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Processing payroll is a must for every business, regardless of size. Businesses pay employees for their time as well as factor in taxes and other benefits. Payroll processing can be cumbersome, time-consuming, and monotonous; however, it is essential that every employee gets paid at the right time.

In this article, we will go through what a payroll system is, the types of payroll systems, and the benefits of a payroll system to your business.

What is a payroll system?

A payroll system is a platform that enables employers to make payments for their employee’s salaries and payroll taxes and keep records. Payroll can be executed manually using spreadsheets or automated with software. A payroll system takes care of everything concerning payroll for employers, giving them more time to focus on other core aspects of the business.

Employers should avoid missing a payday, as such a mistake can negatively affect employee satisfaction and dedication to work and overall affect the company’s productivity. A payroll system prevents pay lags as it combines attendance, leaves, benefits, taxes, and paid leaves to provide an accurate and compliant payroll.

Types of payroll system

As an employer, you have various options to select from to manage your payroll, which depend on your budget and level of engagement.


Employers may decide to manage their payroll internally by either the business owner or a human resources officer. This payroll system is the most common among employees with a smaller number of employees. An in-house employee can easily execute payroll duties since the tasks involving issuing paychecks, taxes, and compliance are manageable with fewer employees. Running payroll manually can be economical, especially for small businesses, but in the long run, it can become unsustainable when your team expands. However, there are other options to consider that can fit your growing team.   


An accountant can help you run your payroll and file taxes on your behalf. You can outsource your payroll to an accountant. They can provide expert advice and support while processing your payroll efficiently. However, it comes with a downside: hiring an accountant can be expensive. You need to place the accountant on your monthly payroll and provide benefits and compensation. 


This is one of the most common options for businesses that have a large team to cater to. Businesses outsource their payroll to payroll providers to run their payroll on their behalf. It’s ideal for businesses with a large number of employees who don’t have an in-house payroll employee.

They specialize in processing payrolls and offer a variety of payroll services, such as time-tracking, reporting, and filing payroll taxes in compliance with statutory laws and regulations. Outsourcing your payroll to an external payroll provider ensures your payroll is accurate and timely, as only experts in the field handle it. In general, payroll providers charge a flat fee per payroll run.

Payroll software

The existence of specialized payroll software makes payroll processing easy, as business owners can automate the entire process. Some benefits of payroll software are: speeding up the entire process, thereby saving time; and reducing human errors that are common when running payroll manually. However, you need to understand how to use them while ensuring compliance with regulatory bodies.

Benefits of payroll system

The payroll system offers great advantages to businesses. Here are some of the benefits attributable to using payroll systems.

Minimize errors

The manual method of processing payroll introduces human errors that may be omitted and included in the payroll. These errors, if left, can lead to employee dissatisfaction and low productivity. Payroll systems reduce these errors when calculating payroll while maximizing accuracy.

Saves time

Conducting manual payroll is not only tedious but also time-consuming. The payroll system simplifies the entire process and makes calculations within a short period of time. With a payroll system in place, you will have your payroll done quickly, giving you ample time to focus on the core running of your business. 

Easy accessibility

A payroll system is designed with a focus on easy accessibility, as they have a mobile app and a website platform, making it easy for you to access your payroll data. You carry your payroll platform with you everywhere. Also, your employees can easily access their portals to track their work hours and other vital data anywhere and anytime.

Reduces cost

Hiring an in-house payroll employee or a certified accountant to manage payroll can be expensive, especially for small business owners. You will have to pay their salaries, paid time off, benefits, etc. On the other hand, outsourcing to a payroll provider greatly reduces your expenses. Generally, you pay a flat fee monthly, mostly per employee. Thus making a choice for low-budget business owners.

Pros of payroll system

Introduces error

The payroll system is not error-proof, as it depends on what you input into it. In other words, garbage in, garbage out. If you enter incorrect data, the calculations you get will be wrong. Ensure you go through the information you enter before making calculations. Also, after getting your output, double-check the results before sending out paychecks.

Compliance risk

The payroll system can surely help you calculate your payroll taxes and other statutory benefits; however, you still need to go the extra mile to ensure you are paying the correct payroll rates. To improve this process, you can automate the process and set schedules. Also, make sure you stay up-to-date with tax and employment laws.

Growth limitation

Some payroll systems don’t accommodate a growing business need; hence, you may outgrow your current payroll plan. To avert these situations, go for a payroll system that is capable of providing the needed services for your expanding workforce. 

How to choose a payroll system

Here are some key factors to consider when deciding on a payroll system to pick

Support system: do they have a reliable and dependent support system? Check how they respond to queries and how quick they are to respond.

Capable of handling different payment methods: does the system have the capacity to integrate different payment methods?

Compatible with other software: check the level of integration of the system with other automated systems. like the time-tracking system and other HR management software.

Security: consider how well they secure sensitive information and prevent leaks or hacks.

Flexible: Also, inquire about the capacity of the system to scale with your workforce growth.

How can we help you with your payroll?

Most business owners face the challenges of deciding to handle payroll themselves or outsourcing to a third-party company. Doing payroll yourself entails having knowledge of the system, keeping in check with the ever-changing regulatory laws, and being in charge of all that concerns payroll.

On the other hand, delegating your payroll management to a third party relieves you of the workload that comes with payroll processing and gives you time to run your business while reducing the burden of managing a payroll system.

PoweredUp Consulting provides payroll services at an affordable cost. Integrating our expert knowledge of compliance requirements and payroll software, we ensure that all payrolls comply with laws at all levels and that your employees are paid right on time. For more details, visit our pricing page or talk with our experts.  

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