Would you like to have free hours each month when it comes to payroll management?
Payroll doesn’t just take care of itself. Miss a deadline, or you will hear about an error with your payroll run loud and clear from your employees.
That’s why e-filing is becoming so popular. Processing payroll has historically been a more time-consuming task than most owners would like.
But all that is changing with e-filing innovations, as payroll software is about to make your life a whole lot easier. We have two entire posts dedicated to the fastest ways to simplify your business payroll software, with the help of the right technology tools.
Let’s dive into payroll specifics and see what the e-filing method of payroll processing is all about.
Here’s what we’ll cover:
- Why E-Filing Is The Right Solution For Payroll Software
- Manual Payroll Software Can Cost You Money
- How E-Filing Services Automate Payroll Tasks
- Features To Look For In E-Filing Software
Why E-Filing Is The Right Solution For Payroll Software
E-filing used to be something new. A technology that made a business’ life a little bit easier. But with 95.15% of Americans receiving their income via direct deposit, the trend is quite obvious.
E-filing is the new standard when it comes to payroll processing.
But the truth is that, despite all of that, 51% of businesses are still using spreadsheets to keep track of payroll. And more than half of them still use manual processes.
That doesn’t make much sense at all.
E-filing provides three significant benefits:
- Quicker processing times
- Error prevention
- Automatic updates for compliance and more
Remember, with the help of payroll software, everything happens digitally. E-filing services connect you directly to the tax agencies. With the digital transformation of payroll, when you have a change of business tax laws, e-filing software updates the system automatically. So when tax laws change, the system does it all.
Pretty cool, right?
The Real Cost Of Manual Payroll Processing
Payroll errors are a typical expense for businesses that are still using payroll software that is not e-filing ready.
Did you know that payroll errors can cause employees to leave your organization? Research says that 50% of employees will begin job hunting after two payroll errors. That means your existing manual processes are the reason you’re losing valuable employees.
It’s not the only problem, though.
When you have a workforce that you must process manually, it means that payroll software requires multiple hours of data entry during each pay period. It also means constant double-checking for errors and risk of tax filing penalties and late night stress before deadlines.
That’s a lot of time you are actually spending on payroll.
And time is money.
Time is a resource that you could be using for improving the business and its operations. Each hour spent on payroll is an hour that you’re not working on building the company.
How E-Filing Software Streamlines Your Process
The good news is that with the help of payroll e-filing software, there are only benefits.
Modern e-file services from 1099 and other programs have transformed the way business owners handle compensation.
Payroll processing is no longer the timesink it once was, and that is because these platforms do the heavy lifting. These systems automate all of the aforementioned issues so that you can focus on what you do best: being a business owner.
The Future Of Payroll Software Is Digital
Did you know that currently, 65% of all companies keep their payroll records stored in digital form? This number is only going to continue to grow as we move forward.
Payroll e-filing software works like this:
The software connects to the tax agencies in your location, and then it’s all done electronically. No more printing of forms or worrying about postmarks. It’s all digital.
When you use the software, you only have to enter the employee information once. The system will handle all the following tasks on its own:
- W-2 generation, signing, and distribution
- 1099 forms for contractors
- Federal tax filing
- State tax submissions
- Year-end reporting
The calculations are all done automatically with the software’s internal math based on the current tax rates. If anything changes, the software does it all. Again.
No need for any manual updates.
Also, what makes most platforms so beneficial is that the software itself comes with error checking. When you’re inputting data, it flags inconsistencies and potential compliance issues so you can fix them before they happen.
Because fixing them after is very expensive and a waste of time.
Features To Look For In E-Filing Software
Payroll software, and e-filing software in particular, is not all the same.
There are certain e-filing software features that separate the great solutions from the OK ones. Let’s see what you should be looking out for.
Automatic Tax Calculations
Payroll software should be taking care of all your federal, state, and local tax calculations without any manual input. Withholdings, Social Security, Medicare, and even state-specific taxes.
This is so important because tax rates change. And doing that manually is almost impossible.
Direct Integration With Accounting Software
Choose payroll software solutions that can directly connect to QuickBooks, Xero, or whatever software you’re already using. Don’t look for a system that is going to have you enter the same data twice.
Don’t double enter data.
Electronic Distribution
Your employees should have access to their W-2s, pay stubs, and all tax documents online. That way, it’s a huge printing and storage cost savings. It also means your workers have the access to the documents they need whenever they need them.
Multi-State Filing Capability
If you have a multi-state business, then you need software that can handle multi-state tax filing. Different states, different rules, different requirements, and different deadlines. Software should take care of all of that automatically.
The Digital Transformation Is Coming
Did you know that 33% of organizations have named digitalization as their top focus when it comes to payroll transformation over the next few years?
Business owners know that to stay ahead of the curve, they need to adapt to technology changes. Those that adapt to the change of payroll e-filing are going to be the ones with the most significant advantages.
The Bottom Line
E-filing has stopped being optional. For businesses big and small, it’s becoming the standard.
Even the smallest of businesses are making the transition. Why? Because even with just a handful of employees, the time savings are significant enough to make the change worthwhile.
Making The Switch
Transitioning to e-filing software doesn’t take nearly as long as most business owners think it’s going to. If you can, most providers offer implementation services to help you get started right away.
Choose a payroll software that suits your business’ size and your needs. Many offer free trials for you to test it out first. Then, you must transfer your employee data over into the system.
This only takes a few hours and is a one-time thing.
Lastly, you want to run a parallel payroll cycle to make sure everything is working correctly. If everything is fine, then you can make the full switch.
It takes most companies only a week or two to be up and running.
Wrapping This Up
The move towards simplifying payroll with e-filing innovations is a game-changer for most businesses.
Software is transforming payroll from a time sink into a digital experience where software and digital integrations are processing everything.
Automation results in massive time savings for payroll processing, a reduced chance of errors which could be potentially very expensive, better staying on top of regulations, and happier employees who are paid correctly and on time.
Most businesses are already on this train so make sure you get on board. Look at payroll software e-filing solutions for your business. Test systems out, and go for the option that best suits you. The initial setup and changes are worth it for the long-term benefits.
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