Automate payroll: A guide to payroll automation

Payroll is a necessary part of running a business to ensure your employees get paid accurately and on time. Unfortunately, payroll can be confusing, especially for small business owners who don’t have a dedicated department to handle these responsibilities. Payroll is then left entirely on the business owner’s shoulders, which can be daunting and overwhelming. Cue an automated payroll system.

Your employees work hard, and they deserve to be paid accurately and on time, and it’s your responsibility as a business owner to make that happen. An automated payroll system makes achieving this goal much easier by simplifying payroll tasks. In this article, we’ll be discussing the benefits of payroll automation, how to automate payroll, and how to choose the right system for you. Use the links below to navigate the article.

What is payroll automation?

First and foremost: what is payroll? Payroll is essentially the business process of paying employees. It consists of calculating employee earnings and accounting for payroll taxes and employee benefits withholdings. Payroll can also include a business’s financial record of employees, distribution of employee payroll payments, and annual records of employee wages. Although it’s imperative to every business, the cost of payroll is high, and learning these processes takes a lot of time and effort—which is exactly why you need to automate payroll.

Payroll automation is the process of streamlining the payroll processing tasks through an automated system to make them as efficient as possible. So, what is an automated payroll system? Automated payroll is a way to simplify the process of paying your employees. A payroll automation software saves you time on tasks including filing taxes, processing direct deposits, generating payroll reports, and calculating tax withholdings. All of these processes would take much longer to do without payroll automation. You can leave payroll to the automation software and focus your efforts on business growth.

What functions can be performed by an automated payroll system?

Various business functions can be performed by an automated payroll system. The goal of payroll automation is to streamline the responsibilities that are usually handled by the in-house payroll manager.

These are just some of the functions that an automated payroll system can perform:

• Track and update payroll data.
• Run payroll.
• Time tracking.
• File taxes.
• Calculate overtime, double-time, bonuses, raises, etc.
• Tax reduction calculation.
• Improved recordkeeping.
• Financial planning for both the employer and employee.
• Make changes to important documents.

An automated payroll software can do all of this for you in just a few minutes. As you can imagine, this can save you a significant amount of time during the month. So what’s stopping you from switching over to automated payroll?

Eight benefits of payroll automation

If you’re still considering whether an automated payroll solution is worthwhile, consider the benefits below:

1. Increases efficiency

Running payroll by hand requires a lot of time and resources that could be spent on other business matters that require your attention. An automated payroll system can save you time and money by streamlining complicated payroll processes. It also helps with organising payroll records for future reference.

2. Reduces opportunity for error

Using automated software also eliminates the risk of human error that can happen with manual data entry for payroll calculations. A payroll software uses advanced technology to calculate figures like deductions and overtime pay for the highest level of accuracy. Unlike a payroll payment calculator, you don’t have to input the data on your own.

3. Ensures employees are paid correctly and on time

Your employees do a lot of hard work for your business. You want to make sure they’re paid correctly and on time, and payroll automation does just that. Automated payroll helps ensure that you meet payment deadlines and calculate the correct withholdings for your employees.

4. Provides reassurance that they’re complying with regulations

Taxes are undeniably confusing, but an automated payroll software makes it a little bit easier to navigate. Payroll automation will handle things like withholding federal income tax from employees’ wages, so you don’t have to figure it out on your own. Not only will this make things easier for you, but you can also enjoy peace of mind knowing that you’re complying with ATO regulations and tax laws.

5. Allows for a smaller payroll team

With an automated payroll software, you don’t have to hire a large team of payroll professionals to oversee paying employees. Instead, you can work with a smaller department that benefits from more efficient processes. This will ultimately save your business money as you’ll be paying fewer salaries and wages. It can also minimise the need for outsourcing to service providers.

6. Simplifies wage calculations

Part of running payroll is writing checks and calculating different types of payment. All of this is time consuming to do by hand, but not with an automated payroll system. A payroll automation software will calculate everything for you, including bonuses, commissions, and wage deductions. This is possible with timekeeping and data collection capabilities that aggregate the data within the system.

7. Helps with financial planning

Using an automated payroll system means funds will be automatically transferred into the payroll account. Your employees will be notified of their payroll payment as soon as it hits their bank account. Since money is deposited more efficiently, financial planning is easier for both the employer and employee.

8. Allows employees to update their information easily

Many automated payroll systems offer employees the freedom to view their payroll payment and edit their information. This reduces your burden since your employees will be able to update their information themselves. With an automated payroll system, employees can view their pay slips, update their direct deposit, and view deductions.

With these benefits in mind, you can see why many small businesses are turning to automated payroll providers to simplify their payroll runs.

How to automate payroll

Now that you have a better understanding of why you may want to automate payroll, you’re likely wondering how to do payroll with one of these systems. Payroll automation can be broken down into the following steps:

1. Find an automated payroll system that works for your business.

There are various automated payroll systems out there, depending on the size of your business and what you’re looking for. QuickBooks cloud payroll software handles all the tedious tasks for you and allows you to manage everything in one place.

2. Input all necessary information into the new system.

Make sure you input all your information correctly so that the system has accurate data to work with. This will help prevent mistakes when payroll is run.

3. Make sure you have the documentation and process in place before rolling it out.

You’ll need important documentation before you can get started, such as TFN, VEVO, EVR, and Withholding declaration. You should also take the time to notify your employees of the change. That way, they can anticipate how it will impact their role.

4. Train employees on how to use the new automated payroll system.

Depending on the complexity of the software, you may have to pay for additional training. Either way, employees should be given time to familiarise themselves with the software.

With an intuitive automated payroll system, integration should be fairly smooth.

When is the right time to switch over to automated payroll?

Automated payroll is beneficial for businesses of all different sizes. Regardless of your number of employees, managing payroll is time-consuming if you don’t have the right tools on your side. But switching over to automated payroll can ease the burden and free up resources for your business.

You might be holding off due to budgetary concerns; after all, many small businesses find themselves strained in the first few years. However, while manual payroll may work if you have a few employees, keeping up with it will become increasingly difficult as your business grows. That’s why it’s beneficial to set up automated payroll before you get to a point where you’re overwhelmed and things start slipping through the cracks.

The bottom line is, the sooner you make the switch, the sooner you can take advantage of freed up time and resources.

How to choose an automated payroll system

Before selecting an automated payroll system, you want to be sure it’s the perfect fit for your business. These are some features you should prioritise when choosing an automated payroll system:

• PTO tracking
• Employee data management
• Reporting
• Federal, state, and local tax filing
• Time and attendance tracking
• Employee self-service access
• Software integrations
• Tax penalty protection
• Same-day direct deposit
• 24/7 support

In addition to these features, you may also want to ask yourself a couple of questions to gauge if it’s the right fit. Questions to ask may include:

• Will this automated payroll system work with my current HR software?
• Will this software work with the size of my company?
• Can this software keep up with my growing business?
• Does this system include all the features that are important to me?
• Will using this automated payroll system save my business time and money?
• Does this solution fit into my current business budget?

Once you’ve answered the above questions, you should have a better idea of which automated payroll system is right for you.

Automate payroll with QuickBooks

In today’s world, just about everything can be automated. So why shouldn’t your payroll be automated too? Automating payroll can improve your business in a myriad of ways. Just think how much more free time you will have when you don’t have to spend all day figuring out payroll. Automating payroll helps you run your business more efficiently, leaves less opportunity for error, and ensures your employees are paid accurately.

The right time to switch over to payroll automation is now. If you’re looking for an automated payroll system that’s easy to implement, consider QuickBooks Payroll. QuickBooks Payroll provides countless features that are designed with small businesses in mind. With QuickBooks, you can get big business benefits on a small business budget, so you can afford to streamline your payroll processes. Plus, it integrates seamlessly with QuickBooks Online accounting software, making it easy to record payroll expenses.

Make the switch to automated payroll today and you will never look back.

While every care has been taken to ensure the accuracy of the information presented as at 01 May 2023, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.