Why to Use a Payroll System for the Payments to the Employees?


Gone are those days when you need to manually pay to your employees or workers. With the advancement of technology, everything is getting advances. Nowadays, most of the companies are using the payroll system to pay their employees. In a payroll system, you just have entered the details of an individual whom you need to pay, set the payment date, and the amount payable. The system begins calculation from the first day when the employee is hired in an organization.

How does the payroll system work? 

When an employee is hired and joins the organization, the first most thing which is carried out is their details in the database of the company. The process of the payroll starts from the first day when an employee has joined an organization and starts working for it. After the joining of the employee, the payroll system is configured in such a way that it calculates the number of days and hours they worked, calculation of taxes, deductions, and insurances if applicable.

Calculating the total time worked 

Payroll System

The first process that a payroll software uses is the calculation of the time an employee has worked. The logged in and logged out time are mentioned in the timesheets which are used by most of the organizations these days. Also, the total time worked also includes leaves and absent and the employees are paid on that.

Calculations or Earnings and Deductions

Next step for the payroll software is the calculations and deductions. In this, the payroll software looks for hours, overtime, and determining the gross pays of an employee. The gross pay is determined as the summation of Regular pay and overtime pay. For instance, if the time of working is set as 8 hours in the payroll system and the employee logs out in less than 8 hours, then the payment will be deducted, or if the employee does overtime, then the amount paid is how much time the employee has done the overtime.

Choose Custom Payment method 

Payroll System

By using a payroll system, you can choose the type of method by which you want to transfer the money to your employee’s account. You can choose among various methods that your registered bank is providing and choose accordingly based on the type of payment you are making to your employee. Keeping a track of the custom payroll methods can be a tough task if you do not have an automated system. If you have a system like this, it will allow you to focus more on your overall business.

Maintain Payroll Records 

When using the payroll system for the payment of your employees, the payroll software can also help you to maintain the records as to when and what time an employee has been made a payment. It can be beneficial to track the payments of an employee based on the weekly, monthly, or yearly basis.

Risks in Using Payroll System

Payroll System

Since it is just a software and a small mistake in the software can make huge losses to a company. While using the payroll software you should be aware of the risks that can happen such as wrong calculations, improper feeding of employee data, documentation failure, not managing the payroll records properly, and even in the audit of the payroll.

Using a payroll system can be a heaven for an organization but a small mistake can make it worse. Though the payroll system is used by almost all the organizations, it has its own advantages and disadvantages on how the software is used. When compared to the manual payroll systems which are often problematic, the automated payroll systems also come up with a variety of deductions, assets and taxation details that can be implemented as per the government rules.


Please enter your comment!
Please enter your name here