The Advantages of Cloud Payroll Software (And the Limitations You Should Know)

The Advantages of Cloud Payroll Software (And the Limitations You Should Know)

cloud payroll

Cloud-based payroll software can provide small to mid-sized companies with advantages central to efficiency, costs, and growth. As a result, many companies are opting for SaaS payroll systems rather than outsourcing these responsibilities or managing them in-house with dedicated accounting personnel.

While a cost and user-friendly payroll solution in the cloud can be highly advantageous to all types of companies looking to professionalize their payroll while keeping costs in check and efficiencies high, cloud systems do have some limitations you should know about as you make the decision on whether to make the move to a cloud system.

We’ll cover many of the cloud payroll pros you can expect to experience when adopting a new software and also point out some of the limitations you should know about in order to make the best decision for your company and payroll needs. 

Cloud Payroll Pros

Payroll software solutions offer a suite of tools designed to help you handle your payroll activities more efficiently by replacing manual (and error-prone) processes with streamlined systems you can automate. Using a payroll software system can also provide your business with these great benefits.

Minimal Upfront Investment and Reduced Costs

With payroll software in place, you’ll eliminate manual tracking and payments which will help your teams work more efficiently and save time processing payroll. This time can be reallocated to other areas of your business to drive even more productivity.

Various Payment Methods for Employees

Most payroll software solutions give you the ability to offer your employees a choice in how they receive their paycheck. You can save preferences in the system to make sure employees are paid using their preferred method each time.

Automated Payment Disbursement

In addition to offering various payment methods, you can also automate the payment disbursement process using payroll software. You can customize for hourly or salary employees and remove a lot of the manual work of calculating hours and paychecks using a payroll software.

Automatic Tax Calculations

Payroll software is designed to automatically apply tax deductions and track payments fluidly so all of your records are updated and ready for tax time, with as little hassle as possible.

Reduce Errors and Limit Liability

Because payroll software helps eliminate errors and automatically accounts for taxes and compliance, you’ll reduce your risk or error and limit your liability.

Insightful Reporting

Payroll software solution typically offer reporting tools that you can use to create reports from the data in your system, such as cost summaries and tax remittances.

Quick Implementation and Ease of Use

SaaS payroll solutions are incredibly quick and easy to implement. Usually within the course of a day or so, a company can have a payroll solution up and running and ready for immediate use. Payroll software systems are fully loaded with an array of different tools and features that companies can choose to use, and accessibility and use is typically very intuitive and user-friendly, even for employees who are not accounting professionals. 

Flexible Options and Advanced Features

Cloud-based software solutions are a continuing trend in business as they offer mobility and flexibility demanded by an ever more mobile business landscape. Payroll software is no exception. 

More businesses are choosing to embrace SaaS payroll solutions that provide convenient and mobile-accessible tools to support a business on the move. This also means that small companies can afford payroll systems much earlier than in the past, simply due to the lower cost and barrier to entry on a cloud software versus a more expensive on-premise system.

The core, must-have features of any payroll software solution include:

  • Payroll Processing
  • Payment Disbursement
  • Tax Calculations
  • Tax Filing Options
  • Compliance System
  • Self-Service Portal
  • Mobile Access
  • System Integration Capabilities
  • Calendar Integrations
  • Reporting

Limitations of Cloud Payroll to Know as You Plan

While there are numerous advantages to using a cloud payroll software in your business, there’s also some limitations that may impact your company. Understanding these things will help you choose the best system for your business, and know what you need to account for (or navigate around) when implementing a cloud system for payroll. 

Lack of Proprietary Customization Options

While many SaaS payroll systems provide you with options to customize and use the system as your company desires, the overall format for these vendors to market and monetize these types of solutions lies in keeping them fairly consistent and easy to host and support.

This means that while you’ll have access to all the most updated cloud payroll features available, there may be things that you cannot fully customize. The options provided by most SaaS payroll providers should encapsulate the needs of most companies, but if your company has some specific requirements or specifications needed in your payroll system, it’s a good idea to see how those things can (or cannot) be accommodated in a cloud-based system. 

Vendor Dependence

Cloud payroll systems are completely hosted and managed by the vendor, which means a reduction in costs and resources for your business. But it also means that your system and the ability to process payroll accurately and on time is completely dependent on the vendor having their system updated and working. Most providers offer SLA terms guaranteeing uptime and updates so that you know your solution will always work well when you need it, so it’s worth looking into the uptime and options your chosen payroll solution provider offers. 


Cloud-based software security is getting more robust with each iteration, and all cloud payroll vendors will have security features in place to protect your data. However, you need to stay savvy and make sure that your employees are always adhering to proper security protocols in your business and backup your data regularly to avoid any losses or instances of compromised data.

About Wheelhouse

Like what you just read? At Wheelhouse, we are passionate about all things software, and our specialty is connecting software buyers to a solution that perfectly matches their needs. 

Please visit our Payroll software page for a complete list of all the solutions we have on offer. Need more help? Drop us an e-mail at and we’ll be happy to assist you!