Payroll Software

2. The Advantages

Using software to do your payroll gives you greater control over your data.

2.1 The software reduces the amount of time spent, by automating repetitive and sometimes difficult tasks.

• It becomes almost as easy to pay people weekly as to pay them monthly. Most packages offer you the option of paying employees every week, every fortnight or every month.
• Payslips are produced automatically. Some software packages have an optional module that allows you to make direct credit payments through BACS.
• You no longer have to perform complex calculations involving different tax and National Insurance tables. The software interprets tax codes and National Insurance letters and does the calculations for you.
• You can easily make additional deductions from each employee's wage packet. Permissible deductions include pension contributions, union dues, employee savings, student loan repayments and voluntary charitable donations.
• The software should automatically calculate a range of additional payments. These include statutory sick pay, statutory maternity pay, statutory paternity pay, holiday pay, back pay and tax credits.
• The software will automatically give you information for your end-of-year returns.

2.2 The software ensures compliance with statutory rules and procedures.

2.3 You can share data between different software applications.

• You can minimise the number of times you have to enter the data.
• You can automatically update ledgers.
• You can integrate data generated by different parts of your business. For example, you may be able to use your payroll information to address letters and circulars automatically.

2.4 More sophisticated software provides you with detailed management information. (See Key performance indicators ).

Most payroll software enables you to run queries and generate reports.

• The software should include a suite of standard reports. For example, a report to show National Insurance contributions.
• The reports should enable you to see how each figure was calculated by 'drilling down' to detailed explanations. You should be able to look at the report at different levels, such as the level of the company, the cost centre or the employee.