8 Ways Payroll Automation Saves Time and Money

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Automated tasks—like calendar auto-syncing or automatic bill pay—might not seem like a big deal, but they can save you a lot of hassle. Automated payroll software works the same way. It can help your organization save time and make payroll a breeze.

According to a recent survey, small business owners say processing payroll is one of the most time-draining HR activities. Most reported spending five hours per pay period calculating taxes, filing information, and allocating funding. Some people even spend roughly 21 days every year on these activities, which could be spent on more important tasks.

Just imagine what you and your team could accomplish in that time.

That’s where payroll software like BambooHR comes in handy. Read on to learn more about payroll automation and how it can make a big difference in the way your organization handles everyday tasks.

What Is Payroll Automation?

Payroll software automates routine processes, so paying your employees feels simpler each pay period. It can save time and effort on headache-inducing duties like filing taxes, processing direct deposits, generating reports, and calculating withholdings.

Payroll managers don’t have endless time to crunch numbers and manage spreadsheets. Many have other responsibilities, like recruiting and hiring, employee relations, training and development, and benefits management. Payroll may also fall to an executive assistant or office personnel, so managers can spend time on other tasks. Here's a breakdown of everything a payroll manager is in charge of (excluding all the other duties beyond payroll):

New Hire Tasks

Weekly Tasks

Periodic Tasks

An automated payroll system can’t do everything for you, but it can help—a lot. If you’re questioning whether your expensive payroll software is worth the cost or asking yourself if it’s time for your organization to get automated, explore the many advantages of an automated payroll system.


What Are the Benefits of Using Payroll Software?

Automating your payroll process doesn't just make things easier. Let’s dig into some of the specific benefits of using payroll software to streamline HR processes.

1. Reduce Errors

A person’s pay isn’t something you want to mess up. More than half of American workers live paycheck to paycheck, so payroll mistakes can cost you and your employees. Plus, it may only take one or two errors for someone to lose trust in their organization and begin looking for a more reliable job.

Just like calculators are a bit better at math than our human brains, payroll software is better at calculating the correct deductions, overtime pay, PTO, and commissions that affect an employee’s pay. And if you aren’t manually entering data, there’s no risk of mistyping a number or copying something over incorrectly.

2. Save Time

Automating some of the many tasks that fill a payroll employee’s plate can save a significant amount of time. For example, HR Program Manager Josh Franklin found that using an all-in-one HR system with payroll cut processing time by 90%. "Payroll now takes 20 minutes compared to four days," he explains. And that’s just one example—think about the time savings for your business if you automated timesheet tracking, tax management, or forecasting budgets!

3. Improve Data Security

Paperwork and spreadsheets aren’t very secure places to keep important payroll data. With an automated payroll system, your data is encrypted, so no one (besides you and your team) can easily access it. Additionally, these online systems make it simple to update passwords, send reminders for security training, and authenticate users’ identities, ensuring all information is protected. After all, it's just as important to protect sensitive employee data as it is to safeguard your customers' data.

4. Pull Payroll Reporting Easily

Making strategic payroll decisions or predicting labor costs is easier with a bit of automated help. What’s not easy is digging through all your manual work to track down your payroll information and assemble it into a report by hand. Many automated payroll software platforms allow you to create downloadable reports, so you can feel confident that everything is running smoothly and you’re making the correct decisions for your organization.

5. Simplify Tax Filing

Taxes are complicated. The US has thousands of tax jurisdictions and the rules change regularly. If your organization operates in multiple states, you have even more to keep track of and errors can cost you. Automated payroll tracks updates in tax policy, makes sure you meet all the correct deadlines, and calculates withholding tax for individual employees. This way, you can feel confident your taxes are filed correctly and on time.

6. Maintain Complete Records

Payroll software can also help you stay compliant with US laws. The IRS requires organizations to keep tax records for at least four years, and the Fair Labor Standards Act (FLSA) requires employers to keep three years’ worth of payroll records. They should include hours worked, payment rates, pay dates, and more, depending on state laws. Payroll software keeps this data organized, so you can stay compliant, spot errors more easily, and be better prepared for a possible audit.

7. Enable Employee Self-Service with a Payroll Portal

Giving employees the autonomy to view their paychecks easily and update their personal information can help streamline your payroll process, keep extra tasks off your to-do list, and limit errors. With payroll software, many solutions allow employees to do things like:

Fewer emails, shoulder taps, and pings throughout the day can make a payroll manager’s life a lot easier.

8. Save on Payroll Processing Costs

An automated payroll system might scare off some businesses with its price tag, but your payroll performance metrics may reveal that a more efficient system could make up for the initial investment in other ways. Many of the previously mentioned benefits of automated payroll contribute to an overall lower cost for your organization. When you eliminate the most expensive errors, you can drop your costs in the long run. Plus, as they say, time is money—which is especially true for businesses.

How to Run Payroll Using Payroll Software

You have a few options for running your payroll. In a BambooHR State of Payroll survey with 500 respondents, 48% of organizations reported that they use third-party software, 24% said they use homegrown payroll software, and 27% said they opted to outsource the task entirely by using a local accountant, national accounting firm, or professional employer organization (PEO).

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If you're looking to automate your payroll process, partnering with a third-party system is likely the best choice. However, one of the most important features you should look for in a third-party system is that it communicates with your HRIS, so employee information like wages, hours, account numbers, and withholdings are all stored in one place. That means you can further reduce the risk of errors by cutting down on the need for double entry.

Essentially, you get all the automated payroll features that make it easier to run your business, plus a simplified system.

What to Look For in Payroll Software

Integrating a new payroll system takes some effort (gathering data, setting things up for your organization, etc.), so be sure to carefully evaluate new payroll systems before selecting one. In our most recent State of Payroll survey, we asked respondents what their biggest challenges were in managing payroll. Here's what we found:

Based on these pain points, we asked participants what features make up high-quality payroll software. The top responses give a good idea of the key aspects you should look for when you choose a payroll system. These automated payroll features can help cut down on the most prominent payroll pain points:

As you consider different payroll system options, ask yourself these questions:

These questions should help you land on an automated payroll system that works well for your payroll manager and your entire organization.

When Should I Start Using Payroll Software?

If you’ve just hired employee number five, doing payroll manually might cut it for now, but adopting an automated payroll system early on that can grow with your company can be greatly beneficial. For example, implementing payroll software after you’ve hired your first employee can help you avoid common errors and delays noted in some of the most recent high-profile mishaps. Automated payroll processes set your organization up for future success, enabling you to spend more time meeting business goals and creating a positive employee experience.

If you’re still manually running your payroll each period, it’s time to automate. Start researching different automated payroll systems and crunching the numbers to estimate the ROI. You’ll find the benefits of automated payroll can eliminate those manual processes that take away from more important tasks.