How Does Payroll Software Work? | Blog | PaySauce

How Does Payroll Software Work?

by Laura Marwick

Nobody looks forward to the slow and tedious job of running pays. That’s probably why loads of small business owners are ditching their spreadsheets and workbooks for payroll software.

Payroll is basically the perfect task to take off people and hand over to software: it’s predictable and methodical, but also complex, dull and stressful. But before you open up a vital part of your business to some unfamiliar system, you probably want to understand how cloud payroll works. Here’s the beginner’s guide.

BEFORE: The Set-Up

The first step is getting all your employment information into your digital payroll. You’ll have to enter info about contracts, compensation, hours and leave entitlements for every person on your staff. Payroll software makes the same calculations as manual payroll, but a darn sight quicker and with no chance of human error. To get you started, PaySauce can import your employee details as a file from Microsoft Excel or your previous payroll system. You can also use our Employee Info form to collect the right details and then record it in our system. You only have to feed these details in once.

To be honest, set up is the toughest part. You have to get familiar with a new system, fill in a couple of forms, and enter all the payroll details. Your provider should offer a lot of resources and support to help you get confident. With PaySauce, you’ll have access to our How-To videos and our expert support team. Plus, our software has been built to be as user-friendly and straightforward as possible, with nothing hidden or cryptic.

You’ll definitely have to provide:

You might have to provide:

Most payroll providers will ask for all these details. If they don’t, that means that you’ll have to take care of payments and IR filing yourself. So while you might hesitate to hand over all that info, it’s going to make life a whole lot simpler in the long run.

If you want to make sure PaySauce is legit before giving us sensitive information, fair enough! Check out our customer testimonials, partner pages, or media coverage.

DURING: The Pay Run

Some providers will need you to enter or upload information for each pay run from a separate timesheet system. You can record hours manually or use timesheet software that integrates with your payroll software. Make sure your payroll provider will be compatible with however you want to record staff hours, manual or digital.

One of PaySauce’s features is digital timesheets available to employees via the mobile app. The hours entered into those timesheets come to you for approval, then feed directly into payroll calculations.

The pay run has three crucial components, all of which will land you in hot water if they’re missed.

  1. Shifting some cash into your employees’ bank accounts.
  2. Calculating tax (PAYE) and other government-mandated contributions (Kiwisaver, Student Loans, Child Support).
  3. Filing of details to Inland Revenue. Once you’ve calculated pays and all those deductions, IR needs to know about them. This used to happen monthly, but from April 2019, this has to happen each time you pay your people under the new “Payday Filing” rules.

A smart and thorough payroll system will sort all of these, and your only task will be the set-up.

Your software will work out how much needs to be paid in wages/salary, tax etc for each employee. It uses this data to build a pay slip, which should be automatically sent out to each employee. If you’re with PaySauce, we’ll also pay IR and staff straight from your bank account (with your authorisation). You’ll just need to give final approval to pull the trigger on the pay run, so that you can make sure that everything looks correct before any money goes to staff or government departments. Maybe you want to add a last minute bonus or correction.

Cloud-based payroll software is available anywhere through your internet connection. PaySauce is pretty special in that all our services are available from a mobile phone, while most providers have limited mobile functionalIty. So you can approve and run a pay from anywhere you want.

AFTER: The Upkeep

So once you’re up and running, what do you need to do to keep your payroll software ticking along? If your software is cloud-based, you won’t need to do any manual updates; they will arrive independently via the web and install automatically. This will keep you in line with any legislative changes, like Payday Filing or increases in the minimum wage.

You may want to add or remove staff members as your payroll changes and grows. This can be done as a ‘self-service’ job in your PaySauce profile, or give us a call and our service team will help out. You can also update info like pay rises or changes in the terms of a contract. All cloud based payroll is really easy to update and increase like this. One of the unique things about PaySauce, though, is that we’ll only charge you for what you actually use. So if you have 7 staff one pay period and 5 the next, you’ll be charged only for the people who are actually included in each pay run. Also, there are no sign-up fees or hidden costs.

Beyond Payroll

The payroll software market is pretty competitive, which has meant that a lot of providers have evolved to offer way more than just calculations and payments. Some will have the ability to generate reports, manage leave requests and approvals and issue automatic payslips. PaySauce has some special extra ingredients, like Pay Advance, allowing employees to draw down their own salary, software that will top up salaried staff to minimum wage during busy periods and a range of integrations like Xero and Cash Manager.


That should cover it - you’re now pretty well informed about taking your payroll online. We’ve tried to give you a balanced picture, though of course we think cloud payroll software is the only way to go. If you still have questions or you reckon PaySauce sounds pretty delicious, flick us a message or call us on 0800 746 701.

Share this page...
Posted on 5 February 2019

Laura Marwick
Marketing Communications & Engagement Manager

See what else we're talking about

Enlighten Me