Payroll software

Payroll software: what it can and can't do


Payroll software can do many pay-related calculations. However, you will still need to input and maintain certain data for each of your employees.

What does payroll software do?

Any payroll software will take over the routine calculation of ordinary payroll requirements such as tax and National Insurance contributions (NICs). It will also calculate the NICs that you have to pay as an employer. It will allow you to pay people at monthly or weekly intervals, as appropriate.

Payroll software will also:

  • calculate student loan and other deductions
  • produce payslips for your employees
  • produce payment reports to allow you to pay employees, showing the amount to be paid to each employee
  • keep records of payments and deductions
  • produce year-end reports and documentation for you and your employees
  • produce the necessary figures or documentation when an employee leaves

What payroll software can't do

Payroll software will automate most of the calculations, but there will still be administrative work for you to do in terms of inputting relevant data into the system.

You will have to:

  • enter employee's details when they start their employment
  • make changes when their rates of pay increase or decrease
  • change tax codes when notifications are received
  • enter details of hours worked and overtime

There are also many possible deductions from pay such as employer loans and pensions. Even if the software can automatically calculate some or all of these, you will still need to key in the details for each employee to whom they apply. You will have to update this information when appropriate.

Read more about payroll software features.