Understanding The Workings of A Payroll System

Posted on October 1, 2021

Being responsible for MA payroll operations comes with a lot of responsibilities. From verifying employee hours to taxes, benefit deductions to paid time off accrual, the details are vast. With so many responsibilities at hand, it is easy to see how errors could occur. At abc Payroll, our team of professional and experienced are experts are here to help with state of the art payroll system offerings. Here’s a closer look.


What is a payroll system?

To understand the potential complications and how to navigate them, one must first understand the workings of a payroll system.

Payroll professionals use this type of system to pay employees for their services. Without a proper system in place, employees would have inaccuracies on their checks, or even worse, they wouldn’t get paid at all. Basic functions of a payroll system include:

  • Hours Worked
  • Deductions (retirement plans, health, taxes, etc.)
  • Benefits (sick time, vacation, travel expenses, etc.)

In general, there are three primary types of systems utilized for payroll – manual, computerized, and external.


Manual System

Usually set up by small organizations of ten people or less, the manual payroll system is one of the most inexpensive options. Operating manually eliminates the need for software to maintain the payroll process. Furthermore, a manual system allows small companies to create a system that works for them instead of staying within the rules of a computerized system.

The primary benefit of a manual system is the freedom of logging employee hours and associated tax records according to your own specifications.


Computerized System

However, the other side of a manual system is that there is room for human error. A computerized system minimizes the error ratio and allows you to save time and costs. Information is easy to enter with a software system in place and allows you to:

  • Double check your info before printing.
  • Detect errors and adjust them as needed.
  • Simplify tax processing by calculating the data for you.


Outsourcing Payroll

Finally, we come to the third type of system, an external (or outsourced) payroll system. Using an external service to process your payroll saves the stress and time of having to do it yourself. Outsourcing also allows for direct depositing of employee’s paychecks electronically. While most companies recognize that direct deposit saves on paper and makes your company greener, many still issue paper checks.

Furthermore, by using an external service you do not have to invest money in payroll software or in-house payroll processors. External payroll systems combine manual and computerized systems to save you the headache of having to do it yourself.


For more information on outsourcing your payroll to a cost-effective plan with abc Payroll MA, please contact our professionals today at (978) 251-3003. From employee paychecks to end of the year W2 forms, our experts are here to keep your life simple. Contact us today to learn more.