7 Benefits of Payroll Software for a Startup

It is common knowledge that managing a startup business is excruciating. However, entrepreneurs are a different breed of individuals who understand the hardships of developing and growing a business. There are a lot of parameters to monitor and managing every aspect of the business is quite a daunting task.

On top of the compliances required by law for a startup, one also needs to consider the payroll rules and regulations once the business starts hiring employees. At this stage, having dedicated payroll software helps the business immensely by streamlining the entire process of payroll management.

Hence, let us take a closer at payroll management, the requirement of payroll software and 7 benefits, especially from a startup’s perspective.

What is Payroll Management?

The term ‘payroll management’ refers to the collective process of handling all the financial dealings related to the employees’ salaries in a company. It includes various steps such as developing a salary structure, calculating the salaries each salary cycle by including any incentives, removing the deductibles, distributing it as well as maintaining a record of the same.

Why do you require Payroll Software?

We can understand that payroll management is very crucial for any company including a startup since it deals with the finances of the employees and the company. Additionally, since taxes are involved, one needs to ensure statutory compliance too.

Having payroll software helps in automating almost all the tasks related to payroll management in a company. Having the option to process payroll with the help of payroll software drastically lowers the time and effort required to undertake the same activity manually.

Payroll software also ensures that payroll calculation is accurate since there is no human interference. It also takes care of statutory compliances due to the inbuilt functions that consider these compliances which perform the calculations.

Additionally, these payroll systems also have the option to keep a record of every transaction that they have ever done, which helps in keeping a track of the company costs. The function to integrate the attendance and leave details with the payroll software also helps in making any deductions automatic and easy for the HR department.

Benefits of Payroll Software for a Startup

As we have seen, having robust payroll management software helps the business and the HR team in managing their employee payroll effectively. It increases the department productivity by automating the tasks of payroll calculation and distribution. With the help of the payroll software, they would be free to perform other activities that keep their employees engaged instead of having to perform the same clerical tasks repeatedly.

The benefits of payroll software are amplified when it comes to a startup as they have limited resources and workforce. Usually, startups usually have a single HR and they would be already burdened by other administrative tasks. Hence, employee engagement could be side-lined due to limited time.

Hence, let us understand how payroll software benefits a startup with the help of seven major parameters:

 Cost and Time Efficient

Primarily, having payroll software helps in reducing the time and effort required in managing the employee payroll and record keeping. Traditionally, spreadsheets have been used to undertake payroll-related tasks in companies. However, it requires HR to manually enter the employee’s attendance and leave data and calculate their commissions, rewards, etc. into the sheet every salary cycle.

With the help of payroll software, this process becomes automated. The HR needs to simply set it once and the software would be able to perform its duties every salary cycle. Hence, it saves the time and efforts of the startup’s HR personnel, who can concentrate on developing other aspects of the company.

Automated Statutory Compliance

Companies of all sizes are required to adhere to certain guidelines set by the labor laws. It applies to startups and their payroll too. Failing to adhere to these laws might result in hefty fines which are detrimental to the progress of a startup with limited resources.

On the other hand, with the help of a payroll management solution, the startup need not spend time and effort on ensuring compliance with the laws as the software takes care of it automatically. Additionally, any updates to the statutory legislation would be updated by the software vendor themselves, thereby helping HR avoid keeping a track of such legal changes.

Advanced Reports & Analytics

A robust payroll system comes with advanced reporting and analytics capabilities. The analytics module will help the company gain valuable insights as to the company expenses, especially related to the payroll of the employees, their rewards as well as the ROI, etc. Such in-depth analytics helps the startup immensely as they can manage their expenses better with the aid of these reports.

With the help of the reporting modules, HRs can easily get a variety of reports as well as develop custom reports based on the parameters requested by the management. On the other hand, they can also develop custom reports to put forth data-driven suggestions before the management to further improve the startup’s efficiency.

Employee Information Security

The legacy spreadsheets offer very limited security features and negligible data integrity features. In contrast, with the help of payroll software, a startup would be able to store and manage employee information securely. This function helps remove the cost of a separate data management software, which might be required later when the company grows beyond a certain point.

Morale Improvement

The employees of the startup would be paid on time and with regularity owing to the error-free payroll calculations of the payroll management system. This reinforces the faith and trust shown in the startup by the employees.

As a result, the employees would recognize their value for the company and would be motivated to work in a better manner. This results in enhanced productivity and increased company growth, which is desirable for any startup.


Most of the payroll systems available in the market are scalable as per the company growth. Hence, it helps the startup pay for only those features that they require currently. In the future, as the company advances, more functionality can be added.

Having this option to scale the software as per the business requirements ensures that the startup gets maximum value for their money while also having the peace of mind that the same software would be able to manage their payroll even if the company expands quickly.


Even the basic payroll software provides a ‘forecast’ feature in their software package. This feature forecasts the expenses and performance of the company and thus helps the management take the necessary actions.

With the help of data-driven reports and past performance, the management would be able to get a clearer picture of the near future and make the necessary adjustments in their business to ensure success and profitability.


From this article, it is evident that having payroll software is necessary for any startup today. The seven benefits that we discussed here are common for any startup irrespective of their business domain. If you are a startup business owner, look for all the features mentioned in this article while finalizing payroll software for your business. The final decision should be yours since only you understand your business more than anyone else and hence, research the market thoroughly and settle for the best option within your budget.

Author Bio:

John Paul Davis is a content writer with Pocket HRMS, an innovative AI-driven cloud-based HR software provider in India with over a decade of loyal clientele. His handiwork usually reflects the latest technologies in the HR domain.

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