The world of payroll processing has entered the 21st century thanks to cloud technology, integrated payroll solutions, and third-party payroll providers that offer a full range of solutions for clients in nearly every sector. If there was ever a time to upgrade payroll from in-house legacy systems to modern cloud-based solutions, it is now.

Many small businesses still handling payroll in-house are relying on outdated legacy systems. While such systems may seem adequate, they are really not when compared to state-of-the-art payroll in the cloud. In fact, the average employer now just getting by with a legacy system could get a better handle on things by upgrading.

BenefitMall, a Dallas-based provider of payroll processing and benefits administration, explains that moving payroll into the cloud with a fully integrated solution is more efficient, more cost-effective, and more than capable of greatly reducing costly mistakes. They recommend cloud-based payroll processing for companies of all sizes.

Clean Up Those Mistakes

Cloud-based payroll does a lot of great things for employers. As just one example, a quality solution that integrates payroll processing with time and attendance tracking can easily reduce the number of mistakes made by the payroll department. As an example of how important this is, consider what the Nigerian government discovered when they upgraded their payroll system.

The police in Nigeria are all organized under the central government. Prior to the payroll upgrade, the number of police officers on Nigeria’s payroll was believed to be in the neighborhood of 371,000. Following the upgrade, it was discovered that the Nigerian government employs 80,000 fewer police officers than previously thought. Over the years, they had been paying billions in salary and benefits to ‘ghost police officers’ who were not really employed.

This is certainly an extreme example, but it illustrates the point. Legacy payroll systems are prone to not utilizing correct information. And when information is incorrect, it can cost employers a lot of money. It can also result in compliance issues. The fact is that cleaning up the mistakes is one of the most important reasons for upgrading payroll.

Comply with the Law

Second only to cleaning up the mistakes is complying with the law. If you follow business news, you are probably aware that the first of the year almost always brings with it changes in the law that directly affect payroll processing, employee wages, benefits, etc. And more often than not, those changes make payroll more complicated.

Just this year we saw the implementation of the GOP tax overhaul that resulted in tax cuts for most workers. But because the IRS did not have adequate time to come up with new tables, employers were left scrambling. They had to figure out how much to withhold for payroll taxes even without updated tables from the IRS.

Those tables were eventually released, but it took some time. What’s more, employers are still waiting on an updated W-4 and guidance as to who needs to fill out and submit one this year.

Even a relatively minor change in the law can leave employers scrambling to maintain compliance. Imagine multiple changes at both the federal and state levels in a given tax year. Whenever the government changes the rules, it is up to payroll departments to figure them out in a timely fashion.

Indeed, companies just hanging on with legacy payroll systems have lots of reasons to upgrade their payroll to a cloud-based, technologically-driven solution that reduces mistakes and increases compliance. If your company struggles with payroll, get a better handle on things by upgrading to a cloud-based service.