There are online calculators for most major financial transactions, including 401k, insurance benefits, and different types of payroll. Online payroll calculators, like the one we have on our website, are useful tools to use for general payroll calculations. They can help illustrate the payroll process and give a picture of the differences between states in the areas of withholdings and state and local taxes. Online payroll calculators are useful for manual payroll processes for very small payrolls, for budget planning, or other overview activities. But there are challenges to using them as well.
They are Static Tools
Online payroll calculators are static tools, useful for checking one paycheck entry for one employee at a time. They don’t create or maintain any history like employee payroll software or online payroll services. The calculators also don’t create the recordkeeping required for compliance with employment and tax law. The calculations they produce from general information aren’t meant for a permanent record, and there are no accumulating formulas to build a history.
They Don’t Perform the Entire Payroll Process
Online payroll calculators let the user enter general information for a paycheck calculation, but they don’t perform the entire payroll process. Calculators are not set up to handle multiple employees, create payroll records, calculate employer payroll taxes, or complete the payroll process. They usually don’t even have a field for hours worked entries.
They Don’t Create Legally Compliant Paycheck Stubs
While an online payroll calculator can give a picture of one employee transaction, it doesn’t create a legally compliant paycheck stub with all the required information. It can’t produce year-to-date figures because it doesn’t keep any history, and it doesn’t have any fields for specific identifying information such as social security number or employer federal identification number.
They Have a Limited Number of Data Fields
Online payroll calculators won’t have the entire range of payroll data fields required for accurate and compliant payroll processing. They may not even have the types of data fields you need for your payroll. For instance, your payroll may include deductions for 12 different types of benefits premiums, but an online payroll calculator is generally limited to a few deduction types. This isn’t sufficient to properly process an entire payroll.
The value of online payroll calculators is that they give the user the ability to quickly and easily calculate basic employee pay. They are a tool to use in a bind, outside of business hours, or to get general numbers, rather than a fully-functioning payroll processing tool. When used correctly, online payroll calculators can be a key tool for payroll, but users must be careful to not rely strictly on payroll calculators alone.
Contact us to learn how PAYDAY can bring your payroll beyond using just a payroll calculator.