Step-by-Step Guide: Automating Payroll with Sage Software

Managing payroll can be a headache for any business, particularly one with a small accounting department, but Sage makes it easy. Sage ERP removes much of the hassle and time-consuming manual work involved in managing payroll. Sage’s automated payroll functions improve accuracy, reduce errors, and improve regulatory compliance.

Before we get into how to automate payroll with Sage software, let’s look into the types of common payroll challenges that companies face.

What is Payroll?

Payroll is the process of calculating, managing, and distributing wages to employees of an organization. It includes tracking employee hours, computing monies owed, withholding taxes and other deductions, and distributing funds via checks or direct deposits in accordance with the required schedule. Handling payroll is often a time-consuming process, and mistakes can land a company in serious legal trouble.

Top Ten Challenges of Managing Payroll

Companies face many challenges when managing payroll, including remaining compliant with tax laws and regulations, maintaining data accuracy, and more. Here are the top ten challenges of managing payroll.

1. Tax and Regulatory Compliance – Payroll laws and tax regulations often change, which can be difficult for employees to manage. Adhering to old regulations can lead to incorrect tax calculations, late filings, or misclassifying employees, which can result in fines or other penalties.  

2. Payroll Errors and Miscalculations – Accidental errors in wage calculations, incorrect deductions, and misclassifying employees can lead to overpayments or underpayments. This can leave your employees scrambling at tax time because of payroll mistakes.

3. Managing Employee Benefits and Deductions – Deductions for health insurance, 401(K)s, and other programs are a normal part of payroll. However, managing deductions, employee reimbursements, and supplemental wages like bonuses can be complicated and time-consuming.  

4. Timely Payroll Processing – Legally, U.S. companies are required to pay employees bi-weekly, semi-monthly, or monthly, depending on the state. Some companies also have employees with different payment schedules, adding complexity.  

5. Employee Classification Issues – Incorrectly classifying employees as full-time, part-time, or contractors can result in legal or tax penalties.

6. Security and Data Protection – Payroll data contains sensitive employee information, including Social Security numbers, addresses, and bank account numbers. All of this data is potentially of interest to hackers. Companies have an obligation to keep it safe against cyber threats, unauthorized access, and data breaches.

7. Remote or Global Teams – Handling payroll for remote or global teams, particularly when the company has operations in multiple jurisdictions, can also be challenging. Payroll staff have to manage multiple different legal and regulatory requirements, including different tax laws, exchange rates, and labor regulations.  

8. Record-Keeping and Audits – Businesses are required to keep accurate payroll records for tax reporting and audits. This can be quite time-consuming for accounting staff.

9. Integrating with Other Business Systems – Some companies have separate systems to manage payroll, HR, and employee time-tracking, which requires employees to manually reconcile data across multiple systems or download and upload data.

10. Providing Employee Self-Service Options – Employees increasingly expect the ability to access their payroll data on their own via an online portal. This can reduce the burden on HR and accounting employees, who often have to deal with payroll-related requests, like payslip requests, tax forms, and questions about paid time off (PTO).

Top Benefits of Payroll Automation

Payroll automation can reduce or eliminate hassles in managing payroll, including the top challenges outlined above. Automating payroll requires getting your business set up with the right accounting or ERP solution that has all the functionality you need.

Sage ERP is a popular form of accounting and ERP software. They have solutions for businesses of all sizes, ranging from startups to enterprise organizations. They offer powerful accounting functionality, including payroll management.

7 Steps to Automate Payroll in Sage ERP

Follow these 7 easy steps to automate payroll in Sage and streamline your accounting processes today.

1. Set up Your Payroll System – The first step is to ensure that your Sage software application is set up correctly. This usually involves working with an implementation partner like CertiPro to configure and install your Sage application, including configuring any necessary HR or payroll modules.

Next, you’ll have to add company details including tax information and payment methods, and employees, as well as defining pay structures.

2. Configure Payroll Settings – Sage is highly customizable, meaning it can be configured to meet your company’s exact needs. Custom payroll settings allow you to easily define periods; set up deductions, benefits, and contributions; and integrate local tax codes. This ensures that you remain compliant with regulatory and legal requirements.

3. Automate Employee Payments – To automate payments through direct deposit in Sage, you must first connect Sage with your company bank account. Next, configure direct deposit details for employees and schedule automated payments.

4. Automate Tax Calculations and Filings – Sage automatically calculates employee tax deductions, employer tax contributions, and year-end tax reporting. It can also automate tax filings. To receive these benefits, please enter the appropriate company information in Sage, and then its automated calculations will do the rest.

5. Generate and Send Payslips – Sage automatically generates and distributes payslips once payroll has been processed. You can customize payslip templates, enable electronic payslip delivery, and archive payslips for record-keeping purposes.  

6. Monitor and Audit Payroll Data – While automating payroll significantly reduces manual labor, employees should still regularly monitor payroll transactions to ensure accuracy and security. With Sage, it’s easy to generate payroll reports for auditing and compliance, tracking changes in employee salaries and tax codes, and set alerts for any discrepancies.  

7. Ensure Continuous Compliance and Updates – As we previously covered, regulations and tax codes frequently change. This means compliance information in Sage payroll needs to change, too. You should sign up or monitor your system to ensure that automatic updates go through to reflect regulatory and legal changes. You should also take advantage of support resources provided by Sage and your implementation partner.

Automate Payroll with Sage Today

Automating payroll with Sage software simplifies operations, reduces errors, and improves regulatory compliance. Most importantly, it ensures that employees are paid accurately and on time. Automating payroll helps business streamline processes while reducing the workload for employees.

Get started today to take control of your payroll management.