Making the Right Choice: Payroll Software vs Manual Payroll
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payroll software

Payroll Software vs Manual Payroll: Making the Right Choice

payroll software

Payroll Software vs Manual Payroll: Making the Right Choice


Any business with a workforce needs a reliable payroll system. Consequently, it is vital to select the payroll system that meets the requirements of the business.

Why and when should a company make the switch from processing payroll manually to using a computerised system? While software can improve productivity, it is not always the first option for smaller companies. However, in this digital age of low-cost, time-saving and precise payroll calculation software, it’s hard to justify manual payroll processing. Let’s compare and contrast the two methods of processing payroll manually and electronically, and determine whether a business should make the transition and when.

There are two main phases to processing payroll. Salary inputs must be prepared first i.e. earnings and deductions. Thereafter the information is used to produce payslips. Once completed, employees can then be paid. Payroll processing is a multi-faceted undertaking that requires careful attention to detail. Typically, the process will include keeping track of employee attendance, overtime, absenteeism, annual and sick leave, salary changes and legislation changes.

Payroll is processed in a timely and efficient manner despite its complexity. Using the most up-to-date payroll data, a carefully developed system begins with salary changes, new appointments and terminations. Government taxes and numerous statutory deductions are applied meticulously as the payroll process proceeds, guaranteeing compliance with regulations. Once these critical processes have been effectively implemented, the final amount owed to each employee needs to be methodically calculated. It is at this stage that the payroll reports are carefully reviewed and approved to ensure they are correct and in accordance with regulations.

The timely disbursement of salaries, as prescribed by the approved reports, marks the successful end of this careful process. Payroll management’s adaptability means that companies can use either a manual or an automated approach, whichever meets their specific needs best. Accuracy and efficiency are of the utmost importance, and every step of the payroll administration process is meticulously planned and executed.

Manual Payroll


The process of calculating and issuing employee payslips without software or professional assistance, may be an acceptable choice for some small business owners. Manual payroll can save money for small businesses with a few employees if the owner is familiar with the rules and laws governing payroll taxes. However, using payroll software is the more prudent option in most other cases.

Manual payroll could save money, as payroll software can be a monthly expense. However, even if you save money by processing payroll manually, you can end up spending more in the end if you need to hire a payroll expert at the last minute. On the plus side, business owners that choose manual payroll develop a deep expertise in all aspects of payroll, including benefits administration, payroll taxes, and compensation issues.

Going the manual route does have its drawbacks. Payroll calculations are quite detailed and precise, which increases the likelihood of mistakes. Payroll software reduces the likelihood of human error by automating the calculations that occur when processing payroll. Manual payroll processes also lack any safeguards against non-compliance. Errors in tax calculations or the taxation of fringe benefits can be costly to the business, and are likely to attract the attention of SARS.

Another consideration is time. Processing payroll manually takes up a lot of time , whereas payroll software can precisely calculate payroll taxes, instantly resulting in a significant amount of time saved.

Software Solutions


Payroll software is the most efficient and cost-effective option for business owners when it comes to managing payroll. Payroll software is a significant investment for any company, no matter the size or number of employees.

Payroll processing software has many benefits. For starters, it helps save time by streamlining the payroll process and giving business owners more time to focus on other areas of the company. Payroll software also often has expert client support to help users with complex compensation issues including wage garnishment and fringe benefit tax considerations. In addition, it guarantees precise calculations and abides by continuously-changing payroll tax rates and local tax requirements to assure tax compliance. Payroll software also helps with document management, making it easier for businesses to preserve the records required by SARS and other authorities. It simplifies the reporting process, making it easier to quickly generate payroll reports. .

However, it’s important to remember that payroll software comes with a price. While there are free solutions available, the vast majority of solutions use a subscription-based Software as a Service (SaaS) model and charge a regular monthly cost in addition to potentially charging for optional features. Keeping an eye out for warning indicators that the company’s payroll system may be ready for an upgrade is an important part of a preventative approach to managing the payroll.

It is more responsible and efficient to devote time and effort into researching the numerous possibilities that will guarantee a new payroll platform that can support client specific requirements rather than waiting until the last minute to update or implement appropriate systems. The need to find ways around the restrictions of outsourcing or manual in-house processing led to the creation of payroll software solutions that are continuously evolving. Updating the Payroll to a software-based system will re-establish confidence in the procedure, give users back control, and involve all essential stakeholders.

A Last Word


It is crucial for business owners to realise the need to switch from manual payroll to digital systems. There are a number of telling signs that indicate a change may be due:

When a business employs more than five people, it becomes impractical to handle payroll manually. A spreadsheet is useful for calculating gross wages, but it cannot provide the precision required for calculating payroll taxes. As the team expands, it becomes increasingly cumbersome to process payroll manually. Manual computations might lead to costly mistakes if it’s necessary to deal with sophisticated payroll concerns like wage garnishments. Payroll solutions can manage complex payroll issues and provide correct guidance through the process with helpful customer service. As a business grows, so should its payroll department and ultimately its payroll system. Investing in payroll software can help save time without sacrificing payroll accuracy.

Contact PayDay Software Systems for fully integrated payroll, human capital and time and attendance software.

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