Payroll software saves a lot of time for companies because it takes care of and automates the following tasks:
- Calculating salaries every pay period (depending on the salary types, it can also differ by rates – per hour, per day, or fixed per month.)
- Distributing paychecks that were signed automatically.
- Generating reports for analytical and compliance purposes.
- Filling end-of-year taxation forms.
It can be done even without the software, of course, but it requires a lot of time, patience, and discipline. On the other hand, with payroll software, you, as a business owner or self-employed entrepreneur, get to take care of the more strategic tasks instead of the routine.
Check out our previous article where we’ve taken a look at the different payroll software solutions available on the market for small and medium businesses.
Individuals & Private Entrepreneurs
Managing personal tax and social charges when you are a freelancer or a private entrepreneur can be exciting (in case you thrive in the land of numbers, receipts, and everything else) or deadly boring (in case you don’t like to deal with the calculator for more than five minutes at a time and don’t like ratios and percentages.)
Payroll software in this case can automatically calculate the required amounts of social charges and taxes. For example, in Germany you need to take into account the following deductions:
- Income tax
- Solidarity surcharges
- Retirement insurance
- Unemployment insurance
- Health insurance
- Nursing care insurance
In the United States, the list is slightly different:
- Retirement benefits
- Income tax (federal taxes)
- State taxes
- Social security
- Health insurance
In the age of globalization, another case is important as well: you can be a resident of one country and work in another. You don’t even have to travel all the time – for numerous jobs, all you need is a computer with a decent internet connection. In this case, the payroll software would simplify the payment of various taxes in the country where you need to pay them. This frees you from running into possible issues with social charges.
Small & medium-sized businesses
If you are a small business, chances are you don’t have an entire finance department because it’s not cost-effective. Who takes care of all the financial processes? You, as a business owner or manager.
Therefore, you need to make sure that all the insurance, pensions, taxes, and other salary deductions are covered and paid on time. How can this process be simplified? Here is where the payroll software comes in and saves the day again. You need to set up the salary process once and then most of the work is covered by the software programs instead of you or your finance department spending hours there.
The same applies when you need to hire freelancers or independent contractors for various tasks. This can include outsourcing software development or design or recruitment or any other job that isn’t covered by the employees of the company. It makes sense because oftentimes it is much more cost-effective to go this way than hiring a person the usual way.
And if, for example, the person you’ve hired as an independent contractor lives in another country, you need to ensure their taxes and social security are also processed correctly. With the help of payroll software that challenge can be easily conquered.
Outsourcing & staff augmentation agencies
There are numerous companies that provide outsourcing services. The services can be absolutely different – for example, logistics or software engineering or marketing, or customer service, to name a few options.
All these people are on your payroll, but at the same time, they work for different clients and aren’t limited by geographical borders. The payments and applicable taxes may depend on the client and numerous other factors, which makes manually managing a payroll a nightmare. This is once again where the payroll software is helpful to take care of the pensions, insurance, and other formalities.
Sometimes, the client also might want the outsourced employee to work in another country, where the client is located. This entails a lot of bureaucracy and financial management as well, which can be, again, automated by payroll software.
There are numerous companies that provide payroll management services. They are the most natural users of payroll software because that is their primary business service.
While many choose from available software options on the market, payroll outsourcing companies can also benefit greatly from investing in customized software that would be hand-tailored to their country or business requirements.
These benefits might include:
- Customized reports that are focused on the information relevant to your business
- Specific tax laws and social security regulations based on your country or your target client audience.
- Human resource management features connected with financial issues like sick leaves and vacations, for example. Another feature might be automatic benefits calculation
- Scalability that you need (sometimes you might need a small solution and sometimes you need a really flexible solution that would increase exponentially in a short period of time.)
Custom products require more time and investments at the very start, but at the same time, they are more proficient as the business grows because you don’t continually have to spend money on subscriptions to various payroll tools.
Six benefits of payroll software across users
In summary, payroll software is a valuable asset to invest in – doesn’t matter whether you are a private entrepreneur or a manager of a large company. There are numerous solutions to choose from based on your requirements, wants, and budget.
Here are six benefits of payroll automation for everyone:
- It saves time (because automated processes are… well, automated.)
- It reduces cost (because you don’t need additional people or an entire department for managing the payroll)
- It minimizes the errors during payroll (because you don’t input numbers manually all the time)
- It improves security (because financial information is properly managed)
- It facilitates self-service for employees (because they can check the salary information themselves)
- It maintains compliance (because you can set up the processes for different countries and the program won’t forget about “that one tax”)
Interested in learning more about custom payroll solutions? Let’s talk.
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