5 Benefits of Payroll Automation

An automated process represents an umbrella term we use to describe any process being automated through the use of computers and computer software. Automated processes require less human intervention and less human time to deliver.

In this case, an automated payroll system allows you to process your organization’s payroll through a computerized system, making the procedure faster, more efficient and less prone to errors. It will also reduce manual labor, saving you valuable employee time which you can then use in other parts of your enterprise. In this post, we’ll discuss five key benefits of using payroll automation in a company.


Increased system flexibility

Making payroll changes manually involves giving an employee a paper form and waiting for its return. Automated mobile forms makes the process more straightforward by enabling changes to be made directly in the system, where they’re being kept for easier access. There are also online payroll systems that streamline the process further as they allow employees to make such changes directly. Examples of such updates include:

  • Printing W-2 forms.
  • Updates to W4 information – such as changes in the number of the address, deductions or tax status.
  • Adding new workers to the system.
  • Adding or modifying bank account(s) for direct deposit. 


Better system security

Encountering data loss and safeguarding information involves adapting adequate countermeasures. Automated payroll systems have sturdier information security features for preventing sensitive data leakage to outside parties. Moreover, some instances offer additional security measures. 

For example, payroll card solutions provide a secure electronic funds transfer while complying with the safety regulations that regulate that area. All in all, automated payroll systems enable organizations to more easily track what data changes were made by which individual with an audit log, and ensure only authorized staff has access to data.


More precise time-keeping


Hourly employees receive their pay according to the hours worked during the pay period. The business uses a time-keeping system to track the hours and pay the hourly employees accordingly. With this in mind, it is of utmost importance that each worker’s time is calculated appropriately. Most employers utilize a time clock for tracking the work hours. A manual payroll system requires computing the time clock data manually. This, in turn, increases the likelihood of error. 

An automated time-keeping system enables the company to import the time clock data into payroll software. For example, employees can use swipe cards or badges to clock in and out. Once the entries are made, the software computes the time worked. All the payroll staff member has to do is ensure the time is tracked appropriately and make the necessary updates.


Faster, simpler wage calculation


A manual payroll involves calculating various kinds of payments, poring over spreadsheets, then writing out a check by hand. Even with a low number of workers, the task involves a significant time commitment for each and every pay period. Worse still, problems can pile up if an employee needs an extended leave from the office.

An automated payroll system has a fast performance for all types of payments, from basic salaries and hourly wages, to more complex instances such as double-time, overtime, bonuses, commissions, raises, wage deduction, tuition reimbursements, and retroactive pay. In addition, automated payroll removes the need for manual paycheck writing. The system generates stubs and paycheck and allows direct deposit. 

Remember that such processes aren’t entirely error-free. The calculations are based on the information the payroll representative inputs. How precise the results are depends on the accuracy of the input.


Tax deduction

Wage and salary deductions are a necessary part of payroll processing. The company must take mandatory withholding from worker paychecks, including the Social Security tax, federal income tax, Medicare tax, and state income tax. Computing such taxes manually can be a time-consuming and complex process. There are a number of rules attached to withholding tax calculations. 

Having an automated payroll system gives you access to software with tax rates hard-coded in the system. It will be able to calculate the withholding tax for each worker based on the withholding conditions data input. This reduces the chances of payroll tax mishaps, which can result in fees from the state taxation agency and IRS.


In the end, one of the best benefits of an automated payroll system is that it lowers the costs of performing various HR functions. Moreover, there is no need to buy or install expensive equipment since it is easy to access through the Internet.