Why Every Business Should Automate Payroll Systems

07 Jun 2022
Why Every Business Should Automate Payroll Systems

For most small businesses, automating their payroll system seems like a not-so-needed investment. It may seem like automated payroll technology is best suited for the larger, more established company with thousands of employees and significant budgets. 

The truth is organizations of all sizes can benefit from an automated payroll. While it makes sense to do your payroll manually if you’re just a team of 10 people or less, adopting an automated payroll system early on can help your company scale and grow. 

If you’re still not convinced, I’m going to share some of the many reasons you should automate your payroll system. Read on.

  • It Saves Time And Effort

With the traditional payroll process, employees need to manually track their time using a paper form or spreadsheet. This means that your employees are using time that’s supposed to be used for work. While a few minutes may seem insignificant, doing this every month and adding in the number of employees, your business can easily waste a few hours of working time in manual employee payroll processing. 

Similarly, when your HR team manually runs payroll, they’ll need someone to collect, input data from paper time cards, and review and calculate deductions for benefits and taxes. All these activities can take significant time and effort for your HR team. 

All these time-consuming tasks can be eliminated by using an automated payroll system. Instead of manual calculations and payroll preparation, the payroll platform will do the legwork. This way, you regain valuable time for both HR teams and employees, allowing them to dedicate their time to activities that matter most.  

  • It Ensures Data Security

Payroll spreadsheets and paperwork are not very secure places to store and keep your important data. If you’re still using physical copies of payroll documents, then you have a higher risk of these sensitive documents getting lost or ending up in the wrong hands. 

With an automated cloud payroll system, you can keep your employee data secure and protect your business from losing data. Most payroll solutions boast strict security features such as encryption and secure user access to ensure that your data stays safe. This way, you have peace of mind that your data won’t be lost or accessed by unauthorized individuals.

  • It Reduces Errorsautomated payrolls

Your payroll requires paying various groups of employees based on their pay rate and hours worked. Even if all your employees are hourly workers, you still need to calculate shift differentials, leaves, and overtime to avoid underpayments and overpayments. 

Manual computing is time-consuming and prone to human error. A wrong input or calculation can prolong the whole process. This can result in disgruntled employees and lower their satisfaction. 

With an automated payroll system, you can eliminate or reduce the chance of errors. You simply need to collect the correct employee data, such as total hours worked, benefits contributions, tax withholdings, and more, and load it into the system. From there, the system should make the calculations for you.

Not only that, but advanced payroll systems may even have features that notify you when any exceptions are necessary. This way, you can proactively manage computation errors before they become a problem. 

  • It Simplifies Payroll Tax Calculation And Filing

Tax can be complicated. Manual payroll tax calculation is easy with a small team. However, it becomes complex with more employees. And if your business operates in multiple locations or even outsource staff internationally, keeping track of tax calculation can become more intimidating. 

Payroll tax can vary by state, and it may change every year. Thus, if you have employees from different locations, you must understand and comply with these tax laws. Otherwise, it will cost your business.

With a reliable automated payroll system, you don’t have to worry about different tax policies and updates. The best systems already have tax rules and rates embedded in their code. This way, you can automatically calculate withholding tax for individual employees with just a few clicks. Additionally, your HR team can feel confident that your employee taxes are filed on time and properly. 

  • It Enhances Accessibility To Payroll Records 

Offsite and onsite storage for paper files can make it difficult to access the payroll records you need promptly. If your employee records are stored in filing cabinets or boxes, you’ll have to search for a few minutes to find the data you need.

You can eliminate this by using a payroll system. With a reliable system, you can store all the necessary data and access it at any time. This way, you can quickly pull up a record whenever you need it for prompt updating, reporting, or decision-making. 

  • It Allows Self-Service

In a digitally-advanced world, employees want access to information about their salary, taxes, and benefits. An automated payroll system can provide this through self-service portals that allow them to access their salary slips and other payroll information. 

With a self-service portal, employees get more transparency on the payroll process while also reducing reliance on paper to view their pay history. In addition, an advanced payroll system can also open other avenues to put the necessary and relevant data into employees’ hands. For instance, an automated payroll that integrates with your employee time and attendance solution can provide employees insight into how many hours they’ve worked and eliminate payday surprises. 

  • It Is Cost-Effective

It’s no secret that an automated payroll system will cost money. For most business owners, particularly start-ups or small businesses, this cost seems like a not-so-good investment for them, at least for now. That said, automation can help reduce your overall payroll processing cost. 

Many of the benefits mentioned above contribute to lower costs for your business. When you eliminate the errors and streamline the process, you can drop the costs in the long run. Ultimately, an automated payroll system helps you save money by saving time on repetitive and time-consuming tasks while ensuring employee satisfaction and better transparency.


If you’re still manually processing your payroll every month, hopefully, this article has convinced you of the numerous benefits of automating the process. Today’s automated payroll systems can transform your payroll processes, eliminating the headaches and pitfalls of manual processing.


Leave a Reply

Your email address will not be published. Required fields are marked *