Payroll is a crucial part of business accounting. Failing to pay employees correctly and on time can have a huge impact on morale, not to mention it’s also a legal requirement to record payroll accurately for tax purposes.
Managing employee-related processes, such as payroll, has always been a challenge for small business owners. With more pressure on bosses than ever before to deliver outstanding employee experiences, these processes can take their toll on employers.
Research from Xero found that almost half (49%) of small business employers agreed that managing employee processes and compliance is taxing on their mental health.
One of the causes of this is out-of-date technology. It’s common for businesses to use Excel for gathering payroll records, but spreadsheets that require manual entry open the door to human error. In fact, research from spreadsheet specialists European Spreadsheet Risks Interest Group (EUSpRig) found that more than 90% of spreadsheets have errors.
Fortunately, cloud accounting software can ensure everything payroll-related runs smoothly. For small business owners considering whether to invest in a cloud accounting package, here are three payroll-related benefits to consider.
1. Reduced tax errors
Most employees have income tax deducted from their salary before they receive it. It’s the job as an employer to get it right and mistakes must be avoided. For example, if they don’t deduct enough tax, employees may have to pay a lump sum payment to HMRC at the end of the tax year. But if they deduct too much, employees will be missing out on income at a time when the cost of living continues to rise, which could potentially be devastating to staff.
Fortunately, the right payroll software can make life easier by ensuring these mistakes are avoided. Records are immediately available for a firm to access, cutting down on data entry and ensuring that tax is billed accurately to employees. Cloud software can go one step further and automatically incorporate adjustments to tax legislation when it occurs, to amend employees’ tax codes when it changes.
2. Robust security through the cloud
Vital payroll information could potentially fall into the wrong hands if an office device gets lost. If personal financial details are stolen, it could leave employees out of pocket.
Fortunately, cloud tools use strong encryption to keep financial data secure and online, reducing the chance of data loss. For businesses still using spreadsheets, the data will not always be automatically backed up.
With accounting and payroll software, as the data is stored securely, it can be accessed online no matter the location. Gone are the days where employees need to be in the office to approve payroll updates such as leave and timesheets or check the monthly payroll figures. It can be done from anywhere, at any time, using a smartphone, laptop or other device.
3. Automation gives back precious time
Organsations who employee a large number of individuals have more administration and routine processes to manage. It’s even more complex for companies managing employees on hourly wages, or in a business that requires a greater amount of time and shift management to run their businesses, as it adds more complexity to payroll needs.
However, a good software solution will make everything as simple as possible, by linking accounting, payroll and employment management information all together to process and securely store all the necessary information. Through the cloud, payroll is quickly processed, with most of the work handled automatically.
As a result, owners will spend less time processing payroll, giving them back more time to do what they do best: focusing on the continued success of their business.
Research before investing
While payroll can seem daunting – and has been proven to cause a lot of headaches for small business owners – the right software solution really can make processes quicker and more seamless, while reducing the stress felt of remaining compliant with the changing legislation.
In the long term, payroll software can save time, and reduce the amount of work business owners have to do manually. It’s important, however, to do research and find a tool that’s right and will benefit the organisation.
Change is not always easy to manage for business owners, but in this case, the potential rewards are huge. It’s time to put an end to payroll headaches once and for all.