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An Overview of Payroll Software

Whether your organization is a small business, a non-profit organization, or a multinational corporation, you must have an accurate and timely way to account for payroll expenses, withhold and pay government taxes, and generate the proper reports required by law. This, more often than not, means the implementation of payroll software into your accounting system. Without payroll software, the detailed elements involved with this task could quickly become overwhelming.

But how do you choose payroll software? What is it? What are the advantages? Are there other options besides payroll software? The software will handle what functions? Whether you’re purchasing your first version of payroll software or replacing an antiquated system, you’ll find the answers to these and other questions extremely valuable.

Payroll Software – What Is It?

Payroll software calculates and tracks employee salaries, wages, bonuses, tax withholdings, and deductions. It prints employee paychecks, provides reports to better manage employee pay records, and generates complete weekly, monthly, quarterly, and annual payroll tax-related forms and reports. Payroll software can assure your business accurately withholds taxes for employees and pays mandatory fees such as Worker’s Compensation.

Once the initial information is input into the system, payroll software can automatically calculate figures and log them in the appropriate accounts. These actions make generating payroll a much simpler and quicker process than if trying to perform these duties manually.

The Advantages of Payroll Software

The two biggest advantages to using payroll software are undoubtedly speed and accuracy. The administration of payroll can be complex and prone to errors. Timely and accurate employee payment is critical to any business of any size. Late payment of withheld taxes can result in substantial financial penalties. Payroll software assures employee pay is accurate and timely. Payroll software also helps assure accurate payment of government taxes.

Regions throughout the country have different regulations and taxes – federal, state, local, or provincial – and, the regulations and tax rates change regularly. Payroll software, provided regular software updates are included, assures accurate employee tax withholding and tax payments.

Due to the need for constantly adjusting to changing regulations, some accounting software developers may not offer a payroll software module. Instead, they work with specialized payroll developers whose software integrates with the accounting system.

Certain industries require unique payroll software capabilities. For example, general contractors and subcontractors are often required by law to prepare and submit a “Certified Payroll” for government projects. Certified Payroll reports detail the hours paid, project number, pay rates, etc.

Accounting firms need “After-the-Fact” payroll capabilities to service clients with quarterly and annual tax filings. After-the-Fact payroll provides for the direct entry of payroll checks and allows manual override of calculations from checks created in another system.

Payroll Service – An Alternative to Payroll Software

While payroll software is extremely helpful, some businesses opt for a payroll service instead. Payroll services essentially eliminate the need to purchase payroll software. While the business still provides the gross pay and specific employee deductions, the payroll service calculates tax withholdings and prints employee payroll checks. Some payroll services provide online processing while others operate via telephone or fax. The payroll service also handles tax payments to the various governmental organizations.

Functions Payroll Software Can Handle

Various types of payroll software have added enormous features and benefits over the years. They have also seen substantial decreases in pricing. Just a few of the varied time-saving functions commonly handled by payroll software include:

• Pay employees for work performed
• Withhold taxes based on your location
• Print payroll checks or perform electronic fund transfers
• Prepare and print W-2 information (US) or T-4 information (Canada)
• Calculate pre-tax deductions such as 403(b), 401(k), cafeteria, health and flexible spending plans (US), and CPP, EI, and other applicable after-tax deductions for both the employer side and the employee side (Canada)
• Provide a structured system of general guidelines for your organization, including employee pay structure, pay frequency, and overtime definitions
• Distribute wages and salaries to specific general ledger accounts, cost centers, or jobs
• Store relevant information on each employee, such as contact information, start date, and wage and payment history

How Payroll Software Benefits Your Organization

In addition to accomplishing the tasks above, payroll software also holds many benefits for your organization. In addition to the time savings and accuracy already mentioned, you’ll see other advantages including:

• Reduced administration time by automating payroll calculation and printing of paychecks
• Eliminated tax penalties for inaccurate returns or late payments of amounts withheld
• Improved payroll accuracy with automatic tax and deduction calculations
• Enhanced management of your pay system and easily compensate employees for work performed
• Improved organization with consolidation of all payroll related records and reports
• Increased speed in adjusting to regulations by receiving periodic updates and effortlessly produce the required governmental reporting
• Reduced time spent calculating and completing government payroll forms and returns each month, quarter, or year
• Improved management reporting by tracking labor paid by job, cost center, or account
• Enhanced insurance reporting of employee payroll figures
• Eliminated paper check security issues with direct-deposit capability
• Increased accuracy of tracking payroll expenses to the proper general ledger account or customer job
• Advanced detail when tracking: overtime paid, vacation days, holiday pay, comp time, garnishments, child support payments, union dues withheld, etc.

Payroll software often integrates with:

• General Ledger
• Time & Billing
• Job Cost
• Human Resource Systems

Which Payroll Software Should I Buy?

There are many companies who produce accounting and payroll software. Making a selection is not always easy. However, with the help of FindAccountingSoftware.com, you have the ability to complete one, simple form and locate only those software manufacturers who can offer products that meet your specific needs and industry.

You’ll skip the frustrating step most organizations go through when they begin their initial search for accounting and payroll software. By focusing your search according to your given criteria, you control the types and the number of firms that contact you. Only the most qualified will be considered a match. Plus you’re never under any obligation to buy.

Best of all, FindAccountingSoftware.com is absolutely free!

Simply complete the search form below (5-10 minutes) and sign up for the brief needs assessment interview (15-20 minutes). In under half an hour, you'll be on your way to finding the most compatible software for your organization.