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Why You Need to Automate Your Payroll And Workers Compensation
Starting a business and optimizing it might be daunting, however, automation simplifies everything. Think of things like Netflix. It automatically plays the next episode. Your desktop calendar automatically syncs with your phone, giving you your to-do list on the go. It makes life easier. And the same goes for automation in the workplace.
When it comes to payroll or worker’s compensation insurance, automation eliminates the opportunity for human error. It removes the headache these administrative tasks cause, freeing up time to focus on big picture ideas and business growth. No matter the size of your team, automation will positively impact your process. Let’s unpack just how much.
What is Automated Payroll?
Automated payroll helps you simplify the act of paying your employees. It enables you to do it on time and accurately, using efficient time tracking to help you calculate wages correctly. It automatically incorporates federal, state, and local tax filing requirements, processing direct deposits for your employees. You’ll easily be able to produce reports and calculate any withholdings.
When you’re running this process manually from a spreadsheet, the margin for error is enormous. Whether it’s managing employee benefits or tracking payroll adjustments, one slip-up can hurt your business. For example, pay stub errors are so unsettling for employees that 49 percent of employees will look for a new job after just two payroll mistakes.
[Read More: The Best Online Payroll Services in 2020]
The Benefits of Automated Payroll
1. Reduced Errors
While payroll might be frustrating for you as an employer, a missed or incorrect payment is equally damaging for an employee. Workers will start to look elsewhere if there are problems with their paycheck, resulting in a high turnover and even more complications for your business.
An excellent analogy to think of is a calculator. While we’re capable of doing math in our heads, calculators are better. Payroll software will be better at calculating deductions, overtime pay, and commissions that may affect the final amount. There is also no risk of misinterpreting handwritten timesheets or data.
2. Save Time
Perhaps the most significant benefit to automated payroll is the amount of time saved on such a manual task. According to Bamboo HR payroll specialist Tamerra Sedacy, automated payroll can save up to three to five hours of work a week. That’s a big chunk of time you can now allocate to other tasks.
Let’s face it; payroll isn’t going anywhere. You’ll always need to pay your employees on time and correctly, and as your business grows, this only becomes more complicated. Introducing automation early on allows you to scale your team quickly.
3. Improve Security
Printed paperwork and Google spreadsheets aren’t exactly secure. An automated payroll system allows you to store your data on a password-protected platform. Only relevant people have access to this information, allowing you to keep tabs on any strange payments.
As a bonus, automated systems also allow you to keep an accurate history of your payroll. As your business goes through the years, it can be tricky to keep track of everything manually. So instead, store it all in one place for safe-keeping.
4. Simplify Tax Filing
In the U.S., there are thousands of tax jurisdictions to consider, plus they change regularly. If your organization grows, operating in multiple states, you’ll need to consider more than one regulation. Staying on top of all of this is near impossible without an automated system.
If there are updates to a tax policy, it will notify you automatically. Withholding tax for individual employees is also accounted for, ensuring your taxes are filed correctly from the get-go. If tax is not your forte, that can be one of the most intimidating payroll processes to manage. Remove that element of stress with an automated service.
5. Improve Accessibility
No matter how busy you are, you can’t miss paying your employees on time. But, if payday falls over a weekend or a holiday, you need to be able to view your figures wherever you may be. Automated payroll software via the cloud allows you to access the information on any device. All you need is an internet connection, and you can authorize any transfers required.
6. Facilitate Internal And External Audits
Your business may be required to undergo an internal or an external audit where they will analyze your financial statements with a fine-tooth comb. Sharing information with an external auditor is as simple as generating a report from your payroll platform. If you’re running it all manually, it’s a lot more challenging to ensure all your paperwork is above board. It makes for a very stressful situation that could result in penalties.
7. Allow Employee Self Service
Automated payroll systems offer employees a self-service option, granting them access to paychecks and personal information. It streamlines the onboarding process, giving employees autonomy to update their information where necessary. For example, they can correct it themselves if they have a change of address or contact information. If they need to print pay stubs or update their banking information, it’s all possible from their portal.
Employee self-service removes a lot of manual tasks from your to-do list. While updates are simple to do, they are unnecessarily time-consuming if they all fall on one person.
8. Save Money
Automated payroll systems do come at a cost, and for small businesses, this can be off-putting. However, according to the American Payroll Association, automation can reduce payroll processing costs by up to 80%. Payroll errors are expensive, and the accuracy automation offers will benefit your business in the long run. Time is a valuable commodity to any business, another benefit you’ll receive.
9. Improve Employee Satisfaction
Employee engagement is a critical element to your business success. It may seem crazy, but an automated system can directly affect this. Not only does it ensure that your payroll ticks over every month with zero errors, but you can incorporate benefit programs that are easily accessible to employees. By making their lives simpler and giving them access to information, you’re able to drive productivity. It means less back and forth between employees and HR, giving them (and you!) time to focus on more significant projects.
10. Stay Relevant
With the increasing number of millennials entering the workplace, staying up-to-date with the newest technology is essential. It needs to become part of your value proposition if you want to attract the new generation. There’s an expectation from younger employees for mundane tasks to be simplified and optimized, manually drafting your payroll just won’t cut it.
What is Workers Compensation Insurance?
Workers’ compensation insurance, known as “workers’ comp,” is an insurance policy almost every business with employees in the U.S. has to have in place. Most states require it.
The insurance policy ensures employees are covered should illness or injury occur in the workplace. It covers medical bills, rehabilitation, and wage loss (something that’s certainly come to light during the COVID-19 pandemic). As a small business, handling workers’ comp obligations can be challenging, so an automated system is an ideal solution.
The History Of Workers Compensation Insurance
Workers’ compensation requirements in the U.S. date back to 1911 with Wisconsin being the first state to pass its own law. Before then, employees who were injured or fell ill on the job had to take legal action against their employers to gain any financial assistance. For employees, it was near impossible to obtain workers’ compensation, but if they were successful, it was financially devastating to the business. Thus, workers’ comp was born to protect both parties, a must-have for your company.
Who Qualifies For Workers Compensation Insurance
If your business has at least one employee, you need workers’ comp insurance. Most state laws insist that you purchase coverage as soon as you’ve hired someone. In some states, it’s optional for employers but it’s certainly worth considering. Depending on your industry, it could really protect you.
A standard workers’ comp insurance policy doesn’t have a maximum dollar amount limit to its primary coverage. Unlike other liability insurance policies, workers’ comp isn’t capped on the employees’ behalf. Once the policy is in force, the insurance company is responsible for all claims and compensation benefits stated in the agreement.
What Does Workers Compensation Insurance Cover?
1. Medical Benefits
These payments are for the treatment of an injured employee. They account for a large portion of total workers’ compensation payments.
2. Disability Benefits
Disability benefits are designed to replace the worker’s income, allowing them to earn from a compensable injury. There are a few disability types to consider:
- Temporary Total Disability: Covers workers who are temporarily unavailable to perform their work while recovering from injury. It’s usually within the region of two-thirds of their weekly wages.
- Permanent Total Disability: Covers workers who cannot perform their work functions for the rest of their lives. Benefits are usually a percentage of weekly wages, including a minimum and maximum amount stated in the workers’ comp policy.
- Temporary Partial Disability: Covers a worker who can still do some work but cannot perform their full function to a usual standard. This benefit covers the difference between the amount earned and what the employee would have made had no injury occurred.
- Permanent Partial Disability: Covers an employee who can still do some of their work but won’t resume their regular duties again.
3. Rehabilitation Benefits
These benefits cover medical rehabilitation for any workers with severe injuries. Whether it’s physiotherapy or a treatment program, it is covered by this benefit.
4. Death Benefits
If an employee is injured fatally on the job site, this benefit ensures their spouse and child are cared for financially. It is a percentage of the deceased’s weekly wages.
Benefits of Automating Your Workers Compensation Payments
1. Easier To Calculate
Workers’ comp rates are calculated based on a percentage of payroll. More often than not, companies are required to pay an estimated premium amount based on the previous year’s payroll. It can lead to overpayment, and although you will receive money back eventually, it can affect your cash flow. On the flip side, you could also underpay, meaning that you’re accountable for additional payments that you may not have accounted for in your books.
Paying workers’ compensation as you go is a great way to stay on top of this. If you automate your payroll and workers’ comp using the same system, it is effortless to do so. Payroll data is automatically synced with workers’ comp, so premiums are based on actual wages and not a guess.
2. Stay Up To Date
If your workers’ compensation premiums increase for any reason, the adjustments are reflected immediately on an automated system. If you’re running it all manually, you’ll have to recalculate it all one by one. However, by adjusting the increase (or decrease) immediately, you’ll avoid any unforeseen bills come audit time.
3. Consolidate Information
An automated system for workers’ comp allows you to house all the relevant information in one place. It ensures employees get the treatment they need without any unnecessary disputes from insurance companies. In addition, the employees’ history is easily accessible, streamlining the process.
Why Automation Is What Your Business Needs
Payroll and workers compensation insurance are two of the many processes that benefit from an automated system. As a small business, workplace automation, in general, can save you time and boost productivity.
Workflow automation can significantly improve communication between your team members. Poor communication is one of the biggest causes of stress, increasing employee dissatisfaction and turnover. It is a great way to eliminate this by streamlining it into one system, automatically reminding the team of due dates.
Because workflow automation clearly defines an employee’s role in the process along with the tasks they’re responsible for, it creates a sense of empowerment and accountability. Gone are the days of micro-managing as efficiency takes preference at every turn.
Automated systems ultimately save time, allowing employees to improve their output. If software handles mundane day-to-day tasks, it will enable employees more time to focus on meaningful growth projects.
Get Automated So You Can Focus On What Matters Most
No matter the size of your business, automating your processes will benefit you enormously. Whether it’s dealing with the complications of weekly payroll or calculating workers’ compensation amounts, an automated system removes any margin for error, freeing up time and curating an environment of optimization. Start with payroll and workers’ comp, and then roll it out throughout your business. Whether it’s marketing or workflows, automation breeds efficiency.