Importance of Payroll Software for Small Business

payroll softwareOne of the expenses that new businesses forget to factor into their budget is the amount that should be allocated for payroll maintenance. In a new upstart business where the only person who needs payment is yourself then no extra cost will be needed but later, as a company grows and the number of employees begins to expand, ensuring the correct and timely payment of staff becomes increasingly difficult. Time spent on accounting and delegating wages to a client can prove to take up much time and, as such, it is advisable that one of either two options should be undertaken. The first option is outsourcing payroll to a third party who, with expertise in this field, would be able to take the burdensome task off of your hands but would do so for a monthly fee. The second option is investing in payroll software.

Payroll software can accurately ensure that any mistakes that could potentially occur in this department are eliminated without cost. The first cost that is eliminated is fiscal – any error made in payment in favour of an employee is rarely likely to be reported by the beneficiary. This thus reduces the profits a business makes.

The second cost, which also due to the time spent correcting it can become a fiscal burden, comes from accidentally paying out too much money to an employee. Chasing up these fees can take time away from the important task at hand – running your business at optimum efficiency – and can thus harm your business. Also, whilst on the topic of time, appropriate software can ensure that payroll procedures are delivered in a quicker fashion than manual delegation. Every second saved by using software to make calculations means a second is gained towards other tasks and, ultimately, more money can be earned.

The third reason that investing in payroll software for your company is invaluable is the legal ramifications of making mistakes in payment as well as the morale problems an employee would suffer from being underpaid. Overtime, for example, complicates an employee’s wage packet as do various other extraneous variables such as holiday pay and sick time. Keeping track of an employee’s entitlements, including time off and bonuses too, can be time consuming without the right practices in place.

Finally software is vital for recording tax information. If a business has expanded so there are a fair number of employees, be they part time, full time or freelance, it is hard to keep a track of all of their wages over the course of a year without a decent system. End of the tax year manual compilation of W-2s for employees, and the government too, can be excessively time consuming which is why it is of optimum importance for a company to invest in software which can take care of this task quickly and with a high level of accuracy.

So whilst purchasing software has an initial cost the amount of money it can save in the long run makes this fee worthwhile. Factor in a onetime cost of finding and purchasing some appropriate small business software and save your company time and money later on.


This is guest post by Kieron Casey.Kieron is a green minded, vegetarian, BA (Hons) Journalism graduate who blogs regularly on the environment, small business software, education and technology. He is writing on behalf of IRIS.