This article acts as a guide that explains how to use cloud-based technology to automate your payroll. The article will provide you with step-by-step instructions on how to set up and manage your payroll system using cloud-based software. By the end of the guide, you will have a comprehensive understanding of how to automate your payroll and save time and effort.
Payroll Automation: What is it?
Payroll automation refers to using technology to speed up the process of tracking time, calculating basic salary and hourly wages, managing wage deductions, issuing bonuses, and more. Advances in accounting, bookkeeping, and time-tracking software have dramatically changed the amount of time and manual effort required to manage the payroll function. With technology, most of the tasks associated with payroll can be managed very quickly and effectively. This allows even very small businesses to avoid manually tracking time, managing payroll deductions, and issuing (gasp!) paper cheques to employees.
The Benefits of a Cloud-Based Payroll Workflow
Taking advantage of cloud-based payroll solutions can simplify and streamline your payroll workflow. Better still, research presented by North American payroll specialist, Wagepoint, estimates that automation reduces payroll processing costs by as much as 80%.
There are dedicated online systems available for every step of the payroll process, making it easy to:
- reduce manual payroll entry for greater efficiency,
- eliminate the collection, printing, and filing of paper timesheets, and
- access your employee data virtually and securely prepare your payroll from anywhere, at any time
System integration that allows payroll data to flow seamlessly from an online time-tracking system to cloud-based payroll and bookkeeping software is the key to automating your workflow. It's important not to overlook this component, so it's wise to ensure that your systems can integrate and allow data to flow between them.
How to Automate Payroll for Your Business
Before you can automate your payroll system, you’ll need to onboard your staff. One effective way to accomplish this is with the help of a software service like Bamboo HR.
As a cloud-based human resource information system (HRIS), Bamboo HR makes collecting, organizing, and managing employee data extremely efficient. You can consolidate each of your employee’s pay details in one convenient location, including:
- individual pay rates,
- personal tax forms (like TD1s and void cheques for direct deposit),
- Social Insurance Numbers, and
- vacation pay data
Using a powerful, secure HRIS like Bamboo HR makes it easy to access the payroll data you need. And with all the relevant information at your fingertips, you can move on to processing your payroll in 3 cloud-based steps.
Step 1: Enter Timesheets into a Cloud-Based Time Tracking Software
Two of our favourite cloud-based employee time-tracking software are TSheets and Harvest. These tools play an integral role in automating your payroll because both your regular staff and any contractors you employ can use them to track and submit working hours.
These time-tracking tools can typically be accessed from any device, making it easy for employees to manage their time and for you to approve it. A key benefit is that they often integrate directly with your payroll system, some even have built-in systems, that allows timesheets to be submitted and processed for payment.
Depending on your chosen payroll software, it's worth conducting some research before investing in a time-tracking tool to ensure your systems will integrate. Technology integration is key to making sure your systems are working as effectively as they can be.
Step 2: Export Pay Data into Cloud-Based Payroll Software
Your company has many options when it comes to exporting employee timesheets and other payroll data to a cloud-based payroll processing software.
Software like QuickBooks Online, Payworks, and Wagepoint, for example, not only lets you manage payroll activities remotely, but they also offer secure, multi-user access that lets you collaborate with your bookkeeper or payroll administrator.
Other functionalities of cloud-based payroll software include:
- direct deposit capabilities,
- automatic generation of employee T4s and ROEs, and
- generation and remittance of payroll taxes directly to the CRA (in the case of Payworks)
Using one central location for all your employee payroll data also means you can do away with both paper files, and the need to store digital files in multiple offline drives.
Step 3: Create Journal Entries in a Cloud-Based Accounting Program
Once the payroll for a specific pay period is complete, you can use your payroll software to create and export journal entries directly to a cloud-based accounting program like Xero or QuickBooks Online.
Automating this important data entry step in the payroll process not only saves time, but it also ensures the accuracy of your accounting records. Your company will benefit from an up-to-date set of books, and you’ll be less likely to have to endure the headaches and extra costs that can accompany bookkeeping errors and audits.
From understanding payroll deductions to complying with tax laws, payroll has become more complicated than ever. Discovering how to automate your organization’s payroll with the help of cloud-based technology is an enormous step forward.
But if you’re not technology-savvy - or you simply can’t find the time to make the switch - contact us. As back-office payroll professionals, there’s nothing we like better at Enkel than helping small business owners take the pain out of payroll.
How We Select and Evaluate Our Recommended Software
We thoroughly research and test the apps we include in our regular workflow for Client bookkeeping services. After deciding on criteria for evaluating the software and then researching the app itself, we tested the app, noting its strengths and weaknesses. We then work with the app for at least a few weeks before deciding whether to recommend it to our readers. We use the software as it was designed for its intended tasks. For a detailed walk-through of how we select and evaluate software, please see the details of our process.
