Small businesses face a lot of complexity today. Change and disruption happen regularly, affecting everything from how to stay competitive to how work gets done, where, and by whom. With so much to think about, adapt to, and integrate, it can feel at times like if you make one wrong move, the whole thing comes toppling down. 

One business process that perfectly illustrates the problem of complexity is running payroll in-house. Payroll consists of a lot of moving parts, so it’s no wonder that accurate and timely payroll processing can be such a battle. And if something should go wrong, it can lead to a host of other complications, including compliance violations and poor employee retention.

There’s no getting around common payroll challenges, given the fact that handling payroll in-house is inherently complex. But as a small business owner, you also know that it’s super important to get it right. We’ll take a look at five top payroll challenges today, and how you can address them with small business payroll software that simplifies and streamlines payroll processing.

1. Hybrid workforce

If you have some employees in the office and some working remotely, you’re managing a hybrid workforce. These days, small and medium-sized businesses (SMBs) have a higher percentage of employees working remotely or in hybrid environments (63%) than at a single location (37%). But while a blended workforce offers maximum flexibility to employees, it can also create maximum headaches when it comes to payroll. 

In each state where you have part-time or full-time remote employees, you’re subject to that state’s laws for tax withholdings, minimum wage, paid leave, and more. In effect, you could have one set of payroll rules for workers at your physical business location, and another set — or sometimes multiple sets — for remote workers in other states, thus exponentially increasing payroll complexity.

2. Compliance with laws & regulations

In general, business compliance gets more challenging over time, not less. New laws, and changes to existing laws, spring up every year. During the pandemic, there was a slate of new regulations that accounted for massive changes unfolding in the workplace. Even business growth can subject you to new and different regulations. Currently, there are more than 180 federal labor laws alone that are applicable to various businesses.

Payroll compliance is complex on its own and includes the Fair Labor Standards Act (FLSA) which governs wages and overtime, the Family and Medical Leave Act (FMLA) which governs unpaid leave, and many others that pertain to contract laborers. Keeping up with payroll and human resources (HR) compliance is serious work that requires legal know-how and attention to detail to avoid penalties for non-compliance. But the end result is that it adds more to the plate of your payroll staff.

3. Overworked payroll administrators 

Payroll administrators have an enormous amount of responsibility, as we’ve seen. Managing payroll records, ensuring paychecks and direct deposits are on schedule, and day-to-day record-keeping isn’t an easy feat. And yet many small businesses don’t even have an HR team per se, but instead have just one person assigned to it. No matter the size of your team, the bulk of their time is spent managing the day-to-day administrative tasks that are critical to keeping the workplace running, which means they have almost no time to spend on strategy or other high-value tasks.

Payroll is one of those tasks that require so much time and effort, there’s not much left over at the end of the day to analyze the process itself and figure out how it could be simplified and improved. With so many competing priorities and not enough resources, solving payroll process challenges get pushed ever farther down the list.

4. Manual methods

One of the reasons payroll is more time-consuming and complex than it has to be is that many businesses still manually process payroll using a combination of data entry methods like spreadsheets and outdated payroll software with limited capabilities. If that’s the case with your staff, toggling through multiple payroll spreadsheets in and out of different software may be familiar, but it also increases the risk of payroll errors, which require more time to troubleshoot and fix.

Another common challenge with manual payroll processing is that it’s inconsistent. Instead, each payroll staff member likely has their own way of managing the process. This makes it next to impossible to produce standardized payroll data and key employee information that can be used to run reports and conduct helpful workforce analysis.

5. Confusing work-tech landscape

Even if you’re ready to switch your payroll services provider, surveying the outsourcing landscape can be overwhelming. There’s a lot going on out there. For example, payroll solution providers offer a payroll system for medium-sized businesses and smaller firms, but other solutions come with a bewildering array of bells and whistles because they’ve actually been developed for large enterprises. 

This makes choosing a provider even harder. How do you know which solution is right for your business and that you’re not investing in more than you need? At the same time, how do you know the solution you choose will be able to scale with your business as it grows and evolves? And how can the solution provide automation when needed?

A system that solves payroll complexity

Payroll process challenges don’t have to be a problem you just live with. There are payroll solutions that address these complex times, empowering HR and payroll staff rather than making their jobs harder. 

With the right HR and payroll technology solution built for the specific needs of SMBs, you can streamline and simplify the entire payroll function for your business. A single, automated system with paperless workflows and centralized payroll- and HR-related data allows you to:

• Accurately calculate payroll, taxes, benefits, and more — and pay employees on time
• Easily locate, manage, and update employee data and share it with other areas of the business
• Stay compliant with pay and tax laws wherever you have employees
• Gain much-needed visibility across your workforce, run reports, and analyze your people operations
• Grow your business as needed without worry that the system can’t keep up

And on top of this, you can rest assured of the option to hand it off to the payroll professionals.

PrimePay at your service.

As a leading small business payroll provider, PrimePay can partner with you to offer support throughout the entire employee lifecycle. Learn more about how PrimePay can help you streamline HR processes, manage payroll and payroll taxes, and help with the administration of employee benefits. Click here to view our breadth of HR solutions.

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