Why should a company use Payroll Software?
Payroll is the sum of all financial records of salaries for an employee, which includes wages, bonuses and deductions. To ensure that all employees receive their wages or bonuses, companies usually use calculators or, thanks to the technological advances, software that can reduce the burden of understanding complex payroll legislation and payroll systems operation to do what we call a payroll.
Payroll software facilitates the automated calculation of gross wages or salary due to an employee based on hours worked at set hourly rates of pay or a set periodical salary. Payroll Software automates the application of payroll legislation to make the necessary tax deductions to transfer the correct net pay to the employee either by means of cash, cheque or credit transfer. Employers are obliged under legislation to then remit PAYE, National Insurance, Pensions and attachment order deduction to the relevant HRMC, pension provider or court on a timely basis.
Payroll Software is an important tool to the benefit of the company providing crucial audit, management and financial reports detailing payroll costs by employee and/or cost centre/department. Software will sort and track personnel records assisting the HR function of the business.
Payroll reports play an integral role of the financial planning and budgetary process of a business forecasting necessary payroll costs and investment to meet the needs of the business into the future. These reports will be implemented to make the key business restructuring decision to reduce workforce and employee numbers when necessary.
Additional Features of Payroll Software
A key advantage to using Payroll software, apart from the automation of complex payroll tax deductions, is the major reduction of time invested in the process. Automated payslip production (email payslips), time import from clock-in systems, HMRC returns/submissions from P45, P46, P30 and P35 to HMRC, and credit transfer files to online banking facilities all facilitate an efficient payroll function within the business. The investment in payroll software leads to a reduced investment of staff training and time into completing the entire periodical payroll process.
Characteristics to look for when buying Payroll Software
When you want to buy payroll software you should pay attention to the following characteristics: electronic filing, costs and updates and customer support/maintenance contracts.
Electronic filing implies that the software suppliers should provide a way to file forms that can be stored electronically including submissions to HRMC. On top of the purchase cost, most of the costs will be in operating, supporting and updating the software. So you will have to check how much does support cost and find out when and how the software is updated, does your license cover all necessary updates to complete payroll for the tax year?
Ongoing customer support to the end user of any software program is vital to the smooth operation and maximization of the software potential; imagine there’s a problem with the payroll software on payday, due to the critical nature of the software, it must be fixed quickly, so before you buy a specific payroll software make sure it offers excellent support to its clients, check the levels of support provided by the supplier, specially, the cost and response times.
Recent initiatives rolled out by HMRC see only a few exceptions to the compulsory online filing of all employer returns to HMRC so before choosing software ensure that it is HMRC compliant! Check it’s compliance to HMRC employer return requirements, will it meet your obligation as an employer to file returns with HMRC in the format they dictate, is the software recognized by HMRC? Does it hold HRMC accreditation? Research and the option to avail of unrestricted free trials of payroll software and its functionality is key to this decision process!
Payroll Software for Small and Medium Businesses
When we are talking about adapting the payroll solution to the business size, keeping enough money in a payroll account is one of the highest priorities for small business owners, even if the business itself doesn’t make any profits, employees must still be recompensed as per the terms and conditions of their contract of employment for their services, additionally any deductions made in line with legislative requirements must be remitted to the relevant government/HMRC body when required. This is why many smaller companies prefer to keep their payroll obligations as low as possible until they have started making profits and reached a certain level of profitability. Small business owners usually disclaim their own salaries in order to be able to meet their payroll obligations. There are specific payroll packages for small businesses and they are usually free (up to a certain number of employees using the software).
Payroll Software brings value to a business
There are several factors to consider when a company is taking a decision on its payroll system like payroll objectives, financial availability and size, just to name a few. The important aspect is that any payroll related automation should bring value to the business and make it more efficient. If you are looking for payroll software, check thoroughly what the market has to offer you. Lastly, make sure that you take a decision based on the software’s features and not its brand. There are very interesting payroll software solutions out there.