What is a Payroll Software?
Payroll software is a software that assists with calculating employee compensation for work performed during the course of employment. Payroll software can be a standalone system or can be part of an all-encompassing HR management system.
In simple terms, payroll software helps with calculating employee salaries. The software then generates employee salary slips and can be utilized to make direct deposits of funds into employee bank accounts. Payroll taxes and deductions are also calculated and withheld by payroll programs in coming up with the net salaries payable to employees in a particular period.
Why should a small enterprise acquire Payroll Software?
Every enterprise or organisation with employees must pay salaries or wages every month, fortnight or every week. Because payroll calculations must be done accurately and on a regular basis it is prudent for small enterprises to invest in a system that automates these processes. Payroll software helps to curtail errors and improve statutory compliance as well as save time that might otherwise have been underutilized performing manual payroll computations.
In-House Payroll versus Outsourced Payroll
In the not so distant past, outsourcing payroll was seen as a way to avoid hiring a full-time resource dedicated to HR and payroll or decreasing productivity by delegating payroll to an existing employee who would then double up as the payroll officer. Outsourcing payroll is still common practice among businesses but using your own payroll software is now a viable alternative.
With the advent of simpler and more user-friendly payroll software systems that are becoming more and more accessible by the day, even small enterprises are now able to run in-house payrolls without having to spend endless hours on payroll processing. Businesses enjoy greater control over their payroll process by running an in-house payroll system. Greater flexibility is enjoyed thereby allowing the business to easily make changes when need arises.
Payroll Software Program Benefits
If payroll is being processed manually, automation by way of investing in payroll software will help to cut back on costs, eliminate errors, and avoid shortcomings on compliance issues. Processing of payroll will take a fraction of the time it takes to do the same on a manual payroll system thereby freeing up employees to engage in other value adding activities. The existence of payroll software in an organisation makes it easier to adapt and take on more employees as it expands.
Moving payroll from a third-party outsourcing arrangement to in-house can save money, eliminate the chances for miscommunications regarding payroll matters, and minimize the number of vendors that it is necessary to deal with regularly.
Payroll Software Mitigates Compliance Risk
Calculating company taxes and understanding what reports to file can be confusing for the small business, missing deadlines for these items can attract interest, punitive penalties and sometimes garnishes.
Payroll software helps businesses by providing reports required for various payroll taxes effortlessly. Reports and tax returns are automatically generated by systems and available to users on demand.
What Does Payroll Software Do?
Stores Company Payroll Information
Payroll software stores and tracks company information about employee compensation and deductions for the financial year. Employees’ pay rates, hours worked, other pay information are stored in the system and used to calculate gross earnings on a monthly basis.
Calculates Deductions and Net salaries
After the gross earnings has been established, payroll software then automatically calculates deductions such as income tax (PAYE), NSSA Pension, NEC, and Trade Union. Deduction amounts are automatically subtracted from gross earnings to come up with net earnings to be deposited in employee bank accounts.
Prepares Payroll Tax Reports
Payroll software can automatically generate tax reports that are needed by employers, employees and payroll tax authorities. Common reports that can be generated include PAYE return (P2 form), NSSA return (Form P4A), NSSA Monthly Payment Schedule of Employees (Form P4), NSSA P16 Year to Date Report, Employee Tax Certificate (P6 form) and ITF 16 Annual Return.
Keeps Payroll History Effortlessly
Keeping payroll history with a manual system can be difficult and requires a lot of storage for manual paper based reports and files. Keeping history with payroll software is effortless and requires little or no physical space as information is store electronically in a central database. Old payroll files from prior years can also be accessed easily.
Determining your Business’s Needs
There are numerous software programs available and all of them are unique. A business needs to be sure about what it requires from payroll software. Companies that are smaller and do not expect to grow rapidly may wish to invest in less expensive payroll software that is limited strictly to payroll functions. This will allow them breathing space and allow for use of scarce resources in business development endeavours.
Companies that are large or are growing rapidly may wish to invest in payroll software systems that are integrated with other aspects of planning and human resources management, such as time and attendance software, and scheduling. Cost considerations also come into play, some systems come with annual or quarterly licencing requirements whilst others offer once off perpetual licences. It is also important to consider how many employees a payroll software solution can handle and factor potential growth. It is also worthwhile to examine the skills set available in the company and determine if there is capacity to operate the software. Some software is a bit more complicated than others and may require more specialized skills and training for one to be able to operate it. Proper needs assessment guided some of the issues highlighted above and other pertinent issues relevant to a business must be carried out in order to come up with an informed decision.
Please visit the following websites to learn more about Income Tax (PAYE), NSSA pension and other payroll taxes;
National Social Security Authority (NSSA)
Zimbabwe Revenue Authority (ZIMRA)
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