Are you still processing payroll manually? Do you use software only to track employee hours through a time clock? When you process payroll manually, you’ll certainly come to understand the process inside and out and hone your payroll processing skills. However, payroll skills won’t help you scale your business.
If you’ve got 5 or fewer employees, you’ll survive with manual payroll for a while. However, to scale and grow your business, you’ll need to start using payroll software.
1. Scaling your business requires simplifying processes and systems
Scaling a business requires simplifying operational processes and there’s nothing simple about a manual payroll process. It takes an incredible amount of time to manually calculate wages, overtime, and taxes, not to mention the lengthy process of cutting, signing, and delivering checks by hand.
If you offer 401(k)s, benefits, commissions, bonuses, sick pay, vacation time, or retirement plans, you’re looking at a full-time job just processing payroll. When all your time is tied up, you’ll never scale your business.
Payroll software simplifies, automates, and streamlines virtually the entire payroll process. You can even get software that comes with advanced features that make life easier for you and your employees. For instance, Paylocity allows your employees to access a portion of their earned wages before payday. You can also monitor metrics and trends through a visual dashboard to make better hiring and budgeting decisions.
To make the right business decisions, you need access to the depth of insights only software can provide.
2. Payroll software eliminates careless mistakes
Careless mistakes are all too easy to make when crunching numbers by hand. Pushing just one wrong button on your calculator or misreading a number on a piece of paper can have devastating consequences. You might pay an employee or vendor too much or too little, withhold the wrong amount of tax, or misrepresent your available cash flow and overspend.
Using a paystub creator eliminates the majority of oversights and careless mistakes. As long as the data is entered into the system correctly, the risk for mistakes is greatly reduced. With an automated payroll system, the majority of data will be retrieved directly from time clocks, electronic W2 forms, and standard settings.
3. Payroll software makes it easier to open new locations
When your goal is to open new locations or sell franchises, you’ll need all the time you can get. Using payroll software will free up your time so you can get your new locations up and running.
When you find good payroll software, you can also recommend that your franchisees use that same software to help them streamline operations. After all, when they succeed, you succeed. However, just make sure you don’t require your franchisees to use specific software or you risk creating an employer-employee relationship. Global Franchise Magazine explains this in detail and shares why it’s a good idea to simply “strongly recommend” specific payroll software and HR tools rather than require their use.
4. Payroll software creates consistency that keeps employees happy
Maybe you don’t make payroll mistakes all the time, but only every few pay periods. The moment those mistakes start to inconvenience your employees, they’re going to look for another job.
For instance, say you have to short a future paycheck because you overpaid on a current check. Employees will generally be forgiving if this happens once. However, additional issues will be met with frustration. When small mistakes become a pattern, employees won’t stick around.
Consistency is a critical requirement for scaling your business and applies to every system and every aspect of your business. Creating consistency around your payroll practices is necessary to keep employees from getting frustrated and getting a job with your competitors.
You don’t want to lose your best employees when you’re trying to scale your business. Dealing with turnover, interviews, on-boarding, and training will take your attention away from scaling your business.
Scaling your business requires a commitment to simplicity
Complex systems don’t scale easily. Processing payroll manually is a complex system. If you scale your business with a manual payroll process in place, you’ll multiply your payroll workload each time you grow a little bit. As you start forming new partnerships, you’ll increase the complexity as well.
Hanging onto a manual payroll system will hold you back in your efforts to scale. Using payroll software will reduce complexity, increase simplicity, and create the foundation for smooth scaling.