{"id":495,"date":"2023-12-22T12:37:33","date_gmt":"2023-12-22T20:37:33","guid":{"rendered":"https:\/\/embedded.gusto.com\/blog\/?p=495"},"modified":"2024-01-02T09:43:13","modified_gmt":"2024-01-02T17:43:13","slug":"payroll-api-what-it-is-how-embedded-payroll-is-different","status":"publish","type":"post","link":"https:\/\/embedded.gusto.com\/blog\/payroll-api-what-it-is-how-embedded-payroll-is-different\/","title":{"rendered":"Payroll API – What it is & how Embedded Payroll is different"},"content":{"rendered":"

A brief introduction to Payroll APIs<\/span><\/h2>\n

A payroll API (application programming interface) is a set of protocols and tools that allows different software applications to connect and interact with payroll processing services. This interface enables the seamless integration of payroll data or functionality into other software applications or platforms for automated payroll management and visibility.<\/span><\/p>\n

There are two primary types of payroll APIs:<\/span><\/p>\n

Payroll data sync and API aggregators<\/b>: API aggregators usually offer read-only access to payroll data and are designed to pull data from multiple payroll providers in a standardized format. This type of API is typically used when payroll data are an input to another algorithm, e.x., credit underwriting, or when seeking to provide a user with visibility into payroll and withholding.<\/span><\/p>\n

Embedded payroll APIs<\/b>: These APIs go further by allowing SaaS developers to offer end-to-end payroll functionality within their applications. This means bringing gross & net pay calculations, tax filing, benefit deductions, and direct deposit of paychecks into a single platform from the user\u2019s perspective. Embedded payroll APIs, such as those offered by <\/span>Gusto Embedded<\/span><\/a>, power the payroll-specific functionality on the backend. This integration simplifies the payroll process and enriches the software’s value proposition by providing an all-encompassing, streamlined, and user-friendly payroll experience.<\/span><\/p>\n

Growing importance of payroll APIs in the digital era<\/span><\/h2>\n

\u201cThat’s what gets us so excited about additional tools like embedded payroll, it’s a further investment in the needs of our power users inside of our customers\u2019 stores\u2026 When we look at the impact [of increased usage], we see it in so many different ways. And it’s the most meaningful metric to track.\u201d – <\/span>Alexander Jekowsky<\/span><\/a>, CEO of <\/span>Cents<\/span><\/a>\u00a0<\/span><\/p>\n

While businesses have shifted more and more of their workflow to digital tools over time, 2020 saw a significant surge in businesses transitioning online. Government programs like the PPP further emphasized the importance of efficient and integrated software solutions. Payroll, an essential component for any business, wasn’t left behind. Modern-day small and medium businesses (SMBs) want fit-for-purpose yet user-friendly payroll solutions. Given the varying regulatory landscapes across regions, payroll APIs are pivotal in addressing these demands by offering customization, efficiency, and visibility.<\/span><\/p>\n

For instance, by selecting Gusto as their embedded payroll partner, <\/span>Chase Payment Solutions<\/span><\/a> aims to \u201cdecrease the time to offer a leading payroll service while increasing the value we\u2019re able to deliver to our customers,\u201d according to Jessica Young, Managing Director and Head of Product.\u00a0<\/span><\/p>\n

How SaaS companies using embedded solutions like Gusto Embedded are driving innovation<\/span><\/h2>\n

Embedded payroll solutions are <\/span>changing the way SMBs approach payroll<\/span><\/a>. By offering software developers the ability to incorporate payroll directly into their platforms, they’re simplifying the payroll process and adding valuable new functionality to their software offerings.\u00a0<\/span><\/p>\n

Embedded payroll platforms allow a wide range of digital products to take advantage of the payroll provider\u2019s specialized (and, in Gusto\u2019s case, extensive) experience in the domain to provide an array of features, from tax filing to employee benefits, all under one roof. The purpose of these integrations extends beyond compliance to improving the overall experience for both employees and employers.<\/span><\/p>\n

Payroll APIs 101: Integration vs. Embedded Solutions<\/span><\/h2>\n

Understanding the distinction between integrating a payroll API and utilizing an embedded payroll solution is crucial for digital platforms considering building payroll and HR functionality for their end customers.\u00a0<\/span><\/p>\n

Payroll integration<\/b><\/p>\n

API integration in the context of payroll typically refers to the process of linking a standalone payroll software (like Gusto) with other business systems, such as time & attendance and accounting software (more examples <\/span>here<\/span><\/a>). This integration is akin to connecting two independent pieces of software \u2014 each with its own functionality and user interface \u2014 so they can share data. The integration capabilities are limited to exchanging data, and from the user\u2019s perspective, payroll processing still occurs in the dedicated payroll system. API aggregators aim to provide these benefits with an \u2018integrate once\u2019 approach that provides access to data from multiple payroll providers.<\/span><\/p>\n

Embedded payroll solutions<\/b><\/p>\n

Embedded payroll solutions, on the other hand, go a step further. Rather than just linking two systems, embedded payroll directly incorporates the entire payroll functionality into another software platform. This approach means that users can manage payroll processes natively within the primary business application they are using without the need to switch between different systems. It’s similar to having messaging capabilities directly integrated into your phone’s operating system, allowing for a more seamless and integrated user experience. See the Gusto Embedded API docs <\/span>here<\/span><\/a>.<\/span><\/p>\n

Use cases for API integration<\/span><\/h2>\n