As more and more business functions go digital, payroll is following suit. Paper checks and manual payroll tabulations are largely on the way out in favor of paperless payroll. Transitioning to a paperless payroll system saves time, reduces errors, ensures compliance with applicable laws and regulations, and makes it more convenient for employees to access payments, pay stubs and tax documents.
If you’re still doing payroll the old-fashioned way, consider switching to a modern paperless payroll system. We’ll explain the benefits of converting to paperless payroll, how it works and how to get started.
Paperless payroll is an entirely electronic payroll system. It typically includes fully digital tools for delivering pay stubs and tax forms, tracking employee attendance, creating payroll reports, paying employees, and more. Excellent payroll services and solutions can make implementing a paperless payroll system seamless and straightforward while meeting your business’s specific needs. (We’ll explain more about payroll solutions later.)
Businesses implement paperless payroll because it can save money and improve operations — not just because digital solutions are trendy. Here are nine reasons paperless payroll can benefit your organization:
Paperless payroll typically works through the following steps:
Paperless payroll begins with the installation of payroll software or one of the best HR software solutions that include payroll. Installing these platforms is typically easy, but it may take time and training to set up integrations and other elements.
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 specific 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.
A key function of payroll software is to link your employees’ time worked with the pay they should receive for a specific pay period. Many payroll platforms integrate with scheduling or time-tracking tools to ensure ease and accuracy. Integrating payroll with a time-tracking system means employees don’t have to manually enter hours worked into two platforms. It also minimizes errors that could lead to overpayment or underpayment.
You’ll likely need to train employees on your new payroll platform. Payroll services often provide guided training and onboarding assistance to relieve you of this burden. If the service you use does not, you should gather your team for a debrief on getting started.
In some states, you may need employees’ consent to pay them electronically. Learn and follow your state’s laws 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.
When it comes time to pay your yearly or quarterly taxes, you’ll need the correct tax forms. Paperless payroll software assists with payroll reporting by generating these forms and sending 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.
Most paperless payroll platforms fall into one of three categories: electronic payroll records, employee self-service or electronic funds transfer.
Paperless payroll can save your business time and money and benefit your employees. However, you should understand the following inherent drawbacks.
When choosing between paper and electronic payroll processes, assess your budget and your team’s internet and banking access before you decide on the best solution for your organization.
The best online payroll services support paperless payroll, saving your business untold headaches. However, features and services vary among providers. We’re highlighting several top vendors and their offerings to help you choose the best payroll service provider for your needs.
OnPay is an affordable, full-service payroll solution without add-on costs. The company only has one pricing tier, and all functionality is available within that plan. In addition to regular payroll and payroll tax calculation, OnPay supports multiple pay rates and multistate payroll. It also has features that make it easy for organizations like restaurants, farms and nonprofits to generate accurate payroll amid specific needs and concerns. OnPay also allows you to pay employees via multiple payment methods, including payroll cards. Read our in-depth OnPay review to learn more.
Paycor is more than a payroll system; it’s a comprehensive HR solution that can assist with recruiting, onboarding, performance management, benefits administration and time tracking. It can run payroll, calculate and file payroll taxes, as well as flag payroll errors. Higher-tier plans include compensation planning, which is an uncommon feature in the industry. In our Paycor review, we were impressed by how easy the platform makes it for hourly workers to punch in and out with options like card readers, proximity badge readers, facial recognition and more.
QuickBooks Payroll is a natural add-on if you already use QuickBooks for your accounting software. You can also opt for QuickBooks Payroll if you use another accounting software platform. We like that higher-level plans allow same-day direct deposit. We also appreciate the platform’s employee workforce portal, which gives employees 24/7 access to pay stubs and tax documents and allows them to update their banking information and complete W-4 forms.
QuickBooks Payroll allows unlimited payroll runs; you can run payroll automatically or manually. Check out our detailed QuickBooks Payroll review to learn about features like detailed payroll reports that provide various insights and metrics.
Gusto handles regular payroll runs and makes adding discretionary and nondiscretionary bonuses and incentives easy. You can also reimburse expenses and add personal notes to pay stubs. Although Gusto does not include time-tracking, it integrates with third-party time-tracking apps. Unlimited payroll runs allow you to process payroll as needed for freelancers, part-time workers or seasonal employees. Unlike some other payroll services, Gusto allows you to calculate the FICA tip tax credit. Find out more in our full Gusto review.
Jennifer Dublino contributed to this article.