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An Overview of the Functions of a Payroll Software

by Lucija
An Overview of the Functions of a Payroll Software

Payroll systems help companies streamline payroll processing, ensuring accurate and timely payments. They also help ensure compliance with tax deductions and other regulatory requirements.

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The right system can help you reduce errors and save hours of work each month-time that you can devote to other high-level business tasks. A sound payroll administration system should have the following features:

Time and Attendance

Payroll software that includes time and attendance capabilities provides a more accurate record of employees’ work hours. It can help employers avoid costly payroll processing errors and ensure employees receive the proper compensation for their hard work. It also helps foster a healthy employee-employer relationship by building integrity in the workplace.

Modern automated systems allow employees to clock in and out electronically through various methods such as time cards, computerized kiosks, internet-connected mobile devices, or telephones. These systems may also include biometrics such as fingerprint, face recognition, or palm scanning to improve accuracy. The system can even track shifts, breaks, and overtime based on the time logged by each employee.

The data is then compiled into reports that allow for better management and monitoring of employee performance, which can help managers improve productivity. Some systems can integrate with existing payroll systems to automatically transfer the tracked hours and PTO accruals for more accessible, more efficient payroll processing.

What payroll software is best offered is advanced systems with more features, such as tracking geofencing, managing Paid Time Off (PTO), creating an employee schedule, and generating detailed reports. They can also provide self-service functions for employees to log their tracked hours, view current and future schedules, and submit time off requests. It eliminates the need to toggle between different programs and helps employees save time and boost productivity.


Payroll is the process of reimbursing employees for work done. It’s a complex set of processes that require various teams to collaborate and a lot of behind-the-scenes work. In addition to calculating paychecks, payroll is responsible for maintaining compliance with government tax regulations, ensuring accuracy, and supporting various payment methods.

A good payroll solution will reduce paperwork and administrative overhead by automating routine tasks, centralizing data, and providing a simple user experience. The system should also scale easily, making it easy to manage increasing complexities as businesses grow and new roles are added. A digital payroll system will also be easier to access. It allows HR leaders to delegate more mundane documentation tasks and free up their time for more meaningful work, like focusing on employee engagement initiatives.

The essential function of payroll software is its ability to accurately calculate wages and comply with tax laws. The best solutions will be able to determine an employee’s gross compensation by multiplying hours worked, the hourly wage rate, and other variables such as overtime, vacation, sick pay, and tips. In addition, they should be able to consider additional compensation such as bonuses, commissions, reimbursements, and other perks. Finally, the system should be able to handle different wage deductions by region and make sure that taxes are properly filed and paid.

Employee Self Service

Payroll software automates calculations, runs payroll for full-time employees and contractors, and files payroll taxes. But even with this technology, there’s still work to do daily, such as onboarding new employees and offboarding outgoing ones, managing recurring payments and deductions like tax withholding and health insurance, and running off-cycle payrolls for seasonal or maternity workers.

Look for a system that provides flexibility to adjust payroll processes as the organization grows, changes, or merges. It might include enabling payroll to be run for different regions with unique rules and regulations or automatically updating the software to reflect changing tax laws.

HR leaders should also consider how well the system supports employee self-service (ESS) through a digital portal. It can reduce the number of requests from employees for information and allow them to manage some of their paycheck-related tasks, such as making changes to direct deposit or vacation accrual amounts. Some ESS portals also provide access to company policies and procedures, wellness programs, and other benefits.

The best payroll management systems are comprehensive, integrated, and easy to use. They help organizations comply with complex government tax regulations, accurately pay employees and independent contractors, and save time and money on manual paperwork and administrative costs. And they enable HR teams to focus on more strategic, high-level work to support employees and the organization’s goals.

Business decision


Whether your business pays employees weekly, biweekly, or monthly, payroll systems consolidate wage-related items like attendance data, salary grades, overtime, and employee benefits into one comprehensive system that calculates net pay. These systems also generate reports to facilitate compliance and audits. They can also help companies meet strict regulations, avoiding costly non-compliance penalties.

Look for flexible systems that adapt to a changing workforce and payment structures. For example, many freelancers and gig workers will soon join nine-to-five salaried employees. Ensure your payroll software can accommodate these employees by examining its capabilities for tracking financial data, generating reports, and supporting employee self-service.

Payroll systems can help HR teams redistribute time and resources toward other vital projects by automating payroll processes. A good payroll management system can handle complex policies, such as mid-year salary revisions and deduction changes, freeing staff to focus on employee support.

HR and IT must work together to get the most out of your payroll system. It includes establishing a timeline, schedule, and clear expectations around the new program. An IT team can guide your system’s technology requirements, while HR leaders should collaborate to ensure the payroll system matches the company’s culture and tech infrastructure. Additionally, HR leaders should communicate to the rest of the organization what to expect during the rollout.


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