Over the past few years, blockchain technology has hit the mainstream. Whether you’ve dabbled in Bitcoin investing or not, blockchain is likely to impact you in the near future.
So what exactly is blockchain technology … and how is it likely to impact on small business payroll?
What is Blockchain Technology?
Cryptocurrencies like bitcoin work because of the blockchain technology underpinning them. The blockchain is a shared ledger that instantly records all transactions. It instantly and transparently records everything, meaning there’s a permanent and secure digital record. Transactions can’t be hidden, misclassified, or falsified. There are some downsides to current blockchain technology, however, such as the environmental impact.
How Will Blockchain Technology Improve Small Business Payroll?
1. Long-Term, Digital, Secure Record of Payroll and Income
Have you ever lost a paystub or other important payroll document? While it’s possible to recreate these using a paystub maker, in the future, the blockchain will keep a long-term, digital, secure record of all payroll transactions. This will potentially make it quicker and easier to recover any lost details and recreate lost documents.
2. Track Pay Back as Far As You Want
With blockchain, both employers and employees can track what employees have been paid … all the way back to the first paycheck. If there’s a dispute about pay or if an employee believes they’ve been paid incorrectly, this can be quickly checked and—if necessarily—rectified. There’s no need to pore over years of finance records because everything’s recorded in the blockchain.
3. Clear Visibility on Tax and Pay
Blockchain technology can also help with visibility of payroll-related transactions. For instance, employers will be able to see how much tax they’re paying to the government. This could help quickly highlight any issues (e.g. not paying a certain tax—or paying too much). On the employee side of things, staff will be able to see the direct pay that they receive as well as any deductions.
4. Freelancers Can Accurately Track Their Income
Few freelance workers enjoy sending invoices, keeping their accounts up to date, and filing taxes. Blockchain technology can make the process more efficient and streamlined, with an automatic ledger recording all transactions that take place.
5. Governments Can Track What’s Owed
Blockchain ledgers are publicly available—so they’re not just for the benefit of the company and its employees. The government will also have full visibility of what’s been paid to them in taxes, as well as knowing what’s owed. This can help prevent fraud, both from employers and from independent contractors. It also means companies won’t need to be audited by the IRS, saving a lot of hassle and worry.
6. Microfinance Will Become Easier
The instant transaction model of blockchain means that microfinancing (low-value loans) will become increasingly viable and popular. This can help low-income individuals or groups improve their circumstances.
Blockchain technology is here to stay. While its effects on business may not be felt immediately, it’s likely that they’ll increasingly come into place over the next decade or two. This will make payroll and other accounting tasks much easier for small businesses, saving time and money.