Most businesses stand to benefit substantially from paperless payroll platforms, though electronic payroll might not perfectly fit all companies.
As evermore business needs go digital, payroll follows suit: Paper checks and manual payroll tabulation are largely on the way out in favor of paperless payroll. Below, learn everything you should know as you consider making the switch.
What is paperless payroll?
Paperless payroll is any entirely electronic payroll system. It typically includes fully electronic tools for delivering pay stubs and tax forms, tracking employee time, creating payroll reports, and paying employees. Typically, one payroll software platform is all you need to implement all these functions. That said, no two paperless payroll platforms look quite the same, but the best payroll software has all these features.
How does paperless payroll typically work?
Paperless payroll typically works through the following steps:
1. Install paperless payroll software.
Paperless payroll begins with the installation of payroll software or HR software that includes payroll. Initially installing these platforms is typically easy, but implementing them and training your team in them can present some challenges. (We’ll address these obstacles and their solutions later.)
2. Have your employees sign up for the payroll software.
Once you install your paperless payroll solution, your employees must create accounts within the program. From their accounts, they can receive pay stubs, tax forms and, most importantly, paychecks. For the latter purpose, your employees will need to add certain information.
3. Have your employees input banking information.
To enable direct deposit, your employees must add their banking information to your payroll software. Once employees add their bank account and routing numbers, all should be in place for direct deposit.
4. Integrate payroll software with your time-tracking system.
A key function of payroll software is to link your employees’ time worked with the amount of pay they should receive for that period. Many payroll platforms achieve this task more deftly when integrated with a scheduling or time-tracking tool. This integration means you and your employees don’t have to manually enter hours worked into two platforms. It also minimizes errors that could lead to overpayment or underpayment.
Tip: Consider these top time and attendance software solutions to integrate with your online payroll system.
5. Train your employees on the system and seek consent.
Some training will likely be necessary to get your employees up to speed on the new payroll platform, and it’s on you to provide this training. Sometimes, your payroll provider will include guided training and onboarding, relieving you of this burden. If not, you should gather your team for a debrief on how to get started.
In some states, you may need employees’ consent to pay them electronically. Learn and follow your state’s laws on the matter before onboarding employees to your paperless payroll system. In all states, you must obtain your employees’ consent to provide their W-2 forms electronically. Employees who decline must receive paper forms.
6. Generate tax forms and payroll reports.
When it comes time to pay your yearly or quarterly taxes, you’ll need tax forms to do so compliantly. Paperless payroll software generates these forms for you and can send copies to your employees as needed. It can also generate payroll reports that further detail your tax liabilities. These reports also come in handy for other needs, such as verifying employee vacation time.
Types of paperless payroll solutions
Most paperless payroll platforms fall into one of three categories: electronic payroll records, employee self-service or electronic funds transfer.
- Electronic payroll records: This is the most basic type of paperless payroll platform. It has only rudimentary electronic payroll tracking and calculation functions, which is all that some businesses need.
- Employee self-service: Through ESS software, you can couple your electronic payroll records with tools for other HR needs, such as benefits and employee handbooks. ESS platforms also automate employee clock-in and clock-out and thus your calculations of hours worked.
- Electronic funds transfer: This category encompasses electronic payroll records with direct deposit tools. EFT platforms both eliminate the paper clutter associated with payroll and set up rapid payments. However, as mentioned earlier, you may need employees’ consent to set up EFT in certain states.
Benefits of Paperless Payroll [Business.com]
