How to Save Time by Switching to a Paperless Payroll

Paying your employees by paperless check can streamline your accounting workflow, saving time and money

Few elements of doing business are as high stakes as payroll. Research shows that as few as two payroll errors can cause 49% of workers to look for new employment. Those mistakes are shockingly easy to make when working with paper. There are simply too many chances for human error. Maintaining proper records, calculating pay appropriately, and sending it out on time to all employees is a mammoth task. And the bigger your business, the more time It requires.

Paperless payroll technology aims to change that. Paperless checks can be easier to send. Paperless pay stubs could be easier to store and organize. And the whole process could cost less than paper-based payroll. If you’re looking for a way to streamline your payroll, this may be the answer.

Adopting a paperless approach is an excellent way to futureproof your business. Read our complete guide to find out what you need to know before you get started.

What is paperless payroll?

In a paperless payroll system, the entire payroll process is digital. Employees use virtual time sheets to save working hours in the system. The system then calculates their pay and issues each a direct deposit that functions as a paperless check. Employers can automate this process to ensure it takes place at the right times. They can also create automatic payroll reports, provide paperless check stubs to employees, and send digital W-2s. These digital records may satisfy the Fair Labor Standards Act (FLSA) provided they’re kept for at least three years and satisfy any other requirements of the law. Businesses should also keep in mind any other applicable state or local laws or regulations that may apply.

Benefits of paperless payroll

Paperless payroll provides myriad benefits. For one, it can help reduce your business’s carbon footprint. Paper production and consumption place terrific strain on the environment. Paperless payroll can also help keep employees happy. After all, nothing boosts morale like a correct and timely paycheck. But the two primary benefits of paperless payroll can lie in savings. That can include both money and time.

Cost savings

Paper is expensive, and therefore, so are paper checks. Working with them also requires investing in many other resources and tools. Printer ink, toner, pens, staples, staplers, file folders, and file cabinets are just the tip of the iceberg. The materials themselves must be stored. When records have to be kept for years their storage can use up substantial square footage. That’s hardly a productive use of expensive commercial real estate.

Moving to paperless payroll provides an opportunity to cut down on these costs. Research by the Electronic Payments Association and the American Payroll Association shows businesses can save between $2.87 and $3.15 per pay run by sending each employee a paperless paycheck. They can add another $1.20 per pay run with paperless pay stubs. And because paperless checks can’t get lost, businesses can save another $8-$10 on each check that might have been lost.

Time savings

Traditional payroll may require several steps of work. For most businesses, it may generally mean going through the employees at the company and cutting each one a check. Those checks would then be placed in envelopes, addressed, stamped, and mailed. Some businesses could even have more to do, beginning with the payroll department collecting employee time cards. These cards would then be tallied up to find the total pay for the pay run. Either way, records must be kept for each paycheck sent to each employee. Taxes must be filed on each. And given the multiple steps involved, something could go wrong or be missed. For instance, pay totals can be miscalculated. Checks can get lost in the mail. Natural disasters can destroy records. These can lead to disgruntled employees, compliance lapses, and a host of other problems demanding more time to fix.

With paperless payroll, all of the necessary calculations and processing are automated and happen instantly. The system knows employee salaries and can send out the correct amount via direct deposit. For time card businesses, the payroll software can pull the info it needs, tabulate the totals (including tax considerations), and automatically dispatch direct deposits to their bank accounts. Forget worrying about timely payments or losing checks. Plus, digital records for every step are faster and easier to organize than physical ones. Paperless payroll software can generate these reports automatically.

How to implement paperless payroll

Legal checks

Different states have different laws around paperless payments. For instance, some may require employers to offer paper checks as a payment option. Others might mandate that employees have the ability to opt out of paperless pay stub delivery. States also may have various laws around the use of electronic funds transfer (EFT). Before switching to paperless payroll, check your state’s laws and local laws around these potential issues. If your employees work in different states, check those state and local laws as well. Each worker must be treated according to the laws of their state.

Establish an employee self-service (ESS) portal

Crucial to most paperless payroll initiatives is an employee self-service (ESS) model. Under this framework, employers create a website or online portal with information employees need. Chief among them will be pay info, but you can also include time cards, tax documents, and more on your platform. Many payroll providers include such a hub among their offerings. That can shift the lift off your team’s shoulders.

Once your portal is up, employees can fill in their W-4s, W-9s, and any other important tax documents. They can also supply contact information, provide banking information, and opt into direct deposit and paperless pay stubs. You may find it useful to offer training on the site. That will help ensure employees understand its purpose and use it correctly.

Implement automated direct deposit

With employee info in the system, your payroll department should be able to transfer funds directly from your business to employee bank accounts via direct deposit. If any employees don’t have bank accounts, you can give them pay cards. These are essentially reloadable debit cards you can use for direct deposit.

Your paperless payroll system should be able to automatically pay employees according to their time cards. You can schedule when those payments go out to ensure they’re on time. You can also create automatic email reports to help keep records up to date and facilitate future audits.

Our recommendation: fi-8040 and fi-8170

Those in the market for a paperless payroll solution have no shortage of options. We take great pride in having spent the last 50+ years researching, designing, and developing some of the most advanced and powerful electronics in the world, including our professional grade fi Series scanners.

Built to purpose for the most demanding document handling jobs, fi and SP scanners are capable of processing tens of thousands of pages per day at the highest levels of accuracy. Their intuitive integration capabilities with all existing work suites minimize time-to-value for businesses looking to invest in tools that will pay dividends for years to come.

The fi-8040’s compact build allows it to slot into even the smallest office, and its Manual Feed Mode gives it the flexibility to scan a wide variety of documents. This makes it ideal for bringing employees with paper documentation into a paperless system. With DirectScan, it can even send scanned materials directly to network folders. If you're in the market for even more horsepower, consider the fi-8170. It boasts many of the same features plus an even faster scanning speed. Click here to learn more or shop the rest of our production scanner line.

Note: Information and external links are provided for your convenience and for educational purposes only, and shall not be construed, or relied upon, as legal or financial advice. PFU America, Inc. makes no representations about the contents, features, or specifications on such third-party sites, software, and/or offerings (collectively “Third-Party Offerings”) and shall not be responsible for any loss or damage that may arise from your use of such Third-Party Offerings. Please consult with a licensed professional regarding your specific situation as regulations may be subject to change.