What is payroll software?
On a basic level, payroll software is a tool that allows your HR department to manage and automate employee pay to compensate them for their work. However, a payroll software is so much more than that. Today, the tool will organize payments of payroll taxes on your company’s behalf, tracks holiday and vacation pay and makes sure your employees are paid at the proper rate for overtime and more.
What does payroll software do?
Now that we know the fundamentals of what payroll software is, let’s cover what it does. There are many things these tools can do based on the solution you choose; however, most solutions will allow you to:
- Calculate employee wages
- Pay employees
- Integrate time and attendance with your payroll
- Run payroll reports
- Withhold taxes and deductions
- Access tax forms
- Offer security and protect employee payroll data
Along with automating most of the work to run payroll, some solutions offer managed payroll. This includes professional assistance with regulatory compliance and having the taxes done for you.
Should you use a payroll software?
No matter the size of your company, there is a payroll software solution available for you that will help automate the process and minimize errors and other payroll issues.
If you own or work for a small business, you may only need basic features that automate enough to save you or your team time and help the company stay compliant with taxes.
Larger companies will look for an enterprise solution that helps them manage more complex payroll functions, integrates with other HR systems and offers advanced reporting capabilities.
What is the difference between payroll and Human Capital Management (HCM)?
If you are just beginning your research, you might not understand the differences between payroll-only software and HCM software.
Payroll Software
When you have employees that you need to pay, that person’s net pay is more than just an hourly wage multiplied by time worked or a big number divided out over 52 weeks or 26 pay periods. If the payroll process was that simple, the software wouldn’t exist.
A paycheck also includes withholdings from federal, state, and local tax authorities, retirement plans or other company-sponsored benefits deductions, and garnishments.
To put it simply, there are a multitude of factors that determine an employee’s pay. This is where software can help you save time and reduce risk.
HCM Solutions
An HCM platform is an integrated suite of technology that handles functions and processes needed for efficient workforce management. Outside of payroll, HCM systems support a wide range of functions like recruitment, benefits administration, time keeping and more
Whether or not you need the functionality of an HCM solution will ultimately come down to your company resources and future company goals.