Your payroll solution is critical to the wellbeing of your business and employees. The right system can offer an automated, accurate and seamless experience, which contributes to employee satisfaction, supports payroll efficiency, and provides actionable insights for stakeholders.
So, what should you consider when choosing a new payroll solution, and why?
Our quick guide steps you through features and benefits such as ease-of-use, automated processes, legislative compliance including holidays acts and taxation, comprehensive reporting, integration with HR systems, tax filing, self-service portals, mobile access, and support.
Yes, payroll software has come a long way. But where to start?
Step 1. Understand your business payroll needs.
Before you even begin to browse possible solutions, it's essential to define your business needs. This exercise will enable you to focus on finding a right-sized and right-featured solution and eliminate unsuitable options.
Start by documenting:
- Number of full-time employees
- Number of seasonal or temporary employees
- Business size
- Payroll budget
- Employee benefits
- Payroll frequency
- Internal payroll administration experience and capability
- Payslips (do you need to print these?)
- Do you need standalone payroll software, or should it integrate with a timesheet application or even your HR solution?
- Do you need employee self-service capabilities to free up administration time?
Step 2. Understand your business analysis needs
Generations of businesses have relied on spreadsheets to report on their payroll. Luckily, most modern payroll solutions provide one-click, real-time reporting.
The question is, though, what reports do you need? They may include:
- Cost centre reporting
- Payroll cost analysis by department
- Payroll summary
- Deductions and contributions summary
- Tax and wage summary
- Tax liability
Step 3: Understand your payroll legislation compliance and contractual needs
Adhering to local employment legislation is non-negotiable for your business. Failing to comply with the letter of the law (and the tax department) can be costly in terms of reputation, employee engagement, and financial penalties.
Your legal and contractual obligations will include:
- Managing employee entitlements (these will depend on individual employment agreements), including bonuses and commission payments
- Minimum pay rates
- Public holiday entitlement
- Annual holiday, sick, maternity, parental, bereavement, and domestic violence leave
- Employer deductions, including PAYE and KiwiSaver
- Taxation payday filing
Step 4: Do your homework (the exciting bit!)
Now you can start to search for the perfect solution. Take your time to examine payroll software features, both must-haves (payroll legislation and contractual obligations) and nice-to-haves (like self-service and mobility).
Your objective is to evaluate the pros and cons of each payroll solution that you've determined meets your minimum business and employee requirements, budget, and type of business.
Features to tick off:
- Cloud: This is a seriously non-negotiable feature. Online payroll software gives you round-the-clock access to and control over your payroll data. Information is easy to update and share with the finance team or the IRD. Robust cloud security significantly reduces potential payroll risks, software updates and fixes are automated and immediate, and the requirement for in-house IT support is minimal. A cloud-based payroll solution will also support business growth and make it easy to add new employees.
- Customisation: While payroll best practices may be universal, a good payroll system will allow you to customise processes, templates, on-screen appearance, reports and more to reflect your unique business needs, brand, and company culture.
- Flexability: With the event of COVID-19, the shape and nature of the workforce has changed dramatically. Will the system support your ability to manage full-time, part-time, contract or flexible workers?
- Tax filing: Taxes are complicated and can be difficult to both document and manage. The ideal payroll system simplifies the process by automatically calculating and filing taxes. Automated tax calculations eliminate potential errors, and a cloud-based payroll system ensures you and your employees meet tax deadlines.
- HR integration: By bringing together the data from your payroll and HR systems, you'll save time, improve accuracy, accessibility and efficiency, and enjoy seamless accounting and comprehensive, real-time reporting.
- Other integrations: The ability to integrate to related payroll software like time cards or attendance records will dramatically reduce the time needed for manual and often error-prone data entry. With all your data in one place, you will have an accurate, calculation-free, streamlined payroll process.
- Compliance: Save time and avoid headaches with a software solution that will 100% support your ability to comply with local legislation. A reputable provider will ensure that your software always reflects the latest legislation, including updated pay rates, PAYE, KiwiSaver, holiday pay, and Employer Tax Credits.
- Local support: Support should never be more than a phone call away, and it should be available in your business hours. At a minimum, you should expect live, in-person support via chat, email, or phone, and on-demand access to detailed user guides and tutorials.
- Reporting: Real-time and detailed one-click analysis of your business's payroll saves on administrative time and reduces errors. With accurate key financial and staff information at your fingertips (as reports or dashboards, or both!), you can make informed, timely decisions.
- Ease of use: Look for a payroll system that makes the load on your payroll admin team lighter, not more challenging, or complex. The software should be intuitive, enjoyable to use, and fast to learn. And it should always be evolving and improving.
- Payday filing: From April 2019, businesses that pay more than $50,000 in annual PAYE and Employer Superannuation Contribution Tax are required to use electronic payday filing. Your payroll solution should eliminate the need to upload files and instead send your information to the IRD automatically.
- Automation and notifications: Payroll automation is a life-changer! Look for a system that includes automated timesheets, tax and leave-balance calculations, and direct deposit management. Never miss a task or deadline again with email and SMS alerts, reminders, and push notifications.
- Employee self-service portal: A self-service portal not only provides your employees with easy access to their payroll data but reduces the payroll team's administrative workload. Employees can view and download payslips, tax information, and accrued leave, update their details, and even book in their holidays. And it's an ideal way for an employee to upload and request payment of business-related expenses.
- Mobile access: For convenience and efficiency, opt for a solution that either a mobile-friendly website or an app.
A thorough understanding of your needs should help you decide which payroll solution will best suit your business, your people, and your budget.
Payroll systems have changed considerably over the last decade, so it's important to ensure that you are reaping the value of ground-up technological innovation, rather than adopting a system that has merely had a makeover. Or worse still, is unable to support your compliance requirements, or offer local support.
As you draw up your payroll solution shortlist, don't forget to read customer reviews. First-hand user feedback on both the solution capabilities and the quality of vendor support is immensely valuable to your decision-making process.