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Introduction
According to the IRS, approximately 40 percent of small and medium-sized U.S. companies face the consequences of paying up payroll penalties; most are due to filing errors or not depositing withholdings on time.
Given the task's difficulty level, the percentage given above is justified. Considering the juggling factors like employees' wages and salaries, employee benefits and incentives, tax deductions, and much more, things get complicated quickly. In addition, every state has its tax regulations, making it quite normal to miss details if you are not careful. Operating a business is costly enough, so you would not want to add payroll penalties to your expense list. But thanks to technological advances, optimizing and smoothly carrying out your payroll process is easy.
With the evolution in technology in the HR sector, the future of payroll seems more focused. It is essential to stay current with the payroll industry's latest trends to remain competitive.
What is payroll?
Payroll, in simpler words, is the process of paying employees. The employers have to handle payroll each pay period, so employees receive their wages. However, payroll is more than just a paycheck. There are many moving parts, like gathering employee hours worked, calculating taxes and other deductions, distributing wages, and reporting and remitting taxes and other deductions to the appropriate parties (e.g., IRS).
When it comes to payroll meaning, you may hear phrases like:
- Running payroll: This is the process of actually calculating and distributing wages and taxes.
- Employees on payroll: This is the list of the employees you pay and their information. Keep in mind that it does not include independent contractors.
- Payroll expense: This is the amount your business spends on employee wages and taxes. It would help if you recorded the expense in your accounting books.
The good news here is that the future of payroll processing is going to make things much easier for you. However, to make full use of the advancement, you need to have a good knowledge of the payroll trends that will determine the future of payroll processing.
7 Payroll Trends You Need to Know
Here are seven payroll trends to expect in the future of payroll.
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Increased Use of Cloud Technology
By 2026, the cloud-based payroll software market is expected to grow by over 2026 $13.3 million.
Cloud-based computing allows you to access your data remotely on any device. After COVID-19 working from home has become more popular, this is particularly useful for HR departments that manage payroll remotely. The employees benefit from saving the trouble of attending the physical office to process this task.
In addition, cloud-based software allows HR, managers, and employees to access their payroll information quickly, which includes their pending leaves and PTO requests.
On the other hand, in the case of the on-premises softwares, the chances of cyber crimes are much higher. Protecting on-premise payroll software from computer hacks and cybercrime can be a costly affair that not everyone can afford. However, cloud-based computing includes various protective services like cybersecurity and software updates so you can be sure your data is safe.
It also allows you to scale your business quickly. When your organization begins growing, you don't have to worry about replacing your existing system. Your cloud-based payroll software can scale with you.
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Integrating Artificial Intelligence
Artificial Intelligence (AI) is the future, and we are experiencing it well. The futuristic films featuring artificial intelligence (AI) will have you thinking robots will take over humans someday. This is a vague and quite superstition-based idea. However, it is also very accurate that you must recognize the increased use of AI in the market and how machines are replacing humans in some industries.
Artificial intelligence has become tremendously popular in various fields, including payroll, which has advantages. Back then, payroll service was limited to calculating employees' wages, paying them, and generating a simple report. But now, the dynamics of the payroll industry have changed, and the future will demand more. AI is revolutionizing the way people get paid. For example, it can help automatically classify employees and ensure they are in the correct tax brackets.
Besides, in light of the ongoing trends, analyzing the enormous amount of payroll data collected has become crucial. This analysis can provide actionable insights, help shape the company's budget, identify unnecessary expenses, and contribute to the overall success and growth of the organization.
AI-based chatbots can be used to help employees with non-urgent requests. This means now, instead of running back and forth between one department to another, employees can get their queries answered using an automated chatbot.
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Integration of HR Technology
Even though payroll and HR management are different fields, they are interlinked.
There are numerous benefits associated with integrating payroll and HR software. An integrated system will enable managers or staff members to access all essential information from a single dashboard.
Combining the payroll process with the best HR functionality can increase efficiency in managing employee data.
Some small to medium-scale businesses believe investing in HR technology is too expensive. However, the truth is opposite to it. An HRIS is accessible to everyone at affordable prices, and the ROI will easily overpower the cost.
HR software enables you with functions like time tracking and scheduling. And if your payroll software integrates with your HR software, you can easily share this data across systems. This ensures that no payroll fraud occurs by accurately tracking employee working hours of employees, so no one gets underpaid or overpaid for hours worked.
Besides, when you have all your data within a single solution, the system can pool together relevant data to generate actionable insights. With the help of HR and payroll system integration, organizations can create personalized reports that include employee details and their packages.
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Expanded Request from the Gig Economy
Innovation empowers individuals to work from anywhere, leading to a consistently developing number of specialists and gig laborers.
This monetary shift from conventional and everyday work to the combination of outsider laborers has made the circumstance complex. Systems that date back decades need to be equipped to deal with a constantly changing workforce.
The perfect mix of full-time and part-time employees can easily be handled and managed using payroll software.
Finance programming can assist you with really dealing with these brief laborers. In addition, assuming you coordinate with your venture the board programming, you can monitor their work progress and issue their installment on time to finish the task.
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Financial Security Included in Your Package
Employee satisfaction directly correlates with the retention rate. You need to maintain the enthusiasm and drive of your employees if you want to boost workplace productivity. Because they are concerned about their financial future, many workers need help concentrating on their work. Additionally, excessive stress can contribute to mental and physical illness.
The thought is to lessen representatives' monetary pressure and energize them to make them more useful. That is why numerous finance suppliers are beginning to incorporate an economic health program into their framework.
A financial health program might incorporate monetary directing for workers and direction on the significance of retirement arranging and how representatives can appropriately designate their cash. This can assist with guaranteeing your labor force invests less energy worrying about the dollars in their ledger and additional time centered at the workplace and appreciating time at home.
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Pay Transparency
Businesses nowadays are moving towards making salary and wage information more accessible. The information ranges from employees' salaries from the executive ranks to part-time workers, and many of them explain how their organization's pay structure is devised. Making employees understand your reasons behind benefits and why they get paid what they get paid helps establish fairness and equality within the organization.
In addition, pay transparency motivates employees to work hard as they know their performance will heavily influence their future pay. It removes the chances of any unbiased treatment amongst employees.
It communicates the value of company culture regarding fair treatment and pays, directly impacting your good employer's brand image.
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Improved Data Security
In the latest development in payroll, new laws have been introduced which require the payroll software to be GDPR-compliant. The system allows you to have any sensitive information you enter into the system automatically protected by the highest cyber-security standards on the market.
Every company has a large proportion of employee information to protect. They are responsible for sensitive data, such as wages, addresses, account numbers, and social security numbers.
Advances like dual authentication to access highly confidential information help support more traditional measures like security questions to keep your data safe.
Conclusion
Now that you have come across the trends in the payroll field the question that arises is, Is your company ready to adopt payroll technology?
From what we have learned, it is evident that technology is evolving at the speed of light. While we might agree that implementing a new technology looks challenging, once you select the right payroll software, you will quickly see its benefits to your organization. The future of payroll services has only good for you.
However, if you do not see the potential in your company, you can outsource the payroll services. The future of payroll outsourcing is also dynamic, and the service will be much more beneficial.
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