Payroll Software: What Is It and How It Benefits HR Teams

Payroll processing and benefits administration are two of the most critical HR functions. HR payroll specialists wear several hats, from issuing or distributing paychecks to maintaining tax compliance and calculating payroll deductions.

These processes alone are downright complicated. Now, imagine how baffling the payroll tasks could get if your payroll staff still rely on spreadsheets and do the accounting tasks by hand.

To save your HR payroll team time and free them from work-related stress, the best help you could offer is to invest in payroll software. Find a system that meets your company’s budget and will enhance the overall operations of your businesses.

What is a Payroll Software?

As its name suggests, payroll software is an application used to manage, organize, calculate, and automate employee wages. This technology allows users to keep track of hours, maintain payment records, pay via direct deposits, and do many other tasks on a single platform.

A payroll system is either hosted on-site or in the cloud. Both software types help payroll professionals deliver an efficient payroll process and ensure employees receive accurate salaries.

However, cloud-based payroll systems are more advantageous in terms of costing, maintenance, and implementation time.

Cloud versions do not require IT hardware and software infrastructure and regular IT maintenance, such as backups and upgrades. They are also scalable and will have all updates as long as you have an active subscription.

3 Ways HR Payroll Teams Benefit from Payroll Software

1. Direct Deposit

Sending employee wages directly to their bank accounts has become the preferred compensation method. In fact, the American Payroll Association (APA) estimates that 93% of U.S. workers received their salaries via direct deposit.

Two reasons made the direct deposit a popular option—it saves time and is safe to use. Unlike paper checks, direct deposit allows employees to access the funds as soon as they receive them.

With direct deposit, HR payroll staff will not have to write on paper checks and distribute them to their employees. Also, paychecks can get lost, misplaced, or stolen, whereas direct deposit does not have any of these potential safety issues.

Do you plan on making a switch to this payment method? Here is the good news, payroll software can connect with banks to send payments directly to your employees’ bank accounts. This HR solution eliminates manual issuance of salary and ensures your staff can access their funds right away.

2. Automated Tax Calculations

Every employee has a tax obligation, and every company should withhold income taxes from employees’ compensation for the applicable period.

HR payroll professionals are responsible for withholding these taxes. They must deduct, report, and pay taxes set by the law, and not paying these taxes can result in fines and penalties. Yes, that is how tricky tax withholding is.

Paying payroll taxes is one of the least fun HR tasks yet the most important. For that reason, calculating taxes and deductions manually only makes the entire process complex, tiresome, and sometimes unmanageable.

If payroll software is in place, payroll staff will not have to spend hours doing tax computations by hand. The system can pull time clock information of employees and allow users to process payroll accurately.

Most payroll solutions come with automated calculations for when tax time comes around. The HR tech comes with a tax table embedded in the system that automatically updates according to the latest tax rates. As a result, there will be a lower likelihood of input errors, and you get to file the taxes on time.

3. Ensure Payroll Compliance

Employers who do not comply with the employment tax laws may face criminal and civil sanctions. Not only does the evasion of employment taxes can lead to criminal charges, but it is also punishable by (in the US) up to a $100,000 fine or five years in prison, or both.

This is why the payroll team carries a weight on their shoulders. It is crucial that they collect and remit withholding taxes to the Internal Revenue Service (IRS) and enforce strict compliance with statutory, local, and federal tax requirements.

Since non-compliance can cost you, it is crucial to use robust payroll software. Such a system comes with compliance management tools that help ensure all processes follow necessary laws and regulations.

Below are a few tax functions and compliance features that a payroll solution should have:

• Deductions
• Contributions
• Social Security Taxes
• Tax Filing/Sending
• Notifications for Deadlines
• Tax Document Completion
• Local, State, and Federal Tax Calculation
• Legal and Financial Compliance Alerts

The Bottom Line

The payroll work goes beyond getting employees paid accurately on time and ensuring compliance. It also plays a pivotal role in driving businesses forward.

By implementing payroll software, your payroll team can automate and process several tricky payroll tasks. You can boost your employee morale and overall productivity throughout your organization and further increase your business growth.