The Benefits of Paperless Payroll: How to Make the Switch and Save Costs

Going paperless is a no-brainer for modern businesses, and payroll is no exception. Paperless payroll can lift the administrative burden off your shoulders, helping you pay your team faster and making your processes run smoothly. Let's explore what paperless payroll is and how to make the transition smoothly.

What is Paperless Payroll?

Paperless payroll is a fully electronic way to manage your employee payments. The digital payroll system can track hours, calculate taxes, deliver pay stubs, and store records. It streamlines your entire payroll process. Key features of paperless payroll often include:

• Direct deposit or pay cards

• Online pay stubs and Form W-2s that employees can access anytime

• Real-time tax calculations and filings

• Custom reporting and audit-ready logs

• Cloud-based dashboards for admins and employees

Digital payroll systems offer built-in encryption and secure backups that safeguard your data. They're also easy to use and scalable, which can simplify your hiring and onboarding processes.

Key Benefits of Switching to Paperless Payroll

Switching to a digital payroll system offers many benefits. Here are some of them:

• Higher Visibility: The paperless payroll software helps you identify discrepancies early, allowing you to respond to changes quickly. Your employees have access to their personal information at any time.

• Cost Savings: Paperless payroll eliminates manual tasks and labor costs associated with paper-based payroll, including printing and preparing pay stubs. You also save on the recurring expenses for checks, envelopes, postage, filing cabinets, and storage space.

• Greater Efficiency: The digital payroll system streamlines your entire payroll process, from data entry to deposits. You can run payroll from anywhere. You can also automate tasks to avoid missteps and ensure timely filings.

• Improved Record-keeping: Tax laws are constantly changing. Paperless payroll software updates automatically to reflect the latest rates, which minimizes your compliance risks. It stores data securely, enabling you to easily search and retrieve audit-ready logs as well as time-stamped records during reviews or audits.

• Faster Issue Resolution: Questions about a paycheck or missing document no longer require a paper chase. With digital access to payroll records and time-stamped logs, you can resolve issues quickly.

• Remote Work Compatibility: With a paperless setup, you can run payroll from anywhere and maintain compliance across state lines, no matter where your team members are logging in from.

How to Transition to Paperless Payroll

Shifting to paperless payroll requires clarity and preparation. Besides the new technology, you also have to set up the system for long-term efficiency. Here’s how to make the transition as easy as possible:

1. Audit Your Current Payroll Process

Outline your current steps and pain points. Understanding what works and what doesn’t will help you avoid digitizing inefficiencies.

2. Clean and Verify Your Data

Accurate records are essential. Review your employee information, tax documentation, direct deposit details, and timekeeping habits. Many payroll errors stem from outdated or incomplete data carried over during a system switch.

3. Know Your Compliance Requirements

Before going digital, confirm your state’s rules on electronic payments and pay stub delivery. Some states require written employee consent or paper alternatives. Additionally, verify the IRS and DOL record-keeping requirements to ensure your new system simplifies payroll records while staying compliant.

4. Choose the Right Provider

Choose a payroll services provider that fits your size and budget. Consider user experience, automation features, mobile access, and integration with benefits or time-tracking systems.

5. Train Your Team

Transparency goes a long way. Let your employees know what’s changing and how it affects them. Offer support and guide them if they need help. A phased rollout or test run can give everyone time to adjust without pressure.

Common Challenges in Switching to a Digital Payroll System

Going paperless is the smart choice for most businesses, though there could be some challenges as you make the switch. Here are some examples:

• Data Cleanup: Inaccurate or incomplete employee records or time logs can lead to delays or errors. Audit your data beforehand to ensure a smooth setup.

• State-by-state Requirements: Some states require employee consent for digital pay stubs or direct deposit. Others mandate paper check options. Review your state requirements to avoid compliance issues.

• Banking Access Barriers: Not all employees have checking accounts. Consider offering alternatives, such as pay cards or digital wallets, to help close the gap.

• Integration Complexities: Syncing your new system with existing tools, such as time tracking and benefits, can reveal compatibility issues.

• Vendor Overload: You have various paperless payroll options to choose from, which can make it challenging to find the best digital payroll system for your business. A clear list of must-haves helps you narrow the field.

Paperless Payroll Software and Tools

Choosing the right paperless payroll software for your business depends on your team size and the level of support you need. The following tools and platforms can help you streamline your payroll system:

• Standalone Payroll Software: If you have a lean team and only need payroll processing and tax filings, consider a simple standalone software.

• Human Resources Information Systems (HRIS): You might want to choose this system if your business employs small to midsize teams. HRIS offers core HR functions with built-in payroll and employee self-service.

• Human Capital Management (HCM) Platforms: Consider these platforms if you run a larger organization and manage payroll and workforce planning.

• Professional Employer Organization (PEO) Platforms: Consider this option if you're seeking full-service support, paperless payroll, access to benefits, and HR compliance through co-employment.

Take the time to evaluate each digital payroll system and choose a scalable solution that meets your business needs.

Modernize Your Payroll System With Justworks

Paperless payroll saves time and helps you stay compliant, and the good news is we can handle all of the complexities. Justworks offers flexible payroll solutions for small businesses that simplify payroll and HR tasks. As your business evolves, so does your paperless payroll software.

Support your next stage of growth with additional HR and payroll features, access to benefits, onboarding support, and compliance management with the Justworks PEO platform. Get started with Justworks today.