Discuss about the Effectiveness of Payroll Software in Small Business.
Business efficiency is the core to its success, service delivery, and more importantly reducing the cost. At all cost, companies strive to improve services such as payment processes to ensure that they save not only cost incurred but also the time and resources. In accordance with (Barak, 2016) among the crucial seven signs that a firm need to improve the payroll service, the top high staff turnover, high error rates, minimal performance monitoring, poor integration and data management among others.
Therefore, this research will be designed to identify some of the fundamental problems that face small business when processing invoices. That is, the study will investigate the different factors that affect payroll processing in small businesses. Primarily, this research will demonstrate how useful payroll system is in streamlining the invoices among other accounting clerical duties. This paper will find some of the most important literature about the payment system. In particular, the paper will play two essential functions. First, it will validate the practicality of the use of payroll system, particularly MYOB and Quickbooks. That is to say; the essay will try to determine whether this system can be adopted in a typical business setting. Second, the report will investigate on how this system is of importance for small businesses. In fact, the research will answer the question; do payroll system add any significant value to small businesses.
This is the core backbone of the research in which the researcher identifies a researchable problem, which he wants to solve. In this case, the problem would be determining the payroll system users, such as a small bookkeeping firms, among other small businesses. The primary aim of identifying the problem is to come up with strategies that can be used to mitigate or how it can be improved to reap more benefits to the business. That is, how can small organization benefits from using this payment system. This report will focus on small businesses, how to use payroll system in processing office duties such as payroll, and other clerical duties like entering invoices. The analysis in this study will also help in determining the proportion/percentage of firms that have adopted the use of payroll system. Hence, at the end of the research, a conclusion will be drawn on whether more people are using this system in their firms or not.
Singh, (2014) stipulates that the payroll system in an organization should enhance speed in calculating pay, and ensure that the payments are accurate and are made timely. The payroll software saves the business troubles of lengthy computation of fees, which this software completes it in a fraction of a second. Besides, this system helps in maintaining the employee’s data and makes them readily available. This system helps in maintaining vital employees’ information and can be used to generate some outputs like pay slip, paychecks, management reports and also government reports (Singh, 2014). This scholar research was aimed at developing a user-friendly system and how it can be implemented in an organization to improve performance.
Recent studies indicate that 80% of small businesses are already using payroll software. This has been a major contribution to the firm’s performance and efficiency in updating the system as well and track the employees’ days off. The employees can submit their own leaves online, and they are able to see the annual leaves, timesheet as well as download their pay slip (Mitra, 2016). The administrations are relieved from the burden of all this, the only role they play is just approving the process. This is an efficient system that has reduced paperwork which is prone to misplacement, if not damage (Mitra, 2016).
Security is a primary concern to all businesses, especially when transmitting the information to the third party (Kim & Solomon, 2013). But that can be termed as the past event since the payment system provides outstanding security standards. In fact, Kim & Solomon, (2013) uniquely states that payroll system is a haven in transmitting confidential information since it observes the highest IT security protocol.
The payroll system is ideal for a small business (Burke, 2014). This scholar also states that there are four main types and reasons for adopting this system; that is, outsourcing, in-sourcing (in-house), for payroll systems purposes, and to stay with the times. Outsourcing refers to the process of communicating with the outside world (Burke, 2014). This helps smooth communication channel between the business and clients. This process is handled by specialists leaving the business with adequate time to attend to clients or providing goods and services. However, there is a need to find a good company and ensure that their quality of work is consistent (Burke, 2014).
In-house, on the other hand, is where the business manages the business payroll from their offices. This responsibility is given to a specialist that understand the task (Burke, 2014). That is, the specialists need to have the PAYE tax system know-how and understand the HMRC protocol. This is because, the personal tax returns should regularly be remitted as HMRC expects (Burke, 2014). Nowadays, almost everything is heavily computerized, but still, the tax can be calculated by hand and issue a hand-written payslip. However, this does not appear professional at all. Therefore, there is a need to find a payroll system software which will save you all the trouble. Some of the factors that this software will require to compute the payments include sick pay, national insurance funds, tax, other inclusions, and exclusion.
Lastly, stay with the time implies that the firm should keep on checking the frequent changes that may occur. That is, the company should update the system now and then to suit the prevailing laws. If the system is online, then this will be efficient as it will not cost the firm a penny (Burke, 2014).
Basically, there is often need to perform a payroll gap analysis progressively. This focuses on assessing the operation progress and procedure of a firm and compare them with the expected performance level. Using this method, Hanks, (n.d.) examined the small business payroll system to identify the gap that needs to be filled using research. More specifically, this scholar states that the best way to evaluate the firm’s payroll system is through external consultants as they can help with ideas that can curb inefficiency and at the same time save resources. This, process assist in determining whether the adopted payroll system efficiently meets the organization’s objective. There is a procedure placed that can be used to assess the payroll gap. First, the auditor checks for the system strength, and weaknesses. Then, evaluate the system capabilities. Lastly, the auditor is expected to conduct a survey targeting the resource staffs, various departments, and the employees, to assess the level of satisfaction with the payroll system. This is followed by a report which highlights the benefits associated with the payment system, and its deficiencies. The recommendation(s) are drawn on how the system can be improved.
The research will develop an evidenced driven report seeking the factors that might be changed or rectified to develop an excellent payroll system. Preexisting theory will be used to identify factors that affect the effectiveness of a payment system. For instance, (Merrifield, 2013) states that to improve the payroll system the organization need to offer training and recruitment, involve the employees when making adjustments in the system, separating the payroll team, and using outsourcing. Therefore, these aspects will be investigated on whether small businesses have adopted these four factors effectively (Merrifield, 2013).
Research question
This part is important of the study, as it will determine the research methodology to be used. The study will be based on the following research questions:
As (Martin & Bridgmon, 2012) says it, research question acts as a pilot to any investigation. And the hypotheses are constructed using the research question. More importantly, the research design depends entirely on the formulated question.
The study will test the following hypotheses:
The research analysis will tend to approve or disapprove.
Two research designs can be used to answer the research question(s). The research methodology should focus on identifying the underlying theory about the topic in question. Variables and Hypothesis in this study will be important in developing the analysis as well as identifying the underlying statistics of the payroll system. The study will take a quantitative research approach, and the focus will be to achieve the set objectives (Creswell, 2013). The quantitative research design is ideal as it will collect quantifiable information about payroll system. The information is presented in numerical form and test of hypothesis is possible (Creswell, 2013).
This will be a descriptive and inferential research design since the main purpose is to understand the current payroll system, which can help this study make recommendations about the future of this system.
The primary population of interest in this research is the small business. The data will be collected from this sample frame about various aspects. The major concern about the data will be on the payroll system and whether it is efficient in meeting and sustain the business objectives.
A sample of 10 bookkeeping firms and five restaurants will be randomly selected. This sample will be sufficient in drawing inferences about the use of payroll system in the small business sector.
The data collection process is as vital as any part of the research since if distorted data are collected the conclusion will not show the actual reality. First, a sample of 10 bookkeeping institutions and five restaurants will be randomly selected in the city. This sampling technique is ideal as the selected sample displays the same characteristics as the population (Thompson, 2012). Furthermore, the sample will have properties that will allow different statistical techniques to be applied. That is, the data will presume a normal distribution.
The second step/phase that follows will be a face to face interview will be performed to the HR managers, different departmental managers, and the employees. The interviews will be recorded for preservation purposes. Survey questionnaires will also be administered to various people selected. The next step will be data processing. The SPA software will be used in the transformation of data into MS Excel Spreadsheet. Pre-data analysis will be performed to remove anomalies and ensure that there is consistency. The data will be ready for the main analysis phase.
This is the main part that will help in understanding the topic under investigation. Both descriptive and inferential analytics will be used in finding the fundamental aspect of the payroll system. Descriptive analysis will be carried out to display the measures of central tendency and spread or variation of the data variables. Measures like mean, and standard deviation will be reported to show how the data deviate from a central point. Furthermore, pictorial presentations like histogram and bar graph and box plot will be used for the same purpose. Some inferential statistics that will be performed include; ANOVA test, correlation analysis, and regression modeling. Statistics such as confidence interval will be used in identifying whether some coefficients are significant or not. The results will be written objectively, and with some degree of significance. The non-textual elements like charts and graph will help in understanding the results more clearly.
The research is expected to find a relationship between the use of payroll system and the satisfaction of the employees. Furthermore, the study expects to find a significant difference between the number of people using the payment system in their businesses and those that does not use the system. This is mainly because most of the businesses have adopted the new technology.
The core focus of the research will be the accuracy of the data since they will be used in drawing conclusions. The variables need to be error free. The researcher will simplify the problem statement so that each variable can be used to show or measure the effectiveness of the payroll system. In the research, payroll system will be dependent variable, and all the variables measuring the efficiency of the payroll system will be independent variable(s).
Conclusion
The research will be well structured with all evidence or citations provided. The error in the data collection, analysis, presentation and reporting need to be minimized. Testing the effectiveness of the payroll system in this research is crucial. The research at this point will give a summary of significant findings obtained in the analysis. The results will identify whether their system is effective and whether this fact is attributed to their rate of satisfaction. The results at this level will be given in simpler terms so that any person can understand easily. Non-statistical terms will be used to illustrate how this finding are important and what values they add in this field of research. The researcher will also provide a strong foundation for future study on the same topic. That is, it will provide a way forward to which other research can be used to explore more about payroll system.
Some of the limitations of this study are as follows. First, the research design used will be quantitative. The sampling frame will be small businesses, in which 10 bookkeeping businesses and five restaurants will be randomly selected. In that light, the sampling procedure used will be simple random sampling. Last but not least, the topic will exclusively measure the effectiveness of the payroll system in small businesses.
References
Barak, D. (2016). 7 Signs That Organizations Need to Improve Their Payroll Shared Service Centers. Retrieved October 07, 2016, from https://www.cloudpay.net/resources/7-signs-that-organizations-need-to-improve-their-payroll-shared-service-center
Bharati, P. & Chaudhury, A. “Current Status of Technology Adoption: Micro, Small and Medium Manufacturing Firms in Boston,” Communications of the acm
Burke, D. (2014). A Small Business Guide to Payroll.
Caruso, D. “Six Ways to Ensure an ERP Implementation Delivers Value,” Manufacturing Business Technology, 25:8, 2007.
Chau, P.Y.K. 2000“Factors Used in The Selection of Packaged Software in SmallBusinesses: –*-*Views of Owners and Managers,” Information & Management,
Creswell, J. W. (2013). Research design: Qualitative, quantitative, and mixed methods approaches. Sage publications.
Duan Y., Mullins, R. & Hamblin, D. 2012“Training for E-Commerce Success in SMEs,” In S. Burgess (Ed.), Managing Information Technology in Small
Feiler, E. “Evaluating Accounting Software Consultants,” CPA Journal, 70:6, 2000, pp.46-51
Greengard, S. (2003). 6 Strategies for Payroll Best Practices. Retrieved October 07, 2016, from https://businessfinancemag.com/technology/6-strategies-payroll-best-practices
Hanks, G. (n.d.). Payroll Gap Analysis. Retrieved October 08, 2016, from https://smallbusiness.chron.com/payroll-gap-analysis-80495.html
Kim, D., & Solomon, M. G. (2013). Fundamentals of information systems security. Jones & Bartlett Publishers.
Martin, W. E., & Bridgmon, K. D. (2012). Quantitative and statistical research methods: From hypothesis to results (Vol. 42). John Wiley & Sons.
Mitra, A., 2016. Fundamentals of quality control and improvement. John Wiley & Sons.
Singh, G. (2014). Implementation and Development of a Proposed Payroll System. International Journal of Research, 1(6), 954-965.
Thompson, S. K. (2012). Simple random sampling. Sampling, Third Edition, 9-37.
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