Why Payroll system should be use in business?

  • Payroll Management :

Any business that has more than one employee must have a payroll system. Paying employees consistently and with no delays not only impacts their morale, but it also reflects the company’s financial stability. Moreover, it is a requirement for compliance with federal and state laws. While this is a complex process, having an efficient system helps streamline and centralize the payroll method. But first, let’s discuss what is payroll management process?

In essence, the payroll management process refers to the administration of an employee’s financial records which includes the salaries, wages, bonuses, deductions, and net pay. These records must be maintained and kept by the employer for federal requirements, especially when it pertains to payroll taxes such as Income Tax Withholding Records, Social Security (FICA) Records, and Federal Unemployment Tax (FUTA) Records.

In the U.S., the most common pay length period is every two weeks. A survey shows 36.5% of private companies give payments to their employees bi-weekly. It is followed closely by weekly payments with 32.4% of businesses. Establishing your payroll period is one of the fundamentals of managing your payroll system. This organizes the process and fosters consistency for your employees.


Payroll software is one of the first HR software solutions small business owners must implement for their growth as it covers the basics for future HR processes, according to a survey of software buyer interactions. Systems for “time and attendance” and “personal tracking” come next, respectively. Forty-two percent of payroll software buyers are SMEs with 1-50 employees as they understand the potential roadblocks it eliminates such as inaccurate paychecks and vexed tax authorities.

After discussing what is payroll management process, it’s important to look at solutions that help streamline it. Aside from outsourcing, a business can implement a payroll software to accomplish their payroll processes. This is to ensure compliance with legal and tax requirements and to simplify the method of paying employees. The following are reasons to consider having a payroll software for your business:

  •  It is time-saving.
  •  It maintains payroll information.
  •  It is cost-effective. 
  •  It is secure. 
  •  It optimizes the process. 



Why Small Businesses Should Use Payroll Systems:

For small businesses, payroll system software can mitigate errors in the payroll process and reduce the amount of effort involved in calculating employee hours, wages, and tax withholdings. Payroll software is easy to use and often times very affordable for small businesses. In some cases, small businesses may save money by using payroll processing software instead of other alternatives.

Small business owners can purchase an affordable system accessible on their local computer or via a cloud service, using a pay-as-you-go model in many cases. Purchasing software eliminates the expense of hiring an in-house accountant for payroll processing. Companies can also avoid working with a third party for payroll processing, keeping the information in-house.

Lastly, small business owners can maintain more control of the payroll process by using the software. Using payroll software allows the business to compile reports at whatever pace they desire and to make changes quickly if the need arises. This can be more efficient than trying to manually create reports or get in contact with a third party payroll company to make changes.

Choosing a Payroll System That Fits Your Business Needs:

Choosing a payroll system that best fits your business is essential. It may be difficult to decide which system to choose, but there are some factors to keep in mind when deciding. First, analyze the size of your business and decide how much you are willing to spend on payroll processing.

Determining your budget and the size classification of your business will narrow down the list of payroll software vendors, making your selection that much easier. Compare the offerings of these remaining vendors and read reviews from some of their current customers. If available, request demos and see for yourself how easy the software is to work with and how well it fits with your business.

While it is possible for smaller businesses to handle payroll duties in-house through a manual process, much time can be wasted while attempting to calculate everything correctly. One miscalculation and the business owner could find themselves in legal or financial trouble. Mid-sized companies with up to 100 employees benefit greatly by investing in a payroll system and for large businesses, it’s a no-brainer.


No doubt, the best way in which you can manage your payroll system is by availing the services offered by a payroll company. Regardless of the size of your business, you can expect benefits on your part. If you currently own a small business, you may consider not having these services, but if you are looking at a long-term goal of expanding your business, availing of these services can save you money in the long run. The money and time saved on payroll services alone are enough to make sure that your company is secured during the year.

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James Junior

James Junior is a HR Go-To Person and a Blogger at He is currently pursuing his Master's degree in digital journalism. He graduated with majors in journalism and English literature.