6 reasons why spreadsheets aren’t ideal for doing payroll

Most businesses start small, and when they do, a spreadsheet is their first choice for managing their business operations with payroll being no exception. It’s inexpensive, it does basic math, and it’s comfortable to use.

However, things get a little complicated when the business grows in size. The employee base grows, and so does the payroll data. Suddenly, maintaining statutory compliance is a challenge, accuracy becomes difficult, and large data sets only make things even more complex. Here are important reasons why you should not depend on spreadsheets to do your payroll operations.

Spreadsheets amplify data complexity

Payroll is complex, and running payroll in Excel sheets makes it even more complicated. If you have a growing number of employees, there’s a lot of Ctrl+C, Ctrl+V involved, which can easily change formulas, misinterpret number formats, and take your accuracy for a toss.

Spreadsheets do not ensure automatic compliance

Spreadsheets are not versatile enough to maintain statutory compliance automatically. With little to no automation for computing taxes, you need to take the initiative to stay up to date on all the changes to the tax laws. The onus is on you to prepare accurate reports for filing tax returns every month, quarter, and year, which leaves your business vulnerable to non-compliance risks that result in hefty penalties.

Spreadsheets depend on manual operations

Spreadsheets don’t help you digitize your payroll operations. Even though you’re using a computer instead of a pen and paper, spreadsheets mean that your proof collection, salary slips, and other payroll processes still have to be done manually.

Spreadsheets leave you vulnerable to chance

Spreadsheets don’t protect your data integrity or prevent errors. Payroll data is entered manually, leaving the door open for mistakes. Since sheets are often shared with many people within the same department, inaccurate data is inevitable.

Spreadsheets cannot be integrated easily

Integrating spreadsheets with other business applications is difficult. As your payroll data grows, integrations with other applications are necessary if you want to avoid duplicate work for your HRs. Spreadsheets are dependent on intermediary applications for integrations, as they do not support direct integrations with other systems.

Spreadsheets’ collaboration capabilities are limited for payroll

Since your payroll department deals with sensitive numbers, you may need to share multiple spreadsheets to collect input from different teams. This makes compiling data tedious and difficult collaboration.