Main Problems with Manual Payroll Management

Do you feel like all your company accomplishes is payroll? Is there ever any time leftover to perform other projects? Does staff struggle with understanding payroll taxes and non-compliance? If so, you need to consider making changes to your payment processes.

The staff that is struggling with making manual payroll on time need some assistance. Whether you offer better organization, more knowledge of tax law, or more time to complete other projects, your staff will be thrilled with your new outlook on your business and how payroll is completed.

Keep reading for the top five problems with manual payroll management and how to solve them.

Incompatible Software

One of the most frustrating parts of the business software and payroll software, in particular, is the lack of communication from one system to the next. The employee records file may not talk to the retirement software, which is not compatible with the payroll and accounting software.

This can make a worker’s job very challenging and frustrating. It would be so much easier if all the programs were housed under the same software so you could access each file quickly. The solution to this issue is to go to automated payroll rather than manual processing of payroll.


Another problem with manual payroll management is the fact that it is extremely time-consuming. Your employee has to check details such as the accuracy of the recorded hours, the use of vacation or sick time, if administrative leave was used, making sure deductions of health insurance and dental insurance are being taken out correctly. If the individual has retirement or disability insurance, your staff member also has to record this and check it for accuracy.

They have to perform this task on each team member. If they have other duties as well, this task can get very time-consuming and frustrating. One way to solve this is to use a payroll provider that is outsourced so your employee can get back to other business tasks.

Administrative Struggles

Administrative staff have a lot on their plate in their day-to-day jobs. Now add-in manually payroll, which is done every two weeks. This puts a burden on staff to try to get the entire task completed on time. A manual payroll system puts a lot of stress on staff and creates a significant amount of paperwork.

When employees are in a hurry to get to the next project, mistakes can occur such as data entry errors, which cause problems down the road in the form of unhappy payroll recipients, and potential compliance and fraud issues. To solve this issue, go to automation for your payroll system or outsource it to a payroll specialist who will have internal controls and random payroll audits to keep them honest!


If you are still manually processing your payroll every two weeks, you have the potential for payroll tax issues and non-compliance due to employees who do not have the knowledge or skill of payroll tax law.

Whether your staff has not been trained on payroll taxes, have no understanding of these issues, or did not do the work they said they did, penalties can arise for your business no matter what the cause of the discrepancy. Make sure you are hiring the correct people for the job that have the knowledge and skill to perform payroll taxes on your business.


The last critical piece as to why manual payroll management does not work is due to lack of organization. You want to make sure all your manual files including employee records and prior payroll statements are organized in an easy to reach area while doing payroll, but in a safe and dedicated spot when payroll is not being run.

This adds to your workflow issues as you have to constantly get up and retrieve files from their manual locations to perform this every two-week task. The solution to this problem is to purchase new payroll software that communicates to all of your other programs or outsource it to a payroll provider in your area.

Why Should Move to an Automated Payroll System?

If you have a small business with very few employees, you should consider either an automatic payroll software system, which is still time-consuming for your payroll specialist, or think about outsourcing the work to a payroll provider.

Both these options would get your overworked staff out of the manual processing of payroll and onto other critical tasks to be done. There are many benefits to this suggestion including better organization, more time for other projects, and less fear of an audit due to poor record keeping. Make the life of your payroll specialist easier and outsource it to a payroll provider today!