In this guide, you'll find out how to automate your payroll, best practices, and more from our experience in running payroll using software like the highly popular Deel.

Benefits of Payroll Automation

Payroll, the process of paying your employees for their work, has evolved significantly in recent years and automated payroll systems have played a pivotal role in this transformation.

‍Increased Efficiency

Automating your payroll process boosts efficiency throughout your entire business. This is because it helps streamline various processes that are typically labor-intensive, such as time tracking, payroll taxes and calculations, and paycheck distribution. This leads to time savings and a significant reduction in manual effort. For instance, tasks like calculating overtime, handling direct deposits and ensuring compliance with tax laws can be completed using software, massively reducing your labor cost and allowing finance teams to focus on more strategic activities.

Accuracy and Error Reduction

Human errors in your payroll cycle can cost you time and money. Automating calculations and data entry can eliminate payroll errors such as miscalculating pay, inaccurately tracking overtime, or missing critical deadlines. The consequences of such errors can be dire, including employee dissatisfaction, legal compliance issues, and financial setbacks. Accurate payroll helps you maintain compliance with tax laws and labor regulations, safeguard your reputation and financial stability, and ensure that employees receive their rightful earnings without discrepancies or delays.

Compliance and Tax Management

The concept of 'compliance' can be daunting, but choosing a trusted payroll automation provider can give you peace of mind. An experienced payroll platform like Deel’s ensures every payroll cycle adheres to tax regulations. Deel’s system is designed to handle intricate tax calculations and filings and helps us generate and send IRS tax slips every tax year. It helps us keep track of the proper deductions and benefits, ensuring the company complies with IRS tax laws in the US as well as internationally. Good global payroll automation helps businesses avoid costly penalties and gain a competitive edge in navigating the complexities of international tax.

Steps to achieve Payroll Automation

1. Assessing Your Needs

Start by considering the size of your workforce and your business location, as these factors can greatly influence the choice of automation tools. Additionally, take into account any distinctive processes within your payroll system, as these nuances will guide you toward selecting the most suitable automation solution tailored to your company's intricacies.

2. Choosing the Right Payroll Software

There are several companies operating in this space, but at FounderPass we often find ourselves advising businesses to look into Deel. Because they’re available 24/7 globally, no matter the country you are based in, they can cover you. You can even expand into new countries and quickly put new people from new countries onto your payroll without having to change systems. Look at review sites like Trustpilot and G2 to see what current users have to say about the payroll company’s customer service and offerings. Deel has positive reviews overall, and their client team always responds to reported problems.

3. Data Migration and Entry

During the data migration and entry phase of payroll automation, it's crucial to transition existing payroll data into the new system seamlessly. This process involves meticulously transferring historical data, employee records, and financial information to ensure a smooth transition. To achieve accuracy, follow a well-defined set of steps, including data cleansing, verification, and validation. This ensures data is consistent between the old and new platforms.

Always remember that accuracy and data security during this time should be of the utmost importance. Safeguarding sensitive payroll information is paramount, as any breaches or mishandling of data can have serious legal and financial consequences for your organization.

4. Employee Communication and Training

• Discuss the importance of informing employees about the transition.
• Provide a checklist for communicating the change.
• Explain the necessity of training employees to use the automated payroll system.

5. Implementation Timeline

• Discuss how to set a realistic timeline for payroll automation.
• Highlight the importance of planning for a smooth transition.
• Provide tips for managing the transition period.

Using Payroll Automation Software

Features and interfaces will differ depending on the payroll automation software you choose, but here are the features and processes we looked for when choosing to go with Deel:

Payroll Processing

• Automated payroll systems efficiently process employee payments.
• The process typically involves data input, calculations, and paycheck generation.
• These systems offer flexibility in handling various payment types, from direct deposits to checks.

Time Tracking and Attendance

• Automated systems track employee time, including clock-in and clock-out functionality. Use an integration to sync records to Deel.
• Automated attendance management reduces errors and ensures accurate payroll reports and records.

Tax Calculation and Filing

• Payroll software automatically calculates taxes based on employee data and tax laws.
• It's crucial to stay updated with changes in tax laws to maintain compliance.
• Automation simplifies tax filing by generating accurate reports and facilitating electronic submissions.

Reporting and Analytics

• Payroll automation software offers robust reporting capabilities.
• Data analytics tools provide valuable insights into payroll trends and employee compensation.
• Customizable reports empower businesses to make informed decisions based on payroll data.

Maintaining Payroll Automation

When you set up an automated payroll system, it's more than just a case of setting it up and then forgetting about it. There is a degree of maintenance that needs to happen to ensure it all works properly:

Regular Updates and Compliance

• The software should be regularly updated with the latest changes in tax requirements and changing regulations.
• Automation and monitoring ensure that required compliance documents are properly recorded and updated when needed.
• A compliance checklist can help outline key tasks such as tax reporting, wage garnishments, and labor law adjustments.

Troubleshooting and Support

• Effective guidance for handling common payroll automation issues is essential to maintain uninterrupted operations.
• Open a line of communication with your payroll software provider to resolve technical hurdles. Deel provides 24/7 chat support to assist with withdrawal and payroll questions.
• Having a support plan in place ensures timely assistance in case of critical issues and minimizes disruptions.

The software we recommend

We've tried many different automated payroll systems in the past when it comes to payroll automation. We often circle back to one we find that works and is suitable for almost any business: Deel. Deel is a global payroll software that can run your payroll in over 100 countries all within one platform. They most recently added US payroll to their global coverage. Deel also specializes in areas of HR and compliance, which happily go hand in hand with payroll.

They are fairly priced and offer great customer service. Their reliability is reflected in the 15,000+ businesses that use them, including big names like Intercom, Revolut, Dropbox, Notion, and Shopify. They also sync with all the apps you may currently be using to make your life even easier.

Of course, there are other automated payroll systems available, but it's certainly worth looking into Deel and seeing if it's an option for you. They’re great for businesses of all sizes, including startups. In fact, their Deel HR feature is free for small businesses, which is a great way to organize your team without spending a ton of money.

Our conclusion

When it comes to dealing with employee wages, automated payroll software has become more important than ever. Time is valuable, and automation is the key to efficiency, especially when it comes to payroll. In the past, payroll involved lots of manual work with calculations and paperwork. But now, automation has changed all that. It helps businesses save time and money while reducing errors.

But payroll automation is more than just about speed and efficiency. Automation also helps with compliance and managing taxes, simplifying complex tasks into easy steps. By automating your payroll process, you can make your business more efficient and accurate, ensuring you stay competitive in today's business world.

If you want to explore how Deel can help you streamline your payroll and HR processes, we invite you to book a demo with their team. It’s a no-pressure way to see how you can simplify your business operations.

Frequently asked questions

How do I automate payroll in excel?

We don't personally recommend using excel as an automated payroll system. Automating payroll with a spreadsheet using excel may work for basic calculations, but it certainly won't help when it comes to being compliant with taxes and the risk for human error. Simply put, a task as crucial as payroll requires a reliable, automated solution.

What is an automated payroll payslip?

An automated payroll payslip is a digital document that summarizes an employee's earnings and deductions for a specific pay period, generated by an automated payroll system for accuracy and efficiency. Deel’s simple interface lets employees and employers view and download their payslips and pay reports using their own logins.

What is payroll simulation?

Payroll simulation, also called shadow payroll, is a practice where a hypothetical payroll cycle is run to test and validate payroll processes and calculations without making actual payments. It helps identify and correct errors in the system before processing the real payroll, ensuring accuracy and compliance. Deel runs a payroll simulation for your company if you’re migrating from an existing provider to ensure everything lines up as intended.