Pros and Cons of Having Payroll Software

14:17 13 November 2019

Carrying out the payroll process for your employees can be hectic, especially when you are associated with a big corporation. Nevertheless, an accurate payroll system is necessary even for smaller businesses for precision and timely procedures. To combat this process as efficiently as possible, many companies and business owners are looking into installing payroll software. This is a tool that is used to calculate all payments, including employee salaries and other financial statements of the company.

Other important accounting jobs such as tax deductions and similar withholdings are also taken care of by payroll software. But before getting an apt payroll tool, you need to consider a few aspects regarding its advantages and disadvantages, which will help you choose the appropriate version for your business. Here, we’ve gathered a few pros and cons associated with payroll software.

Pros

Saves time

There is no doubt that getting a payroll software system will help you save a lot of time. If you have hired an accounting department for your large-scale company, it will save the time of your employees. But if you own a small business and conduct all the payroll procedure yourself, it will help you in many ways as well, giving you the benefit of focusing on other functions to better your business. The procedure only includes feeding the basic data into the system, such as the number of hours worked by your employees, the leaves taken, and presence or absence. The calculations are automatically carried out by the software, which is pretty quick. 

Data is secured

A lot of payroll software products nowadays are installed with secure locks and passwords that make it difficult for anyone to access the stored data, which can include private employee information such as their contact numbers, addresses, and bank account details. It also includes all the financial records and accounts that are confidential and should not get leaked. However, not all payroll software systems are programmed with tight security, so beware of the software you purchase. It needs to be safeguarded in order to avoid a data breach.

Precision and accuracy

Needless to say, the use of payroll software provides ultimate precision and accuracy when it comes to numbers and correct calculations. Unless it’s fed with wrong information or numbers, there are minimum chances of getting the wrong total after the program has run the process. You can avoid entering wrong data by assigning the data entry task only to one or two employees, which will make the process more accurate and fast. 

Calculation of all finances

Tax calculations and payments can be a highly stressful and ambiguous job, especially when there is no one to rely on. Having payroll software can automatically take care of all tax deductions and withholdings along with the employee salaries and other wages. The software should comply with the rules and regulations of each state or country to calculate the exact amount of money that the company owes to the government as tax.

Automatic updates

When you need to update any specific information regarding the employee or other records, only a simple task of deletion or addition is required to update the integrated system. It is automatically updated in the entire human resources system and the payroll system, saving you from the hassle of updating every database manually. It saves a lot of time and keeps it accurate. Termination of employment also requires just the deletion of the employee details from the database, which updates it through every system within the company.

Additional features of record and performance

In a few payroll software products, you can also add the feature of employee performance. By designing a training program for all the employees in the company, you can track individual performances and record them in the database. It also allows you to compare them and make records or changes accordingly. The professional advisors at Zenefits, guarantee the integration of all information within all platforms. This helps you tremendously in filing performance reports, which, in turn, increases productivity, ultimately being beneficial for the growth of the company.

Cons

Hacking of the system

Even though the payroll software you purchase might guarantee high security and protection against data breach, there is still a chance for hackers to get into the system through malware attacks. This is dangerous in regard to securing a lot of private information and confidential data highly important to the company. The chances for this to occur are very little, but it’s not impossible.

An expensive venture

Buying payroll software can be expensive, especially when you want to buy the best. If you own a small business, it can definitely cost you a lot more than anticipated. Not only is it pricey, but the maintenance may also incur some extra expenses in the long run. 

Needs additional staff

If you are a business owner and you are busy almost all the time, you would need to hire a few employees to manage the payroll system. Additional salaries and wages would need to be added in order to pay them, and this would affect your budget. They would also need training and practice to avoid mistakes and increase speed. Also, if the payroll software goes through any glitches, you would need a software engineer every now and then to repair it, adding his wages to the cost.

Not accessible from everywhere

Since the payroll software program is integrated within the company’s computer database, it is impossible to access the data or any information from anywhere else, in case of an emergency. You can only work with it once you are back at the workplace, which makes it a bit inconvenient, especially if you’re away most of the time.

Apart from these, there might be chances of still getting inaccurate results because of human error—your employees might enter wrong information in the database, as the management and handling of the software are carried out by the designated department. However, the chances of that happening are very low. Getting used to a payroll software product may initially require some time and effort, but once you get the hang of it, it can make your life so much easier.