Update 6/24/2021: This post has been updated with additional buying tips about payroll software.
Payroll and its management is a huge responsibility that accountants grapple with all year long. All the employees in the company get their dues on time, get the benefits they are entitled to and pay the taxes & deductions that they legally owe.
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Whether you are setting up a new company and hiring people or an established business with many employees who want to upgrade your payroll process, you must get reliable, efficient, secure, and feature-rich payroll management software. You simply cannot run your payroll processes on paper, spreadsheets, or on last decades’ software that has outlived its utility and is not suited to the challenges presented today.
As accountants deal with any payroll-related matter, payroll services for accountants will cater to their unique needs related to taxation, integrated accounting, and report generation. Making payroll workflow smoother helps the accountants and helps employees get their salaries on time, reduces chances of errors, and increases overall employee satisfaction.
There are many payrolls and human resources software in the market, but not all are the same, and not all have the same features. It can become very confusing for you if you are looking for software for payroll management.
Here we present a comprehensive list of payroll software features that you must necessarily look for in any payroll management software.
1. Type of business
You can be an employer, a freelance bookkeeper or accountant, or running a payroll bureau outsourcing their services to other organizations. The nature of your usage and your business will affect the features that your payroll software must have.
You must check if the payroll software can manage multiple corporations, can allow inter-corporation transfers and deputations, can keep the data of one organization segregated from that of others, and so on. The features also impact the software cost if you have to run multiple instances for each organization, or there can be a single instance that can handle multiple accounts.
2. Ease Of Use
Almost every organization, except for the little ones, already has semi-automated or automated payroll processing systems. The problem with these systems is that not everything needed is found in one place; the process to calculate salaries, taxes, contributions, and deductions is very cumbersome. The users have to follow a large number of steps to compute monthly payroll bills.
Therefore, ease of use is one of the most significant selling points for delivering complete payroll services for accountants. It also includes extensive reporting, automation, and integration that we discuss further on.
3. Integrated Interface
If the payroll software is excellent but cannot interface with other software that your organization is operating – most notably the HRMS and Financial Accounting system – then there will be friction and confusion all over again. The new payroll and human resources software must be fully interoperable with any accounting and financial management system for easy data exchange and consistency.
One of the critical payroll software features should include its integration with the attendance punching system – which is primarily biometric these days, or in the case of factory floors, the time clock.
The Software for payroll management should automate most of your workflows and allow you to do it quickly. With automation, you can create workflows to automatically compile daily attendance, calculate the leaves and their types, available so far, calculate the deductions to be made from the monthly salary, prepare salary bills, and make direct deposits to the accounts of the employees.
Proper automation facilities can also help you generate reports, payslips, send them to employee email accounts, and prepare compliance reports required under the tax, labor, and other laws.
5. Validation and Verification
The payroll software must validate various salary components – both additions and deductions – from the employee’s terms of services and services rules currently prevalent in the organization. Validation means that the benefits given or assumptions made are according to the applicable regulations and laws or not.
Verification means that if validation is successful, the calculation process and the amounts calculated, under various heads, are double-checked for accuracy. This includes heads like relocation allowance, joining bonus, on-site assistance, leave encashment, contributions to pension funds, tax deductions, housing allowance, and many other such heads. With automated verification based on a comprehensive checklist, the payroll can be processed in time.
6. Direct Salary Deposits
Once the payroll has been verified and authorized, the system must interface with the banking application to directly deposit the salary into the accounts of all the employees. This requires creating a salary file in the acceptable format to the bank and uploading it to the banking servers. The entire process must be automated to avoid unnecessary delays and due to manual intervention.
7. Anywhere Accessibility
The software for payroll management must be accessible to accountants, HR managers, and other authorized users from anywhere. This is most critical when the company has multiple locations, possibly in different cities. It is exceedingly difficult to achieve anywhere accessibility with an on-premises solution, but that can be easily solved using a cloud-based solution. It also offers the benefit of scalability and not needing any specialized hardware and infrastructure.
8. Comprehensive Reports
One of the most significant pain points in payroll and human resources software is their incapability to produce comprehensive and ad-hoc reports. The software you buy/license must be able to make the following reports, among others:
- Payslips and monthly payroll bill.
- Daily timesheet reports
- Balancing and audit reports
- Liability audit reports
- Overtime reports
- Tax deducted at source reports.
- Reports related to bonuses, commissions, and variable pay components.
- Allowances and overhead reports
The system must allow for customizing the report formats and creating new reports. All the reports generated must be in several formats such as Excel, CSV, PDF, and XML. The system should automate direct emailing to designated users, printing, or uploading for compliance.
9. Data Migration
Most likely, you would be already using some kind of MIS, ERP, or payroll software. Even if you are not using it, your accountants must be maintaining the data in Excel files. One of the essential payroll services for accountants is a data migration facility without data loss, data corruption, or glitches. The vendor must thoroughly analyze the data and create automated scripts to migrate the data from the current system to their system.
10. Automated Statutory Filing
Most organizations have to file periodic compliance reports to statutory bodies such as labor commissioners, tax authorities, workplace insurance, group health insurance, pension funds, etc. The paperwork for these forms, reports, and formats alone requires dedicating a proficient staff for the job. The software for payroll management must automate the preparation, verification, and filing/uploading of such compliance reports from time to time.
The system must alert well before the due date if any lapses or incomplete information that the management must look into. Once all the reports, filings, and formats are complete and authorized by the competent authority, the system must either print them, email them, or upload them as the case may be.
11. Employee Self Service and Manager Self Service Portals
The ESS and MSS portals or windows are some of the most sought-after features in payroll and human resources software. An ESS is a personalized dashboard for each organization’s employees. They can automatically check their daily time-in and time-out, overtime, leaves, dues, payslips, tax deductions, and other such stuff. They can directly apply for leaves from there and get approval from their manager at the moment.
Similarly, an MSS is a portal for managers, especially project and HR managers, to view the tax declarations, leave applications, expense approvals, travel bills, and overtimes of the employees under their ambit. They can approve, partially approve, or reject the applications or statements of expenses for employees with their MSS.
The use of ESS and MSS makes workplace relations open, transparent, and healthy. Such clear understanding helps nurture better workplace relations among employees, management, and between them., resulting in higher productivity and engagement.
12. Mobile-First Design
When the employees, managers, and entire businesses are on the move, not having a mobile app or a responsive portal for payroll software is outdated. The payroll system you choose must be designed with mobile-first design principles to allow seamless use on all devices and from anywhere. The system should free the users of the space block and not tie them up.
13. Free Trial and Transparent Costing
The vendor must allow your users at least a fortnight of free trial where they can thoroughly test its features, enter data, take reports, and make any adjustments that they deem fit. This gives the vendor a closer understanding of the gaps in functionalities offered and required and users the chance to familiarize themselves with a world-class product.
The costing of the solution – whether one-time installation costs, per user, has costs per employee costs – must be set in paper and transparent to avoid troubles. Hidden charges in the name of data migration, customization, services, training, etc., should be avoided. You would know about such practices of the vendor from online reviews about them.
14. Vendor Support
The after-sales support by the vendor is one of the most crucial factors to weigh in a while buying any new software. You must ensure that the vendor has qualified and 24×7 available support staff who are proficient in resolving any issues your team might face. Support in online training videos & material, data backup & restoration, and handholding in the initial phase is of utmost importance.
In short, a good payroll solution can prove to be an efficiency booster of your company and a boon HR manager. Cloud-based HR & Payroll software has been empowering businesses by automating their payroll and HR workflows and processes.