To pay your employees accurately and on time, you need a payroll system. A payroll database is an automated system that allows you to input employees’ payroll information and compensate them accordingly. The database may be a stand-alone system that enables only payroll operations, or an integrated system that enables related business functions.


A stand-alone payroll database is a single payroll application that you use to perform payroll tasks. This option may come in handy if you already have HR and accounting solutions in place. An effective stand-alone database gives you a complete range of services that allows you to fully manage your payroll activities. This includes new-hire reporting, wage and deduction calculations, check printing, direct deposit, wage garnishments, tax reporting and management, paycheck reconciliation, multiple company management, and electronic record-keeping.


An integrated database incorporates payroll with functions such as human resources and accounting. The system may integrate all three applications, or two out of the three, such as payroll and HR or payroll and accounting. For example, an integrated database with all three functions enables payroll, billing, human resources records, accounts receivable, accounts payable, general ledger, bank reconciliation, workers’ compensation and risk management, benefits administration, tax filing, and unemployment reporting.


In the database are tables that allow you to input information and execute your payroll duties. Tables depend on whether the database is an integrated or stand-alone unit. Payroll tables may include deductions, leaves, pay codes, payroll calendar, job class, bank code, department, earned income credit, and salary schedule. They also provide for federal, state, local and FICA taxes. Once your payroll database is established, you can add and update employee records. Data includes each employee’s name, address, birth date, Social Security number, pay rate, and withholding tax conditions, plus voluntary benefits, such as health care and retirement deduction amounts. You can also generate and print reports. For example, to create a payroll register, you would go to the report printing function and enter the pay period start and end dates. The system would then generate the paycheck data that relates to that time frame.


A payroll software company reviews your current payroll system, and designs and engineers a database that suits your needs. If you’re starting from scratch, the vendor might have integrated systems that are already designed. If you already have a system in place, the vendor can integrate what you need with your existing system. The vendor should offer a one-on-one custom experience, so the implementation is unique to your business. Regardless of whether the database is stand-alone or integrated, it should undergo testing before you use it to officially run your first payroll. This way, errors can be detected and resolved beforehand.


Through the use of user identification numbers and passwords, relevant employees can access the payroll database. Access should be restricted to the appropriate personnel. For example, if your human resources and payroll departments are separate, but they share the same database, the HR department should not have access to paycheck processing and the payroll department should not have access to benefits administration.