Infowan HR
"In the digital age, an efficient HRMS is the backbone of a successful organization." -InfowanHR

Table of Contents
Why small businesses should shift to payroll HR software in India?
Employee Payroll Management in Small and Medium-Sized Businesses
Potential risk to SMEs? (Small and Medium-Sized Businesses)
Why cloud-based HRMS software?
How cloud HR software has improved the workplace?
What are the challenges faced by small businesses during the payroll process?

Dated: 20th July 2023
Reading time: 8 minutes
Why small businesses should shift to payroll HR software in India?
Employee Payroll Management in Small and Medium-Sized Businesses

Payroll management is a crucial aspect of running a successful business, regardless of its size. In small and medium-sized businesses, it is particularly important to manage employee payrolls efficiently to ensure smooth operations. This involves accurately calculating and processing employee salaries, taxes, and benefits, as well as keeping track of employee hours and attendance. Proper payroll management not only ensures compliance with legal and regulatory requirements but also helps maintain employee satisfaction and retention. Implementing a modern payroll system can simplify this process and save time and resources for small and medium-sized businesses.

According to a survey conducted by InfowanHR 80% of small businesses and 20% of medium businesses in India, manage employee payroll on spreadsheets and folders. Small medium-size enterprises have different IT requirements compared to large enterprises. As a result, they tend to have a less number of employees and operate with a smaller budget when it comes to spending money on human resources.

Potential risk to SMEs? (Small and Medium-Sized Businesses)

Even with limited funds and resources, small enterprises must efficiently optimize the human resource workflow. The HR chores or day-to-day tasks in the small enterprise may seem simple and straightforward. Still, a small miss in record-keeping and compliance can result in punitive penalties even lawsuits, due to non-compliance, high attrition leading to lack of sufficient talent, delay in production cycle due to insufficient staff, etc. Of course, no company wants to take such operational, financial, and reputational risks.

Why cloud-based HRMS software?

In today's world, keeping digital records in the cloud remains crucial. A well-structured payroll management software is essential as your business grows and you hire more employees in the longer run. Ultimately, it allows you to cut down on HR personnel costs by automating tasks that were previously handled manually. One can perform the same tasks more efficiently, saving on expenses associated with hiring additional HR staff. An cloud-based HRMS payroll system doesn't eliminate HR personnel job roles but rather reduces their bandwidth requirements for these tasks by 80% so that the remaining bandwidth can be allocated to other crucial business development or organizational and cultural growth.

How cloud HR software has improved the workplace? 1.   Reduce paperwork
2.   Real-time and accurate performance assessments
3.   Bring HR up to speed
4.   24/7 access to payroll stubs and compliance support
5.   Predictive analytics
6.   Improved security approach
7.   Cost-effective HR solutions
8.   Access to innovation
9.   Increase employee engagement
10. Quick deployment

What are the challenges faced by small businesses during the payroll process?

Small firms can manually process data with spreadsheets. Mistakes cannot be avoided, regulations cannot be kept up-to-date, and confidential data cannot be protected. HR Systems will automate payroll for growing organizations.

One may incur large fines and penalties if you fail to detect regulatory changes. A reliable payroll provider will update their clients with ever-changing regulations.

Any personnel processing employee payroll is dealing with highly sensitive data. Data breaches occur daily. Your business is at risk. Tight internal controls to protect sensitive pay-related information must be in place.

Undiagnosed overpayments and underpayments to employees can affect year-end accounting and necessitate time-consuming repairs the following year. Automated HR systems reduce human error in data entry and computation. To avoid financial strain.

Companies may hire full-time, part-time, temporary, and independent contractors. Misclassifying an employee as a contractor is detrimental to both the organization and the employee. Contractors don't get benefits or unemployment compensation. Misclassification may incur penalties; make sure you understand the rules.

SMBs have to employ qualified personnel to ensure that all payroll calculations comply with the most recent tax laws.

Employee data changes can disrupt payroll. If an employee's address isn't updated after moving to a different tax jurisdiction, tax withholding may be incorrect. Employee self-service payroll solutions reduce payroll staff responsibilities and allow employees to take charge.

It’s crucial to know how payroll affects profitability. For example: In order to cut employee overtime costs by 80%, how much staff would we need to increase? Making reporting easier can help businesses make better tactical and strategic decisions with the HR Payroll System


In conclusion, HRMS payroll software is an indispensable tool for small businesses. Its ability to ensure accuracy, save time and costs, improve compliance, enhance employee satisfaction, and provide valuable insights makes it a wise investment for any small business aiming for sustainable growth and success. Underestimating the value of payroll software could lead to operational inefficiencies, compliance risks, and hindered progress in an increasingly competitive market. As a result, many SMBs are now transitioning to digital payroll management systems or outsourcing payroll tasks to third-party providers for increased efficiency and accuracy.