Payroll Processing Software Guide for Small Business
Payroll Processing Software Guide for Small Business

Payroll Processing Software Guide for Small Business

Payroll Processing Software Guide for Small Business. Whether small, medium or big, every business now installs a proper Human Resource Management System (HRMS) for smooth and easy functioning for their company. Using HR software in the HR department has become an essential part of maintaining the organizations’ human resources or workforce as a whole. It helps the HR management and the company as a whole through the ease of data retrieval.

I suppose your small business already has suitable HR software. Then you would know that there are various other features that this software provides. One such prominent feature is the Payroll Processing Software. It is helpful for the employee payroll management of the organization.

You might have a notion that the payroll software is not suitable for small businesses. But it has now become vital to have payroll processing for SMEs, too, due to huge benefits. It helps eliminate any human errors and keeps the necessary records intact with a sound security system. The HR managers must pay their employees the required amount on time with benefits if any.

However, payroll processing is more than just calculating paychecks for employees. You have to ensure compliance maintenance, handling payroll records, and other series of tasks every month. You can streamline your HRs with other important projects of the business. Here are the Payroll Processing Software Guide for Small Business.

Importance of Payroll Processing?

If you are still unsure about the implementation of payroll processing for small businesses, have a look at what significance it has.

● Payroll Processing of Automates

Manual payroll processing always has a slight possibility of errors that could create miscalculations. It is time-consuming, along with lots of other paperwork. However, payroll processing automation helps accessible data collection through the digitalized system. It can efficiently process any task, either complex or simple. It brings simple, efficient, and better organization of things.

Automated payroll processing helps save other costs by calculating the employees’ payment and taxes by eliminating payroll clerks. It does not require human involvement in the calculator process. Hence, saves time as well.

● Tracks Payroll Expenses

Whatever the type of business or work may be, payroll is a continuous activity creating expenses. The payroll expenditure varies along with the size of the company with an increase in activity and requirements. This makes a considerable workload by the end of the month for the HR managers.

However, with the payroll software, you will be free from all these repetitive tasks. The software itself will do the report generation with data from the employee salary records, incentive payouts, etc. This way, the payroll processing tracks every expense happening in the company.

● Secures payroll information/data

The payroll system holds pretty essential data relating to employees’ salaries, bank accounts, taxes, and many more. If done manually, there is a chance of a breach of data against unauthorized users. But, the payroll software ensures quality security with controlled access to users.

● Compliance of Taxes

It’s not an unknown fact that every other business tries to evade tax payments or even wrongly paying taxes. It could be intentional or unintentional due to misinterpretations as well. But the result of non-remittance of taxes is getting penalized.

However, payroll processing helps you adapt to tax laws (even if it changes) and statutory, which applies to your small business. You should not have to concern more about accurate tax deductions as you would get pre-formatted tax reports. HR management software is known for its compliance with the laws and regulations of the company and government.

● Better integration

It is relevant for the PR and HR software to integrate with the businesses’ other systems and apps. It is also necessary for the payroll staff and other teams to coordinate to collect data for payroll processing periodically. But, these coordination’s and time-bound and complex.

However, the payroll software’s’ secure integrations allow you to access data from one place only. The integration of payroll with accounting and HR platforms brings the information under one umbrella.

Payroll Processing Steps

Now that you know about the importance of payroll software for your small business let us proceed. Here you will find the necessary guidelines to payroll processing.

● How to Choose a payroll schedule.

It is necessary to maintain a proper and regular schedule for your payroll. You could make it weekly, fortnightly, or even monthly as per your size and business type. This schedule determines the time that you take to pay the employees.

● Input employee information

This is a crucial step for proper payroll processing. Any information that relates to your employees’ salary/payment needs to be logged-in accurately. This payroll information includes working hours, overtime amount, base salary amount, tax codes, bank account numbers, timesheet records, personal information, etc.

● Gross amount calculation

The gross amount that needs to be paid to employees is calculated based on the hourly rate or the dedicated employees’ salary. However, this amount differs every time any information is put into the payroll schedule. This could be due to factors like sick days leave, overtime, commission, bonus/incentives, etc.

You have to ensure every piece of information input correctly to get the exact amount for the employees’ work.

● Estimate payroll deductions

There could be some deductions necessary to be made from the gross pay of the employees. Such as tax payments, leave of absence, late to work, any casualty caused to the company personally, etc.

● Pay slip creation and payment distribution

Just like you create receipts for any transaction purposes, a pay slip is mandatory in payroll processing. The pay slip should clearly show the employee’s salary along with a deduction if any. The HR managers should give them to the particular employees through maintained confidentiality.

After employees receive their pay slips of the period, ensure that funds are transferred to their bank accounts accurately. But, payroll software is there to take care of this transaction.


For a small business with fewer employees, maintaining these steps correctly is not a complex task for payroll processing. If you are operating a small business, I hope this guide helps you in some way. And moreover, maintaining harmony with the company’s human resources with the payroll process is essential enough.

About Ambika Taylor

Myself Ambika Taylor. I am admin of For any business query, you can contact me at [email protected]