HR personnel can relate to everyday struggles. One day, you’re manually processing payroll with basic spreadsheets. The next, your company expands, you’re using the same tools, but now you’re scrambling to meet payroll reporting deadlines.
As of July 2022, the number of employees on payroll peaked at over 29 million in the United Kingdom alone. Implementing automatic payroll is crucial to meeting the demands of managing and paying a growing workforce. Automation can revolutionize your payroll management, from organizing employee data to filing taxes. There are many benefits of using automated payroll systems. You are about to discover them, how they work, and how they can transform your company.
What Is an Automated Payroll System?
An automated payroll system is a software package that helps you process payments with minimal manual effort. This framework streamlines your payroll processing to complete each payroll cycle faster and more efficiently.
As staff strength grows, managing and paying workers becomes more challenging. Employers make necessary tax and social security deductions before paying workers their wages. They must complete this process in time for remittance and payroll reporting to the IRS.
An automated payroll system helps you execute the primary payroll processing duties such as:
- Collecting employee or independent contractor data
- Designing your payroll framework
- Calculating gross and net income
- Disbursing payments
- Creating pay slips
- Making tax, social security, or Medicare deductions
- Remitting mandatory deductions to the IRS
- Reporting payroll to the IRS
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What To Look For in an Automated Payroll System
Automated payroll systems come in various forms. However, identifying the best fit for your payroll goals can be tricky. Although there are many good options, there’s hardly any one-size-fits-all approach. Before you start searching for an automated payroll system, you must consider certain factors.
Here’s what you should look out for in the ideal automated payroll system:
When choosing an automated system, it’s best to have one eye on the future. Consider the longevity and long-term relevance of the tool. You want a tool that can still be relevant regardless of the company’s size soon.
A flexible, automated tool will help you save money in the long run. Make sure that you can at least upgrade the automated tool as your business booms. Test the system to see if it can handle your company’s current size. Also, be sure that it can grow along with your company.
Seamless Integration With Internal Tools
Like most businesses, you already work with several HR software packages. With some automated tools, you may need to replace hardware and software to accommodate them. This may lead to various setbacks. First, replacing specific office resources incurs additional costs. Likewise, it may take time for employees to unlearn current and relearn new methods, wasting productive time.
Easy To Implement
Switching from one payroll processing system should be easy. Unfortunately, not all payroll systems are easy to implement. On average, it takes about six months to implement payroll software fully. Payroll applications that are quick to execute are usually easier to utilize.
Easy To Utilize
Some systems can be more complex to use than others. While some have a simple interface, you may need to consult the user manual repeatedly before understanding how others work. If you want to kick-start your payroll management duties in no time, prioritize ease of use. Working with an easy-to-use system helps you and your HR team learn and utilize the tool with little training.
Best Fit for Your Business
Sometimes even the most expensive payroll system may not produce the best results for you. While many high-end automated payroll systems may be some of the best, prioritize how well they fit your business. Look for automated payroll systems ideal for your company size, staff strength, and budget. This can help you spend less while you reap the benefits of automatic payroll.
One of the significant reasons for automating payroll is to carry out the procedure in the shortest time possible. Thus, speed is one of the things to look for in an automated system. Consider how long it takes you to process payroll on average. It would only make sense for the automated system to perform this task within a much shorter period. Test the new system for speed before purchasing it.
Benefits of Automating a Payroll System
Automating your payroll processes benefits your company in many ways. Besides enhancing productivity, it also helps you comply with several employment laws. Explore the following perks of an automated payroll system:
Reducing operational costs is on their priority list for virtually every thriving business. Companies constantly seek improved ways to cut costs and inject more cash into other vital business areas. However, by automating payroll, employers process payroll electronically or online. This drastically cuts the cost of buying paper and other materials for paperwork.
In addition, spending less time on payroll management, tax filing, and eradicating errors reduces total operational costs. These costs could skyrocket if errors during payroll processing lead to non-compliance. Automation ultimately helps you avoid these extra costs.
Compliance is critical for employers to achieve their goals, and automating your payroll can help. Manually processing payroll can be intense, leading to errors and inconsistencies. You risk non-compliance with tax laws when you commit constant mistakes. These systems offer accurate filings and ease of forwarding payroll reports to the IRS, thereby avoiding non-compliance issues and accompanying penalties.
Processing payroll can be more challenging than you think, and many things can go wrong. There can be errors or miscalculations, especially when preparing payroll for hundreds of workers. These errors can lead to unnecessary or inadequate tax deductions.
Tax authorities can penalize your company when inaccuracy in making tax or social security deductions becomes a pattern. An automated payroll system helps you make accurate calculations and automatically apply deductions, leaving employees with their correct net income. You only need to input specific commands while the automated system does the rest.
Save Time and Resources
Another primary reason that drives many companies to invest in automation is to save time. Processing payroll can be intense, especially when handling hundreds or thousands of workers. Although processing payroll manually is possible, it’s not advisable for medium or large companies. You risk missing the tax filing deadline.
Besides saving time, you also save resources when you go automatic. Using automated payroll systems, you can perform your tax filing activities online or electronically with fewer physical materials using automated payroll systems.
Incorporate Employee Self-help
Collecting employee or independent contractor tax and bank information is crucial to processing payroll. Automating payroll can make this process quick and easy. Many payroll platforms offer portals with which individual employees can monitor their activities within the company. These systems allow employees to input their details independently and more accurately.
Some of the best platforms also have sections where workers can fill out their tax forms. There are separate tax forms for employees and contractors in the U.S. Besides the category of workers, choosing the correct tax forms depends on location. While the W-4 and W-2 forms pertain to employees, W-9, W-1099, or the W-8 BEN forms are for contractors.
After filling out the correct tax forms, they submit them, and your HR receives them internally. When your workers’ bank or tax information changes, updating their profiles on your platform becomes necessary. The software lets your workers edit or update their details without bothering your HR department.
Less Need for a Large Payroll Processing Team
Payroll processing is only one of the significant duties of HR personnel. Handling the payroll of many employees and contractors manually takes time and careful calculations. Thus, it would help if you had a large team to manage and process payroll for hundreds of staff members. With manually generated payroll, increases in your team size may result in hiring more people in HR to perform these duties, adding to your overall spending.
Utilizing an automated payroll system solves this problem. It helps you maintain a small HR team, reducing your hiring costs. Automated systems can cut the workload and help your HR team create more time for other crucial HR responsibilities.
Control Over Payroll Processing
Automating your payroll makes you more conversant with payroll activities in your company. You can easily access payroll and tax filing activities using your automated platform dashboard. More importantly, you can approve payments within a few minutes on the platform. That way, you can process and file taxes in time before the expiration date to avoid fines.
Choose Skuad as Your Preferred Payroll Platform
Processing payroll manually is not entirely archaic. However, you need to step it up as soon as you hire more than half a dozen employees. Automating payroll is necessary for growing businesses or businesses wanting to grow fast. It offers immediate and long-term benefits, helps you save money and ensures compliance with country-specific employment laws and regulations.
What’s better than having an automated payroll system is transferring this responsibility to a payroll specialist like Skuad. With Skuad, payroll can be unbelievably fast. We offer an automated payroll platform that keeps you in control of payroll activities. After making payroll calculations and mandatory salary deductions with ease, you initiate payment. With one click, your employees or independent contractors receive their earnings. Book a demo to see how we can transform your payroll experience.