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The Advantages of a Computerized Payroll System

A manual payroll system is performed entirely by hand. A computerised payroll system allows a company to process its payroll via dedicated payroll software. A manual system can result in payroll errors and is usually a slow, laborious process; a computerised system helps to reduce errors and speeds up the process. Computerised payroll systems boast a number of other advantages as well.

Time Importation

Many employers use a timekeeping system, such as time clock, to track employees' work hours. A manual system requires tracking employee time by hand; a computerised payroll system often has the ability to automatically transport employee punches/swipes from the timekeeping system into the payroll system automatically. Such a system can separate regular hours from overtime hours worked. All the payroll person has to do is make edits/adjustments, if necessary.

Automatic Calculations

If employee time is imported into the computerised payroll system, the latter rounds the employee time up and down appropriately, such as to the nearest quarter hour. It calculates the total hours worked and to be paid. This saves on time spent manually calculating the hours and reduces errors. If the payroll person enters the hours into the system herself, it calculates the wages automatically, based on her input. The system calculates all pay frequencies, such as weekly, biweekly, and semimonthly.

A computerised payroll system automatically calculates employee statutory deductions, such as taxes and wage garnishments, and voluntary deductions, such as parking fees, 401k contributions and medical benefits. The payroll person simply enters the data upon which the deductions are based, such as Form W-4 information for federal income tax withholding.

Paycheck Processing

A manual payroll system requires you to print paychecks on a typewriter or by hand. A computerised payroll system has direct-deposit capability, which saves money spent on live checks and reconciliation. Additionally, paycheck and pay stub generation occurs quickly, regardless of volume.

Report Generation

A computerised payroll system generates and prints payroll reports. If you want to double-check the payroll before printing paychecks/pay stubs, simply reference the corresponding reports. Furthermore, the U.S. Department of Labor requires employers to retain payroll records for at least three years. A computerised system enables hard-copy printing of payroll registers pertaining to each pay period. It also saves the information in the system indefinitely.

The system generates tax reports to ensure payroll tax compliance. This includes quarterly and annual wage reporting and generating employee W-2 forms. If a related department such as accounting handles the company's payroll tax and reconciliation duties, print the necessary reports the department needs via the computerised system. Furthermore, the system tracks benefit days, such as vacation and personal time, taken and paid.

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About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.