5 Key Features to Look for in a Modern Payroll System

4 Mins read

A modern payroll system can be a game changer for companies. Currently, HR and payroll processes are well-suited for stable environments with nine-to-five salaried employees, but the world of work is changing rapidly.

Many newer payroll systems offer diverse compensation administration, mobile accessibility, and more. Here are five key features to look for in a new payroll system:


In an increasingly diverse workplace, payroll is much more than a medium to facilitate salary payments. Payroll professionals need to manage a wide range of financial data and ensure compliance with strict regulations, all while meeting the needs of employees and delivering business value.

Luckily, there are payroll solutions that can simplify these tasks. These tools include features that enable you to process pay, track tax deductions and other payroll information, calculate time-off accruals, create employee paystubs and W-2 forms, and provide access to a transparent record of past pay. They can also streamline tax filing and automate the generation of year-end returns.

Other important payroll features include compliance-related tools (like ACA reporting) that allow you to track your employees’ headcount and company healthcare coverage. Integrated systems can also allow you to share data between functions like HR and finance. This can help reduce errors by ensuring new data is entered only once, and the same information is used across all processes. It can also help you deliver more accurate information to employees sooner, improving satisfaction and loyalty.


Managing payroll manually with spreadsheets is an outdated, time-consuming practice that can lead to errors and delays in processing. An automated payroll system eliminates manual data entry, saving HR teams valuable time and resources.

Modern software automatically adheres to changing federal, state, and local tax codes, wage rates, and other regulatory requirements to keep your company compliant with the law. This helps to prevent costly penalties and fines.

A fully automated system also reduces the risk of misplaced decimals, erroneous “0” s, and other mistakes that can wreak havoc on your financial reports. This is especially important if you work with multiple currencies or have overseas employees.

A centralized payroll system can also simplify documenting and retrieving payroll information in case of an audit or dispute. Whether adding the details of new hires, deleting employee records, or changing details like address, tax status, and deductions, an automated system makes the process faster and easier. Additionally, a cloud-based system eliminates the need for hardware maintenance and saves your business money on IT expenses.


A reliable payroll system can be a valuable asset to any business. It reduces the time spent on manual calculations and enables faster salary payouts. It can also provide insightful reports on employee performance, labor laws, budgets, etc. These insights can help HR and finance departments make better staffing, wages, and growth decisions.

Payroll management systems can automate the processing of timesheets, which helps prevent data entry errors and ensures that information is updated in real-time. They can also store a backup of all your payroll data and allow remote access. Some even include features like two-factor authentication and secure storage for your sensitive employee information.

Using mobile apps and geofencing technology, the right payroll management software can also enable employees to track their hours. This eliminates buddy punching and allows employees to easily swap shifts and cover absences with their manager’s approval. It can also let them check their schedules on a mobile device and apply for jobs without talking to someone in the office. According to Aptitude’s survey, some modern payroll systems are designed with self-service features and a focus on the employee experience.


The importance of security in any business is paramount. Payroll management is no exception, and protecting payroll data from unauthorized access is a key feature to look for.

Payroll data contains sensitive information that can be dangerous in the wrong hands. From bank account details to addresses and social security numbers, hackers could gain access to critical employee information if it falls into the wrong hands.

strong password policy is essential to protecting payroll records from unauthorized access. The best payroll systems offer strict password requirements, including minimum length, a combination of upper and lowercase letters, digits, and symbols, to ensure that employees create strong, secure passwords.

Most businesses must follow some federal and state employment laws when processing payroll. A built-in compliance feature is vital to a modern payroll system that can help ensure that all time entries, tax withholdings, and benefit payments align with local, state, and federal employment regulations. It’s also important to consider how your payroll system will work with other systems like HRM, accounting, and ERP software. Ensure it’s compatible with these other systems to prevent any unforeseen integration problems.


One of the most important elements of a modern payroll system is that it can scale as your business grows. Anderson notes that this can be done through features, plug-ins, and integration with time and labor management systems. These tools can help you carry out tasks like gender pay gap reporting and skills gaps analysis necessary for proactively driving business growth.

In addition, these solutions are designed to be automatically compliant, helping to keep you out of compliance trouble and mitigating risk. They can also track and update regulations as tax laws, wage rates, and other factors change.

In short, a modern payroll system is not just another cost for your business but a solution that can save you money in numerous ways, from reduced work hours to efficient and accurate tax calculations. This helps your team focus on more productive tasks, leading to a more profitable and successful business operation with happier employees. In a post-pandemic world, these benefits are more critical than ever. So if you are considering upgrading your outdated payroll system, look for these key features in a new platform.


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DN News Desk is the editorial wing of Digital Nod, an award-winning digital PR & marketing agency. Committed to delivering timely and insightful news coverage of global events, DN News Desk's team of seasoned journalists and editors ensures that readers are well-informed about the latest developments across various domains. With a finger on the pulse of current affairs, DN News Desk strives to provide accurate, balanced, and thought-provoking articles that shed light on the ever-evolving global landscape. From breaking news to in-depth features, DN News Desk's contributions aim to empower readers with knowledge and perspectives that matter.
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