small business owner at her desk working on payroll

Updated April, 2024

It's a common small business owner's dream - to grow the business, expand the team and hire employees. For those who started in their basement, garage, or tiny office with a dream and worked long hours to make it happen, getting to the point of bringing on an additional team member is a significant small business milestone.

However, that progress also comes with additional work and responsibility. The days of owner's draw are likely over, and the need for a payroll system emerges. While it's feasible to run payroll manually for a short while, it's not ideal in the long run. (One of the advantages of using payroll software for your small business is the ability to easily generate an accurate paystub for your employees - we’ll talk about several others below).

If you're still debating how to run payroll for your small business most efficiently and cost-effectively, consider these six major advantages of using payroll software.

Avoid Making Significant Errors

Generally speaking, everybody is prone to making mistakes. However, when small business owners make payroll-related mistakes, it can be a significant issue and have multiple negative ramifications.

Payroll errors are not uncommon and have the potential to impact your team members and your reputation negatively. For example, if you make a mistake that short-changes your workers, it could negatively affect their morale and potentially lead to legal issues that could seriously ruin your reputation and the reputation of your business.

Other payroll mistakes like miscalculating an employee's sick leave or overtime pay also can cause headaches for you as the business owner and your employee. Using payroll software for running payroll takes the guesswork out of this sometimes complicated and time-consuming task and ensures your team will be happy on payday every time it comes around!

Spend Less Time on Administrative Work

On average, companies spend more than eighty hours processing payroll each year. But with the right payroll software, you can dramatically decrease that time spent behind the desk and focus on other priorities. Additionally, integrating employee time tracking features, such as a free employee time tracking app, within payroll software streamlines the entire process, making it easier to monitor hours worked, manage overtime, and ensure accurate pay for your team.

Because most payroll software is developed with automation in mind, calculating salaries and deductions, managing employer-specific procedures, and tax filing becomes much simpler to manage.

Access Support and Training

One of traditional payroll management's biggest flaws is that entrepreneurs must depend on payroll processing professionals, especially if you've decided to outsource this task to someone outside your organization.

What do you do if that person suddenly decides to leave the job? Unfortunately, traditional payroll systems are typically very complex and outdated and rely on the knowledge of a single person. As business owners, it's unwise to let such a monumental task rest on the shoulders of a single employee or contractor.

With an automated payroll system, you can rest assured payroll will run seamlessly, usually with the click of a few buttons. And if you enter a scenario where you're unsure what to do or have questions about the best way to handle a situation, you'll have a customer support team available to help.

You'll also have access to training materials and documentation to train a backup team member to handle the payroll process in your absence.

Secure Employee Information

Just like other types of business data, your payroll data is private and sensitive and supposed to be secure, particularly regarding employee attendance, tax calculations, time tracking, and various other information.

Using payroll software ensures that this sensitive information is adequately secured and protected against digital security threats. It's also typically backed up on secure servers should your office and physical records be destroyed or accessed by unauthorized means.

Additionally, this system enables your employees to access all their personal information, like remuneration, attendance, tax forms, and payroll history, without worrying that somebody will jeopardize their privacy.

Make Accurate Payroll Projections

Payroll systems often offer forecasts you can employ to plan employee expenses and budgets. For instance, if you're contemplating increasing the hours for a specific team member, you can run projections inside your payroll software to determine how those expenses will affect your budget.

Or, if you're planning to hire someone new, you can use your payroll system to project their anticipated take-home pay, benefit-cost, and tax estimates.

Simplify Reporting

End-of-year reporting is a task many entrepreneurs dread. And, if you're still using Excel sheets or other outdated technology to manage your employee reporting and tracking, a payroll system can simplify your reporting and save you many work hours.

Payroll software can store all your relevant data and enable you to generate reports quickly, aiding in making significant business decisions.

Final Thoughts

Payroll is one of many administrative tasks in the administrative column of running a business. Instead of letting it cause headaches and stress and dreading the task every few weeks, consider finding the right payroll system for you and your business.

Your team members will thank you, and you'll find extra margin in your day to tackle the fun parts of your job and remember why you started in the first place!

One Nine Design is a digital marketing company helping small businesses and nonprofits learn how to use their website and email list to grow their reach and make a bigger impact!

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