Payroll is a record of money which an employer gives to his employee as remuneration for their work. Payroll management is associated with calculating and distributing paychecks to the employees based on rules and regulations. Payroll software helps in automating the payroll-related tasks.
Payroll software is a type of accounting software that handles your payroll activities. It can reduce payroll processing time and make your life easier. In this article, we will go through what is payroll, what is a payroll software and what you should look for when looking at the best free payroll software for small business.
What Are Payroll Services?
Payroll services is a term that includes the software and/or the outsourced parties used to process payroll for businesses. Typically, a payroll service will provide not only a way for you to process basic payroll, but you’ll get lots of extra features. These include a way to pay employees via direct deposit, integrations or built-in methods to record time, tax calculations and processing, and a way for you to issue year-end documents like W2s and 1099 forms to your employees.
Most small businesses will be satisfied with an all-in-one software solution that is affordable and can do most of the heavy lifting for you, especially if you don’t have an internal team of experts to process payroll on your behalf. This simplifies payroll without breaking the bank. There are also outsourced services, such as a personal employer organization (PEO), that will take care of all payroll activities but unless you have a significant amount of employees, they can be expensive or difficult to work with.
Square Payroll
If your graphic design company mostly employs freelancers or your construction business works exclusively with roofing contractors, you don’t need a full-fledged online payroll plan (much less a PEO). You need something simple like Square Payroll’s contractor plan, which has no base fee—instead, you pay just $5 a month per contractor. You can pause contractor payments anytime, which makes Square Payroll a good pick for employers who work mainly with seasonal workers.
Plus, Square Payroll syncs with the entire suite of Square products. Contractors can clock in and out using Square’s point of sale app, which then automatically syncs with Square Payroll to make running payroll a breeze. Square sends out 1099 forms to your contractors at the end of the year and files your 1099-MISC tax form with the IRS too.
Like Square, Gusto also offers a contractor-only plan with no monthly base fee. It’s a bit pricier at $6 per contractor per month, but it offers a few more HR perks than Square.
If you pay contractors and typical W-2 employees, Square Payroll offers a full-service plan with a $35-a-month base fee. However, while you can use it to easily and affordably pay contractors, that’s pretty much all you can do. For instance, you won’t get the in-depth reports and analysis you would with, say, Paychex. Then again, if you’re just paying contractors, you don’t necessarily need that much reporting: you need a cheap online payroll service, and that’s what you’ll get with Square.
Strengths
No monthly base fee for contractor plans
1099 tax-form filing
Automatic end-of-year 1099 filing
Weaknesses
One plan only (limited scalability)
Limited HR features
Sage
Sage takes payroll services a step further with Sage Payroll HCM, a cloud-based app that allows small- and medium-size businesses to do a lot more than just manage payroll. It’s a central hub for human resources, organizing and simplifying the process of hiring, onboarding, and retaining employees.
The career job portal allows businesses to manage all of their job postings from a single page and comes with a number of integrations allowing you to post open job descriptions to various sites at the same time. From there, you can easily search resumes and manage applicants as they navigate the hiring process.
When it comes to onboarding, the service allows employees to access your company’s policy manuals, facility maps, training videos, and more. Out of the box, Sage Payroll HCM comes with more than 20 standard reports ranging from job requisition details to EEO-1 and other compliance reports. There is no limit to the number of users who can access the system.
Pick the payroll service that matches up with what your business needs, and don’t be afraid to cancel if you’ve made a mistake and want something different. Also, it can be helpful to keep your own payroll records for posterity or in case something goes wrong.
SurePayroll
SurePayroll is designed for small business owners and includes a special version for those paying domestic staff. Best for small businesses with 10 employees or less, SurePayroll has worked to automate the entire payroll process, a major bonus for already overworked business owners.
SurePayroll offers direct deposit, new-employee reporting, and time and attendance tracking. The application also includes complete tax reporting and remittance, with a mobile app available for both iOS and Android devices.
An employee self-service option is also available, and SurePayroll also integrates with a wide variety of third-party applications.
SurePayroll offers an easily navigated payroll dashboard that provides access to all payroll features. The application has simplified the payroll entry process, minimizing the amount of data entry needed. An AutoPayroll option is also available for salaried employees.
SurePayroll offers two plans: Self-Service, which does not include tax reporting and filing, and Full Service, which includes a two-day payroll processing timeframe, along with access to HR resources and compliance posters.
The Self-Service plan runs $19.99/month plus a $4 per employee fee, while the Full-Service plan is $29.99/month, plus a $5 per employee fee.
Paycor
Paycor is designed for small to mid-size businesses, offering a payroll solution designed specifically for businesses paying 10 employees or less. Paycor offers a long list of payroll features, including direct deposit, an employee self-service option, and the ability to pay contractors.
Paycor includes a user-friendly dashboard that displays current payroll related information. Source: Paycor software.
A mobile app is included for both iOS and Android devices, and Paycor also includes complete tax reporting and remittance. HR resources are available in Paycor’s top two plans, and an onboarding feature is offered in the most expensive plan.
Paycor offers easy, intuitive navigation, with complete initial system configuration handled by Paycor. A pay grid is used to quickly enter payroll data, and you have the option to pay your employees by direct deposit, pay card, or check.
Paycor offers Small Business (one to 39 employees) and Mid-Market (40+ employees) bundles. The Small Business bundle offers three payroll plans: Basic, which starts at $99/month for up to 10 employees; Essential, which starts at $149/per month for up to 10 employees and includes HR capability and employee garnishment options; and Complete, which is $199/month and also includes HR templates, employee onboarding, and integration with third-party accounting applications.
If you have more than 10 employees, you’ll need to request a quote from Paycor.
Add-on modules such as Time & Labor Management, Employee Scheduling, Benefits Management, and Recruiting & Applicant Tracking are also available.
PayChex
Paychex also offers multiple payment methods, including direct deposit, paper checks and prepaid debit cards. Every payment method your business uses with Paychex can be branded, keeping your company top of mind for any suppliers or other parties you pay.
Paychex is a cloud-hosted system, so it’s accessible online. You can also use the Paychex mobile application to manage your payroll on any iOS or Android device. Using Paychex is as easy as entering your payroll information (such as salaries, hours worked and pay rates) and submitting the payroll for processing. Paychex also offers employee self-service, allowing your workers to log in to the system and see their own pay stubs and year-end tax documents.
September 2021: Paychex recently announced a new feature, Paychex Pre-Check, that allows employees to review their paystub prior to payday. Employees are notified on their communication channel of choice, such as their email, smartwatch or smart speakers, when their paystub is ready for review. This is designed to help ensure everything is accurate before checks are actually paid out.
June 2021: Paychex recently added a new labor cost tool to the Paychex Flex platform. The new tool gives users a quick and instantaneous look at their total payroll costs. Further, business owners and financial managers can see how events like future raises or overtime will impact overall workforce expenses.
May 2021: Paychex recently unveiled a self-service onboarding tool that allows new employees to quickly set up their payroll preferences. From the Paychex platform, new employees can easily sign up for direct deposit, complete their W-4 form, and digitally make any bank and tax selections they require.
Paychex offers multiple pricing plans that are suitable for businesses of various sizes and needs. Pricing for each plan is based on your specific needs.
- Go: The Go plan is the most basic, lowest-cost plan Paychex offers. It includes payroll processing and payroll tax preparation services, as well as time and attendance tracking and new-hire onboarding reports.
- Flex Select: The Flex Select plan expands on the offerings of the Go plan by adding access to a dedicated payroll specialist to advise your business. It also includes pre-employment screening, onboarding support, wage garnishment services, labor compliance poster kits, and the option to pay employees with paper checks.
- Flex Enterprise: Flex Enterprise adds custom analytics, custom reports and HR administration tools to the package. It is designed for larger organizations with sprawling HR departments, offering the most granular control over every aspect of your business’s HR administration. This gives large companies the ability to manage recruiting, hiring, onboarding, compensation, benefits, and offboarding all through Paychex’s HR platform.
Conclusion
Small business payroll is one of the most important financial functions that every small business has to complete. It can be quite complex to do it at first, especially if you’ve never done it before. There are numerous payroll operations involved in running payroll, which is why there are many software programs in the market that assists businesses in these areas.