9 Reasons to Ditch Manual Payroll & Adopt Software Instead (HR Approved!)

TBR Writer - Brittany McDonald
By Brittany McDonald
TBR editor - Joel Taylor
Edited by Joel Taylor

Published August 30, 2022.

A female professional seated with her elbows propped on her desk, with her face buried in her palms and a large stack of papers visible on the table next to her.

Employees have been utilizing payroll systems for thousands of years, but it was only within the last century that computerized payroll started to gain traction. Even then, an automated payroll system was not widely available, and many companies were still calculating payroll manually or outsourcing the task altogether.

Within the last decade, cloud computing has exploded into every part of the business process, including payroll. Today, payroll software eliminates the need to process payroll manually, which has significant disadvantages. Manual payroll requires a substantial time commitment, increases the risk of calculation errors (and employee dissatisfaction), doesn't allow for real-time visibility, and increases the risk of non-compliance.

Keep reading to learn more about the benefits of using automated payroll software over manual systems, and be sure to take a look at our reviews of the best payroll software available.

1. Reduced Errors Through Accurate Calculation

One tiny error—like forgetting a decimal place—can snowball into something much more consequential when processing payroll manually. Payroll software provides highly accurate calculations, lessening the likelihood of errors during the payroll process and lowering the risk of employee dissatisfaction or expensive resolutions.

2. Save Valuable Time

Utilizing payroll software will save your chosen payroll personnel a considerable amount of time. Wage and deduction calculations, compliance audits, payroll reports, and recordkeeping are tasks usually completed by the payroll team. A payroll software system takes over these responsibilities, saving you and your team hours of tedious work.

3. Reduced Operating Costs

The monthly cost of employing payroll software generally starts at around $15 per month, plus a small fee ($4-$10) per employee or contractor. For one year of payroll processing, the total cost would be between $1,000 to $2,000 for a business with around ten employees.

On the contrary, a full-time/part-time payroll clerk could charge anywhere from $35 to hundreds of dollars each month for the base fee, with an additional $3-$10 per employee. For the same ten-person company, you could expect to pay well over $2,000 for reputable payroll processing.

4. Better Data Security

The very nature of the payroll process involves employees' sensitive personal information. Hard copies of your manually processed payroll and employee data are tough to secure, whereas payroll software companies use security features like encryption, password protection, and two-factor authentication to prevent unauthorized users from gaining access to this data.

5. Payroll Software Is User-Friendly

Payroll software that is challenging to use will create problems rather than solutions. However, most payroll software is straightforward with simple navigation and well-organized dashboards. Some even offer training for new users and integration with your timekeeping or other HR systems.

6. Around-The-Clock Customer Support

Paying for a software subscription means that you also have unlimited access to dedicated and professional support via phone, chat, and email. Some providers even offer around-the-clock support for their products and services. You can complete your payroll process much faster when you're not waiting on a CPA to get back to you on the next business day about an issue that arose during your manual process.

7. Automatically Generated Payslips

In addition to generating paychecks, payroll software will create and distribute payslips to your employees. Payslips include that pay period's wage and deduction information but may contain other data such as PTO balance or retirement contributions. Compiling this data manually each pay period is tiresome without the use of automated payroll software.

8. Streamlined Tax Management

One of the most stressful payroll tasks is tax management—the calculation, withholding, filing, and remittance of employer and employee payroll taxes. Taxes are complex and can vary from state to state or country to country, which becomes a nuisance when you have globally-distributed employees. Payroll software can make the calculations and file taxes on your behalf.

9. Employee Self-Service

With payroll software, employees can create an account with the payroll service to update their information, view their payroll history, and view time records if equipped. Payroll software streamlines the employee onboarding process and payroll process and increases the security of personal information.

Bottom Line

Comparing the manual and automated payroll processes is virtually impossible. The fact of the matter is that there's no doubt about the convenience and benefits that automated payroll software will offer your HR and finance staff.

Still worried about setting up payroll? Read our top tips for setting up payroll as a first-time HR manager.

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