6 key benefits of using payroll software for small businesses
Running payroll is no one’s idea of a good time. In this article, we’ll show you the benefits of using payroll software to do it for you.
5 min read
Taking on your first employees is a major step for any new business, and often a strong sign of success. At the same time, though, it can introduce serious headaches as you now need to figure out payroll accounting.
Luckily, there’s a wealth of systems available to help you work it all out. In this article, we’ll explore some of the benefits of payroll software and show you how it can help you run payroll easily and accurately.
Explaining payroll management systems
What is a payroll management system and how does it work?
A payroll management system is exactly what it says on the tin: a system for managing payroll. When we say ‘payroll’, we’re talking about the process by which employers withhold some of their employees’ earnings to pay directly to the government as tax. You can learn more about it here.
Payroll management systems simply make sure this process runs correctly and easily, processing the data you input; working out how much you owe, to whom and when; and ensuring that all payments are sent to the right entities on time.
What is the main purpose of a payroll management system?
The main purpose of payroll software is simple: to manage everything you need to do to run payroll, from calculating the correct withholdings to keeping clean books and paying HMRC and employees on time. The system aims to make sure that this complex process is performed properly, quickly and without stress.
On top of the basics, QuickBooks Payroll software adds on unique features to empower employees. Workers are allowed easy access to their information, can request time off through the system, and can upload their timesheets and expenses directly. For small business owners we crunch all the numbers, from overtime, bonus payments and PAYE to NI and pension contributions. That’s your payroll, sorted.
Your payroll, sorted
Pay your workers with minimal hassle with QuickBooks’ automated Payroll software.Discover QuickBooks today
Who needs payroll software?
In short, anyone with employees or who pays themselves as an employee. Though it is possible to work out payroll manually, it can present serious costs in terms of time and energy, as a maze of deductions need to be worked out for each individual employee.
If your workers make little enough that they don’t need to pay taxes, you can still use a payroll management system to ensure they’re getting paid the right amounts at the right time.
You can see the UK government’s up-to-date guidelines on registering employees for Pay As You Earn (PAYE) here.
Which payroll software is right for your business?
As with all choices concerning your business, you should explore your options and select the payroll software that’s right for you. Some areas you might want to consider include:
Features - As noted above, different systems can do a range of different things. You should think carefully about what sort of features you need - and avoid paying for those that won’t benefit you.
Cost-effectiveness - Different systems have different payment structures, and choosing the right one can save you a lot of money in the long term. If you run payroll multiple times a month, for instance, a monthly fee will likely work out cheaper than paying each time you run payroll.
Integration - Which other systems does your business use? To get the most out of your payroll management software, you should look for a system that can integrate with the ones you use to keep track of things like attendance, hours worked and time off.
Access - While employees should generally be able to view their own pay slips, tax forms and other information, you should consider whether you want them to be able to do things such as edit their details or request time off through the payroll system.
6 Key Benefits of a Payroll System
Now that we’ve established what a payroll management system is and what you need to consider when choosing one, let’s look at how it can benefit you!
1. Save time and reduce errors
Payroll accounting software takes the number crunching out of your hands and leaves it to your payroll administrator. Income tax deductions and National Insurance Contributions (NICs) are all worked out for you, leaving you free to focus on running your business - and ensuring you won’t make any mistakes trying to run the numbers yourself.
2. Stay compliant with government regulations
Staying up to date with current tax rates can feel like playing catch-up, but there’s no need to worry with payroll software. All changes are logged and automatically applied to the calculations the system makes.
3. Improve accuracy and simplify the payroll process
As with all aspects of business, entering data manually introduces the risk of human error. Under-deductions, late payments and miscalculations can all be seriously costly mistakes. Using a dedicated software can help you avoid them.
4. Do right by your workers
In addition to the issues it can present to you as a business owner, improper accounting can be a nightmare for your workers. Many systems allow workers to log in and check their details themselves, and all will help ensure that your employees get paid the right amount at the right time.
5. Avoid mistakes on paperwork
All employers are required to give each employee a payslip with the details of their pay and any deductions. Whereas doing payroll manually can mean producing those payslips yourself, payroll management systems can run them automatically, sending out secure and compliant payslips directly to your workers.
6. Make your year-end easier
As payroll software offers automatic tracking, recording and reporting, it can help save time and reduce stress at the end of the year. Far from sorting through mountains of paperwork to find the precise pay slip you’re looking for, most software will help you compile what you need quickly and simply.
QuickBooks helps your business run smoothly
We hope this article has given you a decent introduction to payroll software, and showed you how you can use it to benefit your business. If you want to learn more about how to make sure your business runs smoothly and in line with government regulations, visit our small business blog.