How To Choose An Efficient Payroll Software For Your Business?
Payroll holds an essential place in all HR functions as it is directly related to employees and their job satisfaction levels. Therefore, it becomes crucial for managers to generate accurate salaries to keep the employees hooked with the company.
An effective payroll is what delivers actual value to the employees in exchange for their work and saves valuable costs of the business. Therefore, it usually takes much time for HR executives to calculate and generate salaries as they have to consider numerous elements.
Furthermore, the complexities of the salary calculation methods also consume significant time. Therefore, HR executives may make mistakes in a hurry or provide most of their time to just one process. Fortunately, digital tools can help them in this aspect.
Automation technology can help human resource departments save time and costs both. A cloud-based payroll software is an effective solution to generate accurate salaries in less time, so managers can focus on other essential tasks. Plus, it saves various costs that may unnecessarily be wasted in the manual process.
Now, a question might arise in your mind: what is a payroll system, and how can it benefit your business? Let’s see the answer…
What Is Payroll Software And Its Advantages?
Payroll software is an automated system that works on the cloud and efficiently maintains the entire pay cycle. It syncs up the attendance and performance data and calculates the salaries. In addition, it helps in managing taxes also, so the business stays compliance-friendly. Some software providers also offer PF, ESIC, and Gratuity management.
This type of software will help your company generate accurate salaries in just half-time, and you can also save previous records, thus eliminating the tedious paperwork. In addition, the accounting capabilities of software assist accountants in preparing the entries of payroll expenses, or some systems allow integration with accounting tools.
Payroll systems deliver numerous valuable benefits to an organization. Let’s see some major ones:
1. Data Accuracy
“To err is human.”
As the sentence says, identifying errors in a human-managed process is common. The paper-based manual process may result in errors and, thus, occurring in a massive loss.
Payroll software solutionizes the complexities and implements effective calculation formulas to get accurate salary data. It ensures that the employees get paid on the basis of the time they provide to the business and their work quality.
2. Legal Regulations
As previously said, numerous systems enable PF, ESIC, and Gratuity management so that everything can be managed in a single space. And this system gets updated constantly to meet the new government regulations.
In addition, they allow paying payroll taxes right from the system, so it saves time from manual entries.
3. Structured Process
As the system automatically handles all the earning and deduction components, the manager can change the calculation formula to increase accuracy.
In the manual process, there might be some delay in generating salaries, but the automatic system helps to do it on time. In addition, payslips are generated automatically and updated in the system. Therefore, a standard process is established.
Steps To Choose An Effective Solution
Automating your payroll process will lead you to a lot of great results. But to start it, you will need to invest in software first. In that case, if you are just starting a business and operating on a limited budget, even a small financial mistake/investment can do big harm. Therefore, we have mentioned some helpful steps to save you from making a mistake in the selection process:
1. Identify The Process Needs
First, determine your process needs; it will help you in narrowing down a huge list of options. You should have a complete idea of which features your organization will need in the software. Business size, employee count, and salary calculation formula matter in determining the feature requirements. You should consider the following points to make this work easy:
- Your workforce size
- Number of seasonal or temporary employees
- Business size and operational criteria
- Employee benefits (excluded from their CTC)
- Payroll costs in the manual process and your budget
- Payroll frequency (How often do you run the salary generation process?)
- Do you print salary slips?
The points mentioned above will determine which basic features your software should have.
2. Determine Your Analysis Needs
The financial analysis is often required to manage the money flow efficiently. Payroll is one of the highest costs of the business; that’s why it needs to be analyzed properly to know the financial situation.
Every company analyzes the costs in its own way. For instance, some will separate the salary costs from all other expenses; some will segment the costs department-wise and identify the difference between the determined budget and actual expenses.
This analysis and preparing reports often take considerable time. Therefore, the payroll software streamlines that aspect also. You just need to ensure that it will assist you in making all the reports you need. Some common types of reports offered by almost every software provider are:
- Payroll summary
- Deductions and extra earnings
- Wage and taxation summary
- W-2 summary
- Arrears and bonus statement
3. Ensure Compliance With Government Regulations
If you are running the payroll while complying with all the legal regulations, then the automated system will help you to stay updated with all the changing norms. Costly penalties and financial losses can be eliminated with that. Some systems also allow the filling out of tax forms.
The software assists in following statutory compliance, but not every provider offers the same features. Therefore, you should ensure that your potential choice meets all requirements.
4. Understand The Features
As previously said, each provider will offer different features. Firstly, you should consider all the options and the features every system has. Along with the predetermined basic features, one should also consider the additional features a payroll system offers, such as:
- Direct deposits
- Employee self-service
- Mobile access
Consider all the additional features a vendor gives in the plan, and understand their importance. This step will help you finalize a list of some providers that suit your needs.
5. Use Free Trials
To ensure that the software meets your needs properly, you must test it before purchasing. This ensures that the system is not complicated to use and provides you with the true value against its price.
Almost every vendor provides a free plan or trial to the users so that they can understand all functionalities and make the correct decision. You should sign up for the free trial and try a dummy payroll run. It will give you a better idea of your time savings and process accuracy.
6. Decide A Budget
Purchasing software is an investment for the company, so it should be done carefully. Firstly, determine a budget; it will help you make a choice more precisely. We have mentioned a breakdown of costing plans usually offered by prominent vendors:
- Base fee: This is the subscription fee to use the software. Check the list of features included in the plan.
- Tax & Compliance: Some providers may charge additional fees to use tax and compliance-related modules.
- Pay Runs: Some vendors charge a small amount or nothing to use their tool. Instead, they charge users according to their pay frequencies and workforce size. They charge on the basis of how you are administering the process.
- Setup: Based on the software type you select, you might have to pay the installation charges that are not included in the base fee.
- Add-Ons: Some vendors charge more on the basis of additional features users select to include with their basic plan. This type of provider only offers core features in their plans, and you have to pay extra for the add-ons. Usually, every vendor provides this type of plan.
7. Finalize A Software
After researching and testing different systems, then comes the final step of finalizing a software. Before that, consider all the shortlisted options and their unique offerings. Next, make a fair and accurate comparison of all the features. Note down all the pros and cons and the pricing plans.
Then, involve the management and every key person that should be included in the selection process. It should be ensured that the software doesn’t get over budgeted.
Cloud software assists the business in generating accurate salaries and saving much time of managers. It eliminates various unnecessary costs that may happen in the manual process, ultimately increasing profitability.
Accounting integration with the payroll system will deliver even more benefits. It enables robust financial management that leads to achieving greater valuation. The above-mentioned steps will help you choose an efficient software that fulfills all your needs.
Take control of your payroll process and make the smart choice for your business today. Buy an efficient payroll software that will save you time and hassle. Explore your options and find the perfect solution for your company's unique needs. Don't wait, make the switch and start streamlining your payroll process now!