The Restrictions of Payroll Software

Posted by Cedric Joshua Martinez

Aug 11, 2016 12:30:00 PM

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Payroll software programs are widely used across many fields, from business to medicine. While these systems may make the entire payroll process seamless and efficient, they also have limitations that you need to be aware of. Here are a few of them:

High Data Storage Requirement

Payroll software computes and analyses millions of data each day while producing more data that your company needs to store in its archives. Transferring and organising your data archives, however, both require human interference; thus, your payroll can’t be completely automated and you’ll likely need to hire another employee (or split the responsibilities of another, adding to his existing workload).

Restricted Access

Payroll software is usually installed into a single device that receives and computes the data. Any data or access to the program itself requires the user to physically use the machine. This can become a hassle, depending on who is in charge of payroll and how easily they can access the said machine. The burden becomes even more evident if the hardware were to malfunction, as computers do from time to time. The risk of losing all of your data because of a single error or virus is possible, and should be prepared for accordingly via backups, firewalls, and so on.

Additional Costs

Other than purchasing the software, there are other costs that you may not have taken into account. For example, if the software you purchased a license for is too complicated for an average person to understand, you may have to spend money on skills training or, as said above, hire an in-house team to operate the system for you. Both options will put a small yet still noticeable dent in your current capital.

Risk of Miscalculation

Programming is only as good as the programmer’s skill and ability. An error in its computing functions can lead to a lot of inaccurate data and calculations. In certain cases, for example, the programs are not able to recognise the difference between mandatory and voluntary withholding tax. This can lead to the government concluding that you are under withholding, for which they can fine you a hefty amount. For the Australian government, the penalty is equal to the missing amount.

Requires Regular Maintenance

To avoid the problem above, your system needs to be updated with the newest laws, bug fixes, upgrades, and everything needed to give you the quickest and most accurate results. Without this, you could be operating under out-of-date laws, or with bugs that may cause your system to generate the wrong results. If for some reason, software updates are out of your hands, then you will have to rely on the punctuality of the provider. If you made a good choice, they will update your system before you even know that it needs to be changed. However, if you’re constantly being fined or distributing wrong amounts during payroll, you should look into alternatives.


While some of these may only be true for a few software programs, it is always important to know what you are involving your business with - particularly, all the benefits and hassles that come with it. Remember that payroll software is continually evolving, with constant innovations and updates. Though it may eventually reach the point where most, if not all, of the issues stated in this article cease to exist, these limitations are very much present in modern day payroll system software, and need to be considered and dealt with carefully. Fortunately, D&V can help you do just that! Contact our payroll specialists today, and you’ll never have to worry about falling prey to any of these payroll software restrictions.

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Topics: Payroll Services

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