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How Does Payroll Automation Benefit Your Business?

Payroll automation refers to the processing of payroll through a computerized system as opposed to manually inputting and processing all the information necessary for payroll.

Automation is simpler, quicker, and more accurate.

An automated payroll system is often integrated into a company’s enterprise resource planning system, which offers a comprehensive view of its finances. In addition to payroll processing, an automated payroll system can manage the following:

  • customer relationships
  • production
  • personnel resources
  • invoicing
  • accounting

The benefits of an automated payroll system


1. Fast and convenient calculations and paycheck generation

Payment and deduction calculations will be quick and easy. The automated system performs all types of payments and deductions:


  • Hourly wages
  • Salaries
  • Overtime and double-time pay
  • Commissions and bonuses
  • Pay raises
  • Retroactive pay
  • Auto payments
  • Tuition reimbursements

Salary and wage deductions

Mandatory withholding from employee paychecks includes the following:

  • Federal income tax
  • Social Security tax
  • Medicare tax
  • State income tax (usually)

Given the number of rules attached to calculations of withholding tax, manual computations can be time-consuming and confusing. With automation, the software has the tax rates hard coded in the system, allowing for quick and accurate calculations.

Notably, an automated payroll system automatically generates paychecks and stubs that are sent via e-mail and enables direct deposit, eliminating manual paycheck writing.

2. Significant error reduction

Automation removes risk of inconsistent and inaccurate information that is highly likely in manual payroll processing. This decreases the likelihood of wage miscalculations and payroll tax errors.

3. Substantial cost savings

According to the American Payroll Association, automation reduces payroll processing costs by as much as 80 percent, much of that due to reduced errors in invoices and paychecks.

Errors in tax calculations can result in steep penalties from the IRS and the state taxation agencies.

4. Hassle-free recordkeeping

The government (the IRS and the U.S. Department of Labor) requires employers to archive the following documentation:

Employment tax records (minimum of four years)

Payroll records (minimum of three years)

Complying through the manual system requires filing by hand, which eats into valuable personnel time and increases clutter. In an automated system, the payroll software generates and stores payroll and employment tax data.

5. Seamless, portable timekeeping

Integrating timekeeping into payroll automation ensures accurate calculation of hours worked, especially for hourly workers, which is necessary for accurate wage calculation. With manual timekeeping, the risk for errors is considerably high, and can lead to worker distraction and dissatisfaction over miscalculated pay.

With an automated timekeeping system, payroll staff can import into the payroll software the time clock data collected when employees either swipe a card or badge or use a handprint or fingerprint to clock in and out. With the software doing the computations, payroll staff members can make any necessary edits on the backend if needed.

6. Speedy, accurate reporting

Downloadable reports are a feature of many automated payroll software platforms, with options for output formats and delivery for easy access to payroll data.

Reports can include the following:

  • Pre-process register
  • Job costing/labor allocation
  • Check register
  • Payroll summary
  • Workers’ compensation
  • 401k contributions
  • Deductions
  • Accrual
  • Employee census
  • New hire

7. Convenient employee self-service

With automated payroll, employees can do the following without requiring the assistance of a payroll or HR staff:

  • Edit their own personal information
  • View and print pay stubs
  • Update their direct deposit
  • View benefits statements
  • View deductions and contributions
  • Access and print W-2 and 1099 forms

Looking for a payroll service provider you can rely on?  Payroll Systems offers payroll solutions that are easy to scale and a dedicated payroll specialist to ensure your specific payroll needs are met. Talk to us to learn more.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.