trust. Many payroll solutions offer resources for calculating deductions built right into the software.
Streamlining and automating the payroll process. Payroll solutions that offer built-in automations like set-and-forget approvals, direct deposit, and recurring deductions will vastly reduce the amount of time you have to waste on manual processes at the end of every pay period. That means you can focus on more critical aspects of HR administration, and your employees can get their checks delivered faster. What’s more, if you find a payroll app that integrates with your current accounting software, you can push hours and pay rates directly from your timesheets to the payroll app, and pull financial updates back into your accounting system.
Is Payroll Software Worth the Cost?
Our answer to this question is an emphatic yes. Payroll software can offer considerable ROI, considering many programs are inexpensive. Investing in payroll software will reduce employee hours spent on processing payroll. This is a scenario where spending money will help you save money in the long run. Is now the right time to invest? If your business finds it difficult to grow because manual processes are holding you back, yes.