Want to Change your Payroll System? Here’s What to Need to KnowYou think it’s time for a change in your payroll system, so where do you start? These kinds of decisions are not made lightly, and usually not quickly. It starts with understanding that there is a need for change. If our team fails to see the need, change will be met with resistance at minimum and, at worst, potential sabotage by those required to do the heavy lifting.

Take the time and do the research to figure out if it is the right time, and if so, what do you need from a new payroll system? We’ve put together some questions and topics you should consider before changing your payroll system.

Evaluate Your Current System

What are the key indicators that it is time to make a switch? They primarily revolve around whether the current system supports your needs both now and in the next 3-5 years.

Wage types – Does it calculate the wages on the check properly?
Benefits – Can you set up benefits so that they calculate automatically?
Tax calculations – Does it calculate taxes properly, including state and local tax calculations?
Payroll tax reporting – Are you manually filing tax reports in multiple states?
Employee self-management – Does the system have a way for the employees to self-manage and view their information around tax withholding, benefits, and paychecks?
High error rates – Are you constantly fixing payroll errors?
Lack of systems integration – Does the payroll system allow for easy integration to other systems?
Unfulfilled reporting requirements – Are you getting the necessary reporting from your payroll system?

When the current payroll system doesn’t support your needs, the result is normally a large number of inefficient, manual processes. This leads to higher cost. The cost of the payroll software “system” may be extremely low, however, your personnel costs will skyrocket as you try to manually calculate paychecks, paid time off, quarterly and annual tax filings, etc. Finding the balance between systems and personnel cost is critical to the overall success and health of your organization.

Changing your payroll system? Things to consider

Should you determine that it’s the right time to change your payroll system, you’ll want to make a list of those areas that the new system needs to support. To get you started, here are some of the primary considerations:

  • Employees

    • What types of employees do you have?
      • Full-time/Part-time
      • Temporary
      • Contingent (contract, interns, consultants, independent, seasonal)
  • Wages

    • What types of wages do you pay out?
      • Hourly wages
      • Salary wages
      • Minimum wage employees
      • Tipped employees
      • Prevailing wages
      • Piecework pay rates
  • Leave Management

    • Do you have paid leave requirements?
      • Vacation
      • Sick
        • Maternity/Paternity leave
        • Mandated sick leave
        • FMLA
      • Holiday
      • Bereavement
      • Jury duty
      • Military leave
      • Personal time
      • Comp time (especially important for public-sector employers)
  • Benefits

    • What benefits do you offer to employees that need to be included in payroll?
      • Medical
        • Health insurance
        • Vision
        • Dental
        • HAS, HRA and/or FSA
      • Life Insurance
        • Employee (over $50k?)
        • Dependent
      • Disability
        • Short-term
        • Long-term
      • Retirement
        • 401(k)
        • 403(b)
        • 451
        • ROTH
        • IRA
      • Stock Benefit Options
  • Integrations, reporting, and more

    • Does your system need to integrate with a financial system (GL and bank rec)?
    • Does the system support your required state and local tax calculations and filing requirements?
    • Do you need an employee self-service portal?
    • Does the platform support out-of-the-box integration with other systems?
    • Does the platform support your reporting needs?
    • Can you build your own apps to meet special needs?
    • Can the vendor support your payroll team effectively?
      • Does their SLA meet your needs including issue response and uptime guarantees?
      • Do they have in-depth experience with payroll?
      • Does their reputation speak for itself?

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