Payroll automation: How to automate your payroll process

Whether you’re a small business with a handful of employees or a large corporation, payroll automation can simplify one of the most important parts of your company: paying your employees. But it’s especially helpful if you're too small or early to have a dedicated finance team.

But is there a way to automate payroll? Yes. Rather than relying on yourself to complete manual payroll as a business owner, automated payroll processing can help make sure that your employees get paid in a timely and accurate manner, all in less time and with reduced error.

While automation is key to improving your payroll structure, it’s also the future of finance—not just for payroll: think accounting automation, automated vendor management, and more. If you want automation to play an integral part in your business, automated payroll software is a great place to start.

What is an automated payroll system?

Payroll is the process of paying employees, which consists of calculating earnings and withholdings for taxes and employee benefits. Payroll also may include business records like the distribution of paychecks and employee wages. While important, this can be a costly and time-consuming process. This is where automation plays a huge role.

An automated payroll system performs employee salary calculations and tax withholdings, creates payroll reports, and pays your employees via direct deposits. It also offers improved data security, reducing the risk of breaches or unauthorized access to sensitive employee information. This reduces the time spent on manual data entry and the risk of human error, saving your business valuable time and resources.

What are the benefits of implementing payroll automation for small businesses?

Of course, saving time and money by setting up an automated payroll system will take resources to implement. Digital adoption can take time upfront to learn and train employees on how to use the new payroll software, but the upfront investment is worthwhile in the long run because of the amount of time you’ll save with the overall efficiency of the product. Here’s a look at the many benefits of payroll automation:

More efficient and cost-effective

If you’ve done payroll by hand, you know how time-consuming it can be. An automated payroll system allows you and your employees to focus on growing your business and other important tasks. By saving time, you’ll save money.

Lowers the chance of human error

An automated payroll system limits the likelihood of human error from manual data entry by using technology that does the work of calculating figures like deductions and overtime rates for you, thus ensuring your employees get paid on time and accurately. This minimizes discrepancies in employee pay, tax filings, and benefits, which can lead to costly corrections or compliance issues. Not to mention they’ll be able to access their financial information when and where they want with a user-friendly system.

Streamlines your payroll taxes

An automated payroll system can help you stay in line with IRS tax laws and regulations by generating reports, like profit and loss statements, that you’ll need come tax time.

Limits the number of employees you’ll need to hire

If you’re a small business that can’t afford to bring on a full-fledged finance team, payroll automation means you can work with a smaller team, which allows you to save money by not paying more employees. You can also keep your payroll services in-house and avoid the need to outsource your finances to a third-party provider.

What to look for in an automated payroll system

Every company will have different priorities for what they’re looking for in an automated payroll system, but these are some features that are important across the board:

• Employee data management and self-service options
• Tax filing at the state, local, and federal levels
• PTO tracking capabilities
• Same-day direct deposit
• Time tracking
• Software integrations
• 24/7 support when you need it

How to automate payroll

Once you decide to make the move to an automated payroll system, you want to make sure you’re going about the switch the right way. Here are four simple steps to automate paying your employees:

1. Find a payroll system that works for you

Not all automated payroll systems are created equally. You want to make sure you select the best product for your individual business needs based on the size of your company and other factors. For example, you may specifically want an accounting software for small businesses if it’s just you and a few employees. Questions you may want to ask yourself while searching for the right payroll management tool include:

• Will this payroll software save me time and money?
• Will this tool work with my current HR software?
• Will this payroll provider work for the size of my business?
• Can this payroll management tool work with a growing business?
• Does this payroll solution fit within my budgetary constraints?

2. Input your information into the system

Your automated system is only as good as the information you give it. Make sure you plug in all of your payroll data and employee information correctly the first time around to avoid any errors in the future.

3. Make sure you have the necessary documents and processes in place before launching

Get your tax forms and documents (EIN, I-9, W-4) ready, and make sure your employees are aware of the switch to a new system before you roll it out.

4. Train any employees who will use the automated payroll system

Give your employees ample time to learn the new system, whether you’re doing a self-run training or enlisting an outside source to run an onboarding session. The American Payroll Association is a good place to turn if you’re considering outsourcing training. If you choose the right product, though, you should have a smooth and successful transition, with or without outsourced training.

Payroll automation software examples

Here are some payroll software solutions to consider for your business:

Square Payroll

Square Payroll is an intuitive payroll automation software primarily targeting small to medium-sized businesses. It simplifies the payroll process by automating employee wages calculations, tax deductions, and salary payments via direct deposit.

The platform can also calculate, file, and pay your local, state, and federal payroll taxes, reducing the risk of human errors or non-compliance.

Square’s payroll software is known for its user-friendly interface, making it accessible for businesses without extensive accounting experience. Square Payroll also integrates with other Square products, making it a good choice if your business already uses Square’s suite of tools.

Quickbooks Payroll

QuickBooks Payroll, offered by Intuit, is another popular payroll automation solution, widely recognized for its versatility and integration with the broader QuickBooks accounting ecosystem. Designed to cater to a range of business sizes, this software automates payroll functions including salary calculations, tax deductions, and payroll tax filings. Employees can also view their paystubs via the software.

QuickBooks Payroll integrates with QuickBooks accounting software, making it an ideal choice if your business wants a unified platform for accounting and payroll. The software offers flexible payment options, including direct deposit, and provides comprehensive payroll reports.

It also updates tax tables automatically, ensuring compliance with local tax laws. QuickBooks’ platform is known for its ease of use and robust customer support, making it a reliable choice for any business.

ADP Payroll

ADP Payroll is a well-known payroll automation software from Automatic Data Processing, Inc., a payroll and human resources (HR) software company. It's designed to fit many different business sizes and structures, from small startups to large corporations. Like other tools, ADP Payroll’s software includes payroll calculations, tax deductions, and payroll tax management.

The software integrates with numerous HR systems and financial software, making it a versatile choice for businesses that are looking for a streamlined payroll and HR solution. ADP offers a range of payment methods, including direct deposit, check, and payroll cards, along with detailed payroll reporting functionalities.

ADP Payroll can also help your business stay tax-compliant with automatic updates that align with evolving tax laws and labor regulations. The platform's user-friendly interface and dedicated customer support make it a dependable choice for businesses who want a smooth, efficient, and compliant payroll process.

Robotic processing automation (RPA) and payroll

Robotic Process Automation (RPA) is a type of technology that uses software robots or 'bots' to automate routine, rule-based payroll tasks that humans typically perform. In payroll, RPA can be effectively used to streamline various functions.

For some companies, using RPA to run payroll is an alternative to hiring a team specifically for that function. Its implementation is usually handled by HR or IT teams, though a payroll or finance administrator might also execute the bots.

Here are some of the possible uses for RPA in the payroll process:

Automated recordkeeping and data validation

RPA can be used to automatically gather and validate essential data for processing payroll. It can collect payroll records, salary information, and other pertinent employee data from various systems, such as HR management tools, spreadsheets, and timekeeping software.

Payroll calculations

RPA can handle complex payroll calculations. It can be programmed to compute gross wages, incorporating elements like regular hours, overtime, and bonuses, and to calculate various deductions including taxes and insurance premiums. This automation significantly reduces the risk of human error and maintains consistency across payroll processes.

Compliance and regulatory updates

RPA can also be tasked with staying current with tax laws and employment regulations, automatically updating payroll calculations to remain compliant. This aspect of RPA is crucial for mitigating the risk of non-compliance and ensuring that payroll processes adhere to the latest legal requirements.

Employee self-service

RPA can be employed to respond to routine payroll queries from employees. By automating answers to frequently asked questions, RPA can alleviate the burden on payroll staff and provide prompt assistance to your employees.

Salary deposits

RPA can be used to automate salary deposits, allowing you to schedule times to transfer wages directly into your employees’ bank accounts. Like with payroll automation software, this streamlines employee payments and removes the administrative workload associated with manual payroll processes.

Beyond automation, AI can help fix payroll errors by identifying anomalies, miscalculations, or compliance risks before they impact your team—offering real-time corrections and smarter workflows over time.

Corporate cards with payroll integrations

Ramp is a corporate card and expense management system designed to streamline your business’s financial operations. Our cards integrate with payroll and accounting software including Square Payroll, Quickbooks, NetSuite, and Xero. We also seamlessly connect with the most popular HR systems, so you can automate employee onboarding to our cards and handle benefits administration at scale.

If you’re looking for an all-in-one platform to assign company cards, manage your business expenses, and pay both vendors and your employees, consider Ramp.