Online vs Offline Payroll Systems

April 16, 2024by Crystal Payroll

As a New Zealand business owner, managing payroll is an essential part of your operations. With the complex tax and payroll regulations in NZ, it’s important to have a reliable and efficient system in place. When it comes to payroll management, you have two main options: online or offline systems. In this blog post, we’ll explain the differences between these two types of payroll systems and help you determine which one is the best fit for your business.

What are Online and Offline Payroll Systems?

An online payroll system, also known as a cloud-based system, allows you to access and manage your payroll from anywhere with an internet connection. Your data is securely stored on remote servers, and updates are automatically applied to ensure compliance with the latest regulations.

An offline payroll system is installed locally on your computer or server. You are responsible for managing data storage, security, and updates manually.

Advantages and Disadvantages of Online and Offline Payroll Systems

Online Payroll Systems


  1. Cloud storage

Your data is securely stored online, eliminating the risk of data loss due to hardware failure or other issues. No additional storage is required on your devices.

  1. Seamless integrations

Many online payroll systems offer integrations and APIs that allow you to connect with other business systems. A payroll system that can integrate with human resources, accounting, or banking software will help with streamlining your processes. 

  1. Accessibility

With an internet connection, you can access your payroll from anywhere, using any device. This flexibility is particularly beneficial for businesses with remote employees or multiple locations.

  1. Employee self-service

Online systems often include employee self-service portals, allowing staff to enter their own hours and access payslips. This feature reduces the workload for managers and HR personnel.

  1. Collaboration with accountants

If you outsource your payroll, an online system makes it easy for both your accountant and your business to access the necessary information. As a business owner, you’ll be able to view financial reports through the online payroll software.

  1. Scalability

As your business grows and payroll needs change, online systems accommodate these changes through seamless updates and expanding features, ensuring ongoing compliance. With New Zealand payroll legislation going through constant changes, having automatic updates may save you from IRD fines and penalties.


  1. Internet dependency

Online payroll systems require a stable internet connection to function properly. If you often manage your business without an internet connection, using an online system may be difficult.

  1. Subscription costs

Most online payroll systems operate on a subscription model, which can be more expensive in the long run compared to a one-time purchase of an offline system.

Offline Payroll Systems


  1. Cost-effective

Offline systems often have a one-time cost, which can be more budget-friendly for small businesses.

  1. Self-managed security and storage

With an offline system, you have complete control over data security and storage, as everything is kept on your own servers or devices.

  1. No internet required

Offline systems don’t rely on an internet connection, making them suitable for businesses with limited or unreliable internet access.


  1. Manual updates

Offline systems are version-based, requiring manual downloads and installations of updates, which can be time-consuming and lead to compliance issues if not done regularly. This can put you at risk of fines or penalties if your payroll processes do not adhere to legislation laws.

  1. Limited accessibility

Offline systems can only be accessed from the device or server where they are installed, limiting flexibility for remote work or collaboration with external parties. Payroll data is also stored on their device, making it difficult to access your payroll data from anywhere else.

  1. Scalability challenges

As your business grows, offline systems may struggle to accommodate changing payroll needs without significant manual intervention.

  1. Lack of API integrations

Offline payroll systems typically do not support API integrations. This may make business processes more time consuming.

Choosing the Right Payroll System for Your Business

When deciding between an online or offline payroll system, you’ll need to consider factors such as the size of your business, your current business processes, and the cost vs. efficiency trade-offs.

Here’s a list of considerations before deciding on the right payroll system:

  1. Budget

Evaluate the long-term costs of subscription-based online systems versus the one-time cost of offline systems. When it comes to cost saving, also consider the risk of fines and penalties. You might save more initially with an offline system, but you’ll need to make sure you’re staying compliant to avoid those extra fees.

  1. Business size

Online systems are more suitable for growing businesses, while offline systems may suffice for small, stable companies. With a large number of employees, it’ll be increasingly beneficial to have the tools to allow employees to enter their own timesheet data and check reports on their own time. With online employee access, you’ll be able to foster transparency within the workplace.

  1. Accessibility

If remote work or collaboration with external parties is essential, an online system is the better choice. If you outsource your payroll, online access can allow your accountants to access your payroll software without needing to lock you out of direct access. However, if you handle payroll on your own and find that an internet connection isn’t frequently available then an offline payroll system may be more effective.

  1. Compliance

Online systems ensure automatic updates and compliance with the latest regulations, reducing the risk of penalties. With an offline system, you’ll need to make sure to stay up to date with installing updates.

  1. Integration with existing systems

Consider the software your business currently uses, such as accounting, banking, or HR systems. Choosing a payroll system that seamlessly integrates with these existing tools can save time and streamline your processes and data flow.

  1. IRD communication and compliance

Look for a payroll system that reliably communicates with the Inland Revenue Department (IRD). Crystal Payroll, for example, is an IRD intermediary, which means we have a direct line of communication with the IRD. This special status helps ensure your payroll is always compliant and in line with the latest IRD requirements, giving you peace of mind that your payroll provider can reliably act on behalf of you.

Why Choose an Online Payroll System?

In today’s fast-paced business environment and digital age, online payroll systems have emerged as the more efficient choice for modern businesses. Cloud-based solutions allow you to manage your payroll anytime, anywhere, using any device with an internet connection. With access to the internet being so widespread and available, it’s difficult to see how an offline desktop-based system can compare.

Online payroll systems also ensure compliance with the latest tax and payroll regulations through automatic updates and expert support. As your business grows, an online system scales with you,adapting to new payroll complexities and industry standards. Seamless integrations with other business tools, such as accounting and HR software, streamline processes and save valuable time.

Moreover, the enhanced security provided by cloud-based systems, with advanced encryption and regular backups, offers assured data safety. Your sensitive data is protected from hardware failures, theft, or loss.

For modern businesses seeking efficient payroll processes, the convenience, flexibility, scalability, and security offered by online payroll systems make them the preferred choice for businesses.

Crystal Payroll – NZ’s most feature-rich cloud payroll software

If you’re looking for a reliable and comprehensive online payroll solution, Crystal Payroll is an excellent choice. Crystal Payroll is a leading online, cloud-based payroll system designed specifically for New Zealand businesses. With Crystal Payroll, you can have all the benefits of an online payroll system plus:

  1. Competitive pricing

Our transparent and affordable pricing plans cater to businesses of all sizes. We offer four different service options to ensure you’re only paying for what you need. In addition, we have add-ons available so you can tailor your payroll system to suit your requirements.

  1. Local customer support

Our dedicated New Zealand-based support team is always ready to assist you with any questions or concerns. We’re easily reached through phone, email, or contact us with our contact form.

  1. Comprehensive features

Crystal Payroll offers a wide range of features suitable for businesses across various industries, ensuring a solution for your needs. We stay on top of NZ industries with unique payroll requirements too, like the horticultural industry and RSE seasonal workers.


In the complex world of New Zealand payroll, choosing the right system is crucial for the success and compliance of your business. While both online and offline payroll systems have their advantages, the clear choice for most businesses is an online, cloud-based solution like Crystal Payroll.

With its commitment to clarity, compliance, and customer satisfaction, Crystal Payroll offers a payroll management solution that can streamline your payroll processes, ensure compliance, and enjoy the peace of mind that comes with knowing your payroll is in expert hands. 

Experience the clarity and simplicity of our software firsthand, and discover why countless Kiwi businesses trust Crystal Payroll for their payroll needs. Don’t let complex payroll tasks hold you back any longer – book your demo today and take the first step towards payroll success!

Disclaimer: This blog post is intended for informational purposes and should not be considered as financial or legal advice. Always consult with professionals for tailored guidance.

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