Payroll is a vital aspect of all business organizations, irrespective of their size and type of business. It needs to be tackled carefully so that all the aspects of the employees’ compensation such as payroll processing, time and attendance, leave management, loans and advances, taxation, and other statutory compliance are dealt with in a timely and satisfactory manner.
It is observed that most small and medium sized businesses (SMBs) end up spending more time on administrative tasks such as payroll, wages, taxes and deductions than striving to grow their business leading to profitability. Though it may not sound too time-taking, payroll is a time-consuming activity, where resolving small problems and errors may take up a lot of time that often goes unaccounted for.
With the advancement in information technology, a number of payroll software solutions on cloud have come up as a substitute to manual payroll processes. Though these Online Payroll Software solutions make it easy to process payroll and ensure a quicker and error-free execution repeated every month, they may come at a cost to the employer. This human resource effort makes it necessary for business owners to calculate exactly how much time can they afford to spend on payroll if they do not want to invest in payroll software.
How much time should you spend on payroll?
The National Small Business Association (NSBA) 2013 Small Business Taxation Survey asked 1,500 small business owners how do they handle payroll. It was found that 60 percent handled it with an internal Payroll System. The same survey also found that 24 percent of small businesses spend over 120 hours a year dealing with employee statutory tax issues alone, not to forget the time spent on other issues such as correcting and paying for payroll mistakes.
It is important to note that in addition to the time it takes to issue salary checks to all the employees, the employer also spends time on other aspects such as retirement fund management, employee benefits, tax reporting and filing, worker’s compensation issues, and other statutory compliance, when calculating the overall cost of payroll.
Another important aspect of manual payroll process is chance of human errors in leave or salary calculation. Sometimes, it could be just a misunderstanding on the employee’s part that needs someone to explain them the calculation rules. All such issues can be dealt with having an online Employee Self Service (ESS) system in place.
Employers must understand that business generation is in fact more important than just fulfilling their payroll obligations because it adds to the overall cost of payroll processing. The huge numbers may come as a surprise to employers because most of them may have been overlooking the cost of lost business generation when determining the cost of payroll.
Therefore, accurate determination of the actual cost of payroll is important so that business owners can decide if it is really justified to spend the amount of time and efforts in fulfilling their payroll obligations. Though there is no rule of thumb to decide when exactly is the right time to go for a payroll software, considering certain situations may possibly help reach a conclusion.
· If you are beginning to hire more employees, it is an indicator that it is probably time to consider having a salary software.
· If you are finding that errors creeping in payroll are costing you expensive tax penalties for mistakes in calculating and filing tax returns, it is time to consider investing in payroll solution.
· If you are spending more time in payroll management than you deem fit, getting the payroll software may provide a quick solution.
· If you feel keeping up with payroll taxes is becoming more risky, complex and time-consuming, it is time to switch to the risk-free software solutions.
· If you are unable to spend time managing other important issues in your business, such as new clients or new business opportunities, make payroll management easy with just a few clicks needed to manage payroll.
If the answers to these questions are positive, it is time to switch to a online payroll software which will also include:
Upgrading to a online payroll software provides wide-ranging benefits that translate to savings to the company not just in terms of money, time, and effort, but also taxation penalties, employee leave management, and loan management. As a value addition, it leaves the business owners with more time to focus on their ultimate objective of growing their business.