Why Payroll Data Should be a Big Priority for Small Business

November 6, 2018

Category: Payroll

the importance of payroll data for small businesses

Running a small business takes a lot of work– payroll administrivia not being an insignificant part of that. What’s more frustrating is that across many different versions of payroll software for small and medium-sized businesses it’s still extremely difficult, or even impossible, to get the payroll data you need. This is particularly true as your company begins to grow; not all payroll software is able to scale with your business.

Payroll Complexities

As your company grows, so does the complexity of your Payroll data. It’s no longer just a few infrequent adjustments or manually handling a few pay periods. Now it’s about balancing, reconciling, and managing records while ensuring compliance with tax regulations. Furthermore, this must be done for an ever-changing and growing worker base with different salaries and payment methods.

Compounding the complexity of payroll issues is the fact that for many organizations, it’s difficult to find and access necessary, meaningful payroll data that they need to drive business decisions. This occurs either due to system limitations of clunky legacy software or because they are using lightweight downmarket solutions that their companies have outgrown.

The truth of the matter is that when it comes to the tax and regulatory environment, there’s a lot riding on a paycheck– .and approximately 33% of small and midsize businesses are struggling with this.

Data exists in many different silos and when it’s tracked down, it’s frequently inaccurate or difficult to understand – requiring significant manipulation. This may be acceptable for excel gurus who have unlimited time on their hands, but for the rest of us, there are better ways to spend our time.

The current state of affairs is even more surprising when you take into account how absolutely vital payroll reporting and analytics are for successfully running your company.

The importance of the paycheck

Payroll is the largest company expense by a long shot, at 68% of a company’s total overhead. This expense is over twice as much as benefits, the next largest expense.  And it’s also one of the most essential pieces in the relationship with your workers. So much so that 40% of workers stated that they would find it very difficult to meet financial obligations if their paycheck was delayed even just one week. It has such an impact on your workers’ lives that 49% of workers would begin a new job search after only two issues with their paycheck.

The truth of the matter is that when it comes to the tax and regulatory environment, there’s a lot riding on a paycheck– .and approximately 33% of small and midsize businesses are struggling with this.

Across the US, over 5 million employers were assessed for over $7 billion in civil penalties in 2017. And the US Department of Labor found back wages of $286 million dollars for 280,000 employees in 2016.  

The cost of a payroll error

The cost of getting things wrong can have a massive impact on the overall financial health and livelihood of a business – especially those with under 500 employees.

But even in the face of this, many non-enterprise companies struggle to replace their legacy solutions that haven’t changed in quite some time. One in three payroll professionals is still working in a system greater than 10 years old. For context, that’s a system that was built around or before the first iphone had even come out.

49% of workers said they would begin a new job search after only two issues with their paycheck.

Old legacy systems may be a contributing factor in the unnervingly long average 10-day time period it takes a small or medium size business to correct a payroll error. An error, which we just discussed earlier, can be extremely disruptive to the lives of your people.

With old, challenging systems, which are increasingly prevalent in non-enterprise organizations, many companies are left without good payroll data to act efficiently. It shouldn’t come as a surprise that 66% of payroll professionals and 51% of HR practitioners indicated that their organizations have occasionally cut corners that would jeopardize compliance. Furthermore, when asked what their payroll wishlist was, “on-demand reporting and analytics” topped the list at 87%. This was closely followed by “improved data quality” at 81% and “an intuitive user experience” at 80% of respondents.

So, what’s the solution?

To avoid these pitfalls and feel secure in your payroll process, check out an integrated, reliable payroll software. The best payroll software will have the ability to deliver you various payroll reports that include expansive and specialized data to help with planning, and diving in deep to pinpoint a detail on an employee paycheck on a single pay period.


Harsha Vijayakumar is Product Management Leader for Zenefits where he is leading all aspects of Zenefits Payroll and Tax Services product. Harsha has years of experience building products across HRMS/HCM. Beyond Payroll and Tax Services products, he has built Employee Engagement, Rewards and Recognition, and Performance Management products. He holds a Management degree from Carnegie Mellon. Harsha has come long way since his first job as software engineer in Bangalore, India.

Category: Payroll

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