What is Payroll Management System?

A payroll management system is an employee management system that helps to manage all your employee's financial records in a simple and automated fashion. For example, it manages employee's salaries, deductions, bonuses, and generation of pay-slips, etc.

Importance of payroll management system

Payroll management helps improve employee engagement and regulatory compliance. Without an efficient payroll management system, employers could face wage claims and expensive penalties.

Different phases of the payroll management process

Payroll process generally consists of three phases:-

Pre-payroll:

In this phase, employers gather relevant data for the pay period. This data is based on defined company policies and regulatory requirements, including exception time and employee adjustments, such as new hires, salary increases or changes to benefit deductions and tax withholdings. All of these information is verified and used to process payroll further.

Calculations:

After the Pre-Payroll process, employers calculate the total gross pay each employee earned during the pay period and withhold taxes and deductions, resulting in net pay.

Post-payroll:

Once the calculations are done, employers reconcile their payroll, deposit their taxes by the appointed due date and process any related payments.

Benefits to using payroll management software:

Payroll management is a painstaking process; therefore, many rely on payroll management software, which frees up their time and offers benefits such as: -

Accurate calculations:

One of the major advantages of automated payroll management system is that it helps ensure that wage calculations, payroll deductions and tax payments are correct.

Compliance assistance:

There are certain providers of payroll software who notify employers about changes in employment or tax regulations that might affect their business. At the same time, by having such a system employers may have easy access to important tax documents through their payroll software.

Flexible payments:

Another advantage is flexible payments. Payroll software can usually alternative payment methods, like pay cards.

Employee self-service:

With the help of a mobile app, employees may be able to edit or modify their personal information, change deductions, view pay statements and more.

Reduced payroll errors:

One of the crucial benefits is reduced payroll errors. Payroll software that are well-integrated with time tracking and HR programs cuts back on repetitive data entry, thereby helping prevent errors.

Automatic alerts:

There are payroll systems that offer workflow notification. So, if there is a data entry error, it can send an alert to users so they can correct it before payroll is finally processed.