Payroll Integration: How It Works, Benefits, & Best Practices

Filip Dimkovski - TBR writer
By Filip Dimkovski
Nevena Radulović - Trusted Brand Reviews Editor
Reviewed by Nevena Radulović

Published January 21, 2023.

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In this modern fast-paced world, managing business processes accurately and on time means everything. Nowadays, employees have high expectations when it comes to payroll management, which is why more businesses have started using an integrated payroll system. Payroll integration allows you to automatically and accurately manage all necessary functions of the payroll process, including employee compensation, time attendance, tax filing, and more.

Having separate systems for each of these functions often creates confusion, not to mention the time wasted on errors and miscalculations. However, with the right payroll integration system, employers can avoid a lot of manual work, reduce errors, and streamline payroll processes. Now that we've covered the basics, let's learn more about payroll integration, how it works, as well as its benefits.

» Learn the essential payroll policies and procedures for employers

How Payroll Integration Works

Simply put, payroll integration refers to automated synchronization between your payroll system and other solutions, allowing your staff to work throughout multiple platforms. For example, payroll integration will allow your HR staff or finance team to work with the latest employee data, drastically reducing the chance of errors.

It's worth mentioning that setting up online payroll integration isn't complicated at all—in fact, some payroll solutions like Gusto allow employers to automatically choose between multiple payroll software integrations on a dashboard, dynamically synchronizing between the third-party apps you use.

Some of the basic solutions you should integrate with your payroll system include the following:

  • An HR management solution
  • Time attendance & tracking
  • An accounting software
  • A workers' compensation solution

» Using Gusto: here's how to manage your workers' compensation like a pro

Benefits of an Integrated Payroll System

There are many benefits of having an integrated payroll system, including:

  • Tracking employee hours: With an integrated payroll system, employers can easily track how many hours each employee has worked, allowing them to accurately compensate their staff and avoid overpaying or underpaying.
  • Easy payroll administering: When using payroll integration, employers can easily automate the process of calculating and distributing multiple aspects of payroll from a single location, avoiding manual errors and saving time.
  • Improved data accuracy: By integrating all necessary solutions into a single payroll system, employers can access accurate employee information in real-time, streamlining the workflow across multiple departments and shifts.
  • Avoid penalties: With payroll integration, employers can automatically calculate and file payroll taxes on time, drastically reducing the chance of being fined for late or inaccurate payments.
  • Reduced security risks: By using an integrated payroll system, you reduce the number of passwords and personal login information you need to remember or store. This leads to increased security, as you'll use an all-in-one solution for all your payroll processes and avoid fraud risks.

Best Practices to Manage Payroll Integration

Now that we've covered the benefits of using an integrated payroll system, let's go over the best practices:

  • Test your integrations before starting to use them: Before you start fully using your payroll integration, it's highly recommended you test it out. This way, you'll find any potential issues or anomalies so that you can fix them before they become a problem.
  • Consult an integration specialist: You can find many experts that specialize in integrating payroll systems with third-party apps. Additionally, consider hiring a reliable project manager to help you undertake the entire payroll integration process.
  • Analyze the results: After running tests and trying out all of the functionalities of your integrated payroll system, analyze the process and see if anything can be improved. The more thorough your analysis is, the higher the chances of better results and fewer errors.

» Best practices for payroll processing: learn 5 best ways to manage payroll

Get the Most out of Payroll Integration

You now know all about payroll integration, including how these systems work, the benefits you'd get from using them, and the best practices to manage such systems. So, where can you start?

If you're now in the world of payroll integration, opting for payroll software with the right features that suit your specific needs is the first step toward a fully integrated system and automated payroll.

» Not sure where to start? Read TBR's payroll software reviews and find the right payroll solution for your needs.

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