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Difference Between Payroll and HR Software

New technologies such as mobile devices and social media have transformed the way organizations deploy technology in HR. Today’s human resources function is being transformed by the Web. To maintain a competitive advantage in the marketplace, every firm or organization needs to maintain a balance between their physical, organizational, and human resources to survive in this competitive marketplace. HR management services such as HR and Payroll play a central in this. But, it’s important to understand the different functions of both HR and payroll.

What is HR Software?

Also referred to as human resources management systems (HRMS), HR software is a complete web-based solution for managing and optimizing daily human resources tasks and activities. It combines a number of systems and processes to ensure effective and efficient management of human resources, business processes and data. HR software does that by automating manual tasks, organizing employees’ data and making data-driven reports in a timely manner. Back then, HR was all about fitting people into specific boxes and then building better practices to find the right people for the right box. The 21st century HR is all about automation; it simplifies everything by automating and integrating many of the routine HR processes in an organization. It enables the effective management of several HR functions through the use of information technology.

What is Payroll Software?

Payroll, as the name suggests, is associated with employee compensation and benefits. Payroll software, like HR software, is a web-based payroll management solution for managing, maintaining and automating payments to employees. It assists organizations in accurately calculating and processing payroll of each employee, eliminating the need of manual handling. By automating payroll functions, it eliminates the human error. In addition, the payroll system helps generate paychecks and direct deposits several times a month. In order to effectively handle the application side of the payroll system, you may need to understand something about benefits, tax laws, and other application domain-specific knowledge. The primary role of payroll software is to automate the whole payroll process.

Difference between Payroll and HR Software

Software 

– HR software, sometimes referred to as human resources management systems (HRMS), is a complete web-based solution for managing and optimizing daily human resources tasks and activities. Simply speaking, HR is all about managing employees and employee relations. Payroll software, as the name suggests, is a web-based payroll management solution for managing, maintaining and automating payments to employees.

Role

 – HR software is a complete web-based solution that combines a number of systems and processes to ensure effective and efficient management of human resources, business processes and data. It assists an organization with all HR related responsibilities, from hiring employees to induction, talent management, payroll processing, benefits administration, and everything in between. The role of payroll software includes calculation of wages and deductions, generating payslips, calculating bonuses and incentives, expenses, taxes, etc.

Payroll vs. HR Software: Comparison Chart

Summary

In many organizations, payroll functions com under the HR department, which handles everything from hiring to salary processing and everything in between. Sometimes, payroll falls under the finance department, which handles everything from calculation of wages and deductions to generating payslips, calculating bonuses and incentives, expenses, and taxes. HR plays a key role in the effective management of payroll related tasks and functions. HR software is arguably one of the most robust systems adopted by most modern businesses and payroll software is sometimes a part of that system.

Do software vendors make a distinction between a HR system and a payroll system?

Vendors often provide both HR and payroll related services, however, there are a lot of confusing acronyms being used to describe HR software solutions, like HRIS (human resources information systems), HRMS (human resources management system), etc. In many cases, vendors perform both tasks and oversee both HR and payroll functions.

Does payroll fall under HR?

Sometimes, payroll comes under the HR department, and sometimes, it comes under finance. There are many areas where HR and payroll functions need to reconcile, such as hiring, salary and bonus payments, and benefit deductions.

Should HR process payroll?

Managing the employees’ payroll is covered either by the finance department or the HR department. In many organizations, payroll functions com under the HR department, which handles everything from hiring to salary processing and everything in between.

Does payroll sit with HR or finance?

The employees’ payroll is either managed by the finance department or the human resources department. In some organizations, the payroll functions are outsourced to a third party HR and payroll services provider.

What is the role of HR in payroll?

Payroll also comes under the HR function. In many organizations, HR is responsible for handling and managing the salary, bonus and incentives of employees. So, HR plays a key role in the effective management of payroll related tasks and functions.

How is HR payroll calculated?

The calculation of the employees’ payroll involves determining their gross pay, followed by the subtraction of standard deductions and payroll taxes. The HR department does this either through the HR or payroll software or the organization outsources the HR functions to a third party payroll and HR services provider. 

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References :


[0]Kavanagh, Michael J. and Richard D. Johnson. Human Resource Information Systems: Basics, Applications, and Future Directions. California, United States: SAGE Publications, 2017. Print

[1]Schmidt, Lars. Redefining HR: Transforming People Teams to Drive Business Performance. London, United Kingdom: Kogan Page, 2021. Print

[2]Tsui, Frank F. and Orlando Karam. Essentials of Software Engineering. Massachusetts, United States: Jones & Bartlett Learning, 2007. Print

[3]Image credit: https://pixabay.com/illustrations/business-success-payroll-salary-2800752/

[4]Image credit: https://global-uploads.webflow.com/5fb89486431df956d62ce163/5fe276efa0211cc216e2be84_Macbookpro_Products.png

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