Handling the Limitations of Payroll Software

If your small business employs workers, you must have a reliable payroll system. If your company only has a few employees, you may be able to get by with a manual payroll process. However, once your business starts to grow, you may decide to use payroll software to handle your payroll tasks.

Payroll software is a tool, not a strategy, to make payroll easier, but it comes with its own set of issues.Payroll software can provide your business with many benefits, such as greater efficiency, a reduction in the likelihood of errors, and less stress related to your employee reporting obligations. But, using a payroll software system isn’t all rosy either. If you’re considering purchasing payroll software for your business, you need know about the well-documented shortcomings of payroll software, too.

Payroll Software Can Be Expensive

 You must purchase and maintain your software, which can be costly. The amount you pay depends on the type of plan you purchase – monthly subscription, per-user-pricing, quote-based pricing where you only pay for the features you need, one-time licensing, or a software bundle. Plus, you’ll likely need to purchase regular upgrades to your system. Not purchasing these upgrades could result in incorrect payroll reporting when new tax laws are implemented.

You May Need to Hire Staff to Process Your Payroll

When you purchase payroll software, you may need to hire and train someone to take on the responsibilities of using it. An added employee comes with the additional cost of salary and benefits. Additionally, if you ever have any software glitches, you may incur technical support costs, too.

You Must Constantly Backup Your Payroll Data

Payroll processing creates mountains of data with each payroll cycle. Per federal law, this data must be retained for all current and former employees for a certain length of time depending on the statute the information pertains. Therefore, you must have a system in place to constantly archive this data. You or an employee must set aside the time each day to perform this backup.

Access to Payroll Software May Be Limited

In most cases, when you buy payroll software, it’s loaded on to one computer. This means the software can only be accessed using that one machine. If that computer goes on the fritz, you won’t be able to process your payroll using your software. This can lead to a lot of stress for you, your payroll administrator, and your employees.

Your Payroll Software May Lead to Withholding Errors

 According to the Internal Revenue Service, some payroll software systems can’t tell the difference between additional voluntary withholding amounts and regular withholding amounts when it calculates catch-up withholding for a current tax year. Not all payroll software programs have this problem. Therefore, you need to identify if your program has this glitch and account for it in your payroll processing. Otherwise, your business could be fined for under-withholding.

You Are Still Responsible for Handling Your Payroll Taxes

You or your payroll employee must compute payroll taxes and make sure all forms are completed accurately and payments are made on time. Paperwork mistakes and forgotten payroll tax payments can lead to hefty fines.

Instead of Buying Payroll Software, Consider Outsourcing Your Payroll

While technology can make your payroll easier, payroll software limitations can create other issues for your business. Therefore, a better option may be outsourcing your payroll to a payroll services provider like The Payroll Department.

Let’s face it, payroll processing is a time-consuming process.  The staff at The Payroll Department are experts in payroll. When you outsource your payroll, it enables you and your employees to focus on your core business and more important strategic tasks affecting your bottom line. Additionally, The Payroll Department stays on top of constantly changing regulations, withholding rates, and government forms. Therefore, we’re far less likely to make a costly error than you or your staff. By keeping up to date on payroll changes, we can ensure your business stays compliant.

For more information on why you should outsource your company’s payroll processing with The Payroll Department, contact Teresa Ray at 317-852-2568. She will be happy to learn about your company’s payroll needs and explain how The Payroll Department can help your streamline your payroll processing.

– Ariane of The Payroll Department Blog Team



Posted in: Operating a Small Business, Payroll

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