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What is Payroll Software?
Payroll software is a tool that simplifies the setup, management, and automation of payroll processes. It may be housed on the cloud or operated locally within a business’s premises.
Depending on the business size, payroll applications range from simple to complex, offering features like tax filing assistance, direct deposit setup, and ensuring legal compliance. Many payroll apps are also integrated with accounting and human resource (HR) solutions, syncing data across a company’s departments.
On-Premises vs Cloud-Based Payroll Software
Payroll solutions can be categorized based on data storage, management, and updates. On-premises software is installed and runs on a company’s computers and servers. This allows businesses private control over their data and customization. Such applications typically involve a one-time setup cost rather than ongoing subscription fees.
Meanwhile, cloud-based payroll solutions are hosted on the vendor’s servers and accessed over the internet. They’re a type of Software-as-a-Service (SaaS) apps. These solutions are scalable, as they don’t require the business to build a dedicated IT infrastructure. Some businesses prefer cloud-based apps for their efficiency, automatic updates, accessibility, and cost-effectiveness. They’re also ideal for companies with remote or international teams.
Integrated HR, Accounting, and Payroll Solutions
Platforms like QuickBooks offer integrated HR, accounting, and payroll functionality. These all-in apps help key personnel in managing employee data on a single platform and automating payments. Gusto and similar applications provide integrations with other business software, including QuickBooks, to seamlessly link payroll with bookkeeping tasks.
Benefits of Using Payroll Software
Payroll software benefits business owners, accountants, and HR managers, as it automates calculations, ensures tax compliance, and efficiently manages employee data.
- For Accountants. Accountants can effectively reduce manual work and errors. It helps keep payroll processing and year-end tax reporting on time. In case of any tax compliance updates, a cloud-based payroll solution can automatically add new features to accommodate those changes.
- For the Human Resource Department. HR managers can take advantage of a payroll solution’s unified system for documenting employee history. It helps them review the employee lifecycle, from onboarding to off boarding.
- For Employees. Advanced payroll cloud apps also allow employees to set up and update their corresponding accounts. This gives them easier access to payslips, helping them monitor payroll deductions.
- For Employers. Overall, payroll apps can provide comprehensive data such as labor cost analysis and budget planning. This in turn helps business owners make better financial decisions.
