Selecting payroll software for small business is not always easy. Do you hire a professional to do it, use your own accounting staff or do it yourself? Whether you are looking for free payroll software, best small business payroll software, or payroll programs for small business, consider these three options to determine the best fit for your business.
It can be hard to choose payroll software for small business. There are so many programs and different features, it all becomes very confusing. This guide should make it easier for you to decide by listing out the features of some great programs.
When your business’s payroll system is set up right, it’s actually a pleasure to use — not a burden. But for that to happen, your system should adapt to the unique need of your business and do the heavy lifting for you. That way, payroll takes minutes, not hours of your time.
So, how do you choose the payroll software that’s perfect for your business? Here are the criteria you need to think about when you make your selection.
1. Is this system a fit for your business?
Your payroll software should adapt to the unique needs of your business. You should never have to make decisions based on what your software can do. Look for these features to ensure your final choice is right for you.
- Specifically designed for small businesses. Every payroll software was designed for a specific size or type of business. Make sure you choose one that’s made for small- to medium-sized businesses.
- Serves your geo-area. Wherever your business operates, you need a software that’s compliant in that area. Make sure your payroll software is designed for the specific areas where you do business: your city, state or province and the country you operate in. And if you have employees in both the US and Canada, you need a software that’s compliant in both countries.
- Can scale with your business. As your business grows, your payroll software should grow with you. Choose one that’s flexible and scalable, so you can put your focus on growing your business, not setting up a new payroll system every few years.
- Simple, transparent pricing. Make sure there are no extra fees or contracts. Ideally, you should be able to figure out what your costs will be today with your current number of employees, and future costs as your company grows. If not, you may find a lot of hidden fees once you’re signed up.
- Customer service. Choose a software vendor that’s available to answer your questions and help you set up your new payroll software. Also, make sure there’s a knowledge base for quick reference when you need it.
2. Does it do what you need it to do?
The best payroll software does most of the heavy lifting for you. These are the features it needs to keep it running smoothly and worry-free.
- Cloud-based software. Payroll is key to your business’s operations. A cloud-based software will allow you to access and update your system anytime, from any device. If the software also provides a mobile app, all the better. That way you and your employees can easily access your data whenever you need it.
- Direct deposit. Eight out of 10 US workers are paid by direct deposit. It’s fast, convenient and reduces the possibility of fraud or lost checks. It also simplifies reconciliation and processing since the direct deposit statement gives you the total amount for each pay period.
- Integrates to create an HR workflow. Your entire payroll stack should work together seamlessly, allowing you to schedule workers, track their time on the job, run payroll and reconcile your accounting — all without a hitch. Before settling on one payroll software, make sure you can create a smooth workflow by integrating it with the other tools you depend on.
- Payment types. In addition to salaries, your payroll software needs to handle holiday pay, expense reimbursements, commissions, bonuses and other taxable benefits.
- Tax compliance. One of the most complex and time-consuming aspects of payroll, sales tax compliance should be a key component of your payroll software. It should take care of tax deposits and e-filing of tax forms without you having to manually trigger them.
- Stays compliant over time (without having to think about it). The best payroll software will automatically download and install updates as they are released. This is key to staying compliant, especially when rate tables change on a regular basis.
- Salary structure. You may have some salaried employees, others who are hourly and still others who are a mix. Make sure your payroll software can handle all types of salary structures.
- Deduction types. Every employee will choose a different mix of deductions — such as medical, dental, life insurance and retirement savings. Make sure you can specify all the deductions you offer, then assign them as applicable to your employees.
3. Will it save you time?
Payroll shouldn’t take hours of brain-numbing work. A good payroll software will save you time and effort — so you can get back to growing your business. Here are the time-saving features you need to look for.
- Simple onboarding and termination of employees. Setting up new employees should be quick and intuitive. You should be able to enter the basic details of their employment within a few minutes. Ideally, this data should sync with the other tools in your payroll stack, so you only have to enter the information once.
- Employee self-service. Employees shouldn’t have to check with you every time they want to review their paystubs or download a W-2. Your software should come with an app or online portal where employees can access their pay stubs, request time off or review their time on the job.
- Contractor payments. In addition to paying employees, your payroll software should be able to pay recurring salaries to contractors. Make sure it can handle 1099s and issue paychecks with no withholding amounts. That way everyone’s salaries will be paid at once.
- Off-cycle payroll. Sometimes you need to distribute bonuses or advances, perform final pay or make corrections. Before settling on any payroll software, verify it can handle your off-cycle payments too.
- Set-it-and-forget-it functionality. If your payroll process doesn’t change much and could all but run itself, your software should make that possible. Auto-approve features will let you set it to run whether you’re in the office or taking a well-earned day of vacation.
Benefits of Payroll Software
Small businesses generally have to function with fewer people performing multiple tasks compared to larger businesses. While it may seem like payroll would be easy to do with few employees, the reality is that payroll can still take hours and errors can cost a small business more than they‘re worth in penalties. Payroll software can help to mitigate these issues and can assist a new company with maintaining a reliable image.
Payroll Software Accuracy Guarantees Ease Worries
Most payroll software comes with accuracy guarantees that provide peace of mind. Payroll software is tested and audited regularly by experts, ensuring the highest degree of accuracy in compensation and tax filing. If there is a problem, the vendor will generally assist with correcting it.
Paycheck Options Fit Needs
Small businesses may operate better with direct deposit or with paper paychecks. Having the option to use direct deposit can prevent bottlenecks at the place of business on payday, but being able to run paper paychecks with just a few clicks can also be convenient. Payroll software vendors often provide options that allow employers or even employees to choose their preference.
Software Simplifies Tax Filing for Small Businesses
Tax filing can be tricky when it’s done manually. Payroll software comes standard with tax tables, automatic calculators, support for deductions, and customization options. These options make it easy to calculate taxes or have them calculated automatically, but they also help small businesses to make sure that key people are familiar with the requirements and guidelines.
Once taxes have been calculated, payroll software can help small businesses with filing and submitting required reports. This degree of assistance can save small business owners time and frustration while ensuring that taxes are filed correctly. Since everything can usually be submitted online, there’s also no messy paperwork to organize and contend with afterward.
Payroll Software Mobile Accessibility Improves Experience
Employees generally expect to have some kind of mobile access to their payroll records. Many small businesses don’t offer this option, however, so having payroll software that allows employees to view their own paychecks and information can improve their experience. This could serve as a competitive advantage when recruiting and keep existing employees more content.
Additionally, the user experience may be improved for the accountant, manager, human resources professional, or owner that’s responsible for doing payroll. Managerial mobile options allow payroll to be run from a mobile device so payroll never has to be done late because a meeting ran over or other outside obligations interfered.
Payroll Software May Be More Affordable
Payroll software may be more affordable than an accountant or third-party payroll company. Payroll software companies may charge a flat rate or per employee. This allows small businesses to select the structure and pricing that fits their needs and budget best.
Some small businesses don’t look into payroll software because they feel it will be too expensive or are unsure whether the time savings will be worth the investment. Payroll software for small businesses may be more affordable than expected, however, and may also exceed expectations for functionality and efficiency. Investigating payroll software is worthwhile for most small businesses.
Evaluate Business Needs
No two small businesses are the same. Therefore, each company benefits from different features that cater to the unique nature of the business. Customized small business payroll software has a significant impact on a company, allowing for simplicity and ease of payroll functions.
When evaluating a business for payroll needs, there are some general guidelines and “checkpoints” to take into account. Based on these standard considerations, companies can be sure they have found the best small business payroll software.
When choosing small business payroll software, companies should consider factors such as:
- The size of the company, which translates to the required time and resources
- The available budget that can be comfortably allocated to payroll processing
- Level of comfort and familiarity with regulatory and legal payroll considerations
What Payroll Software Features Do I Need?
Do I Need Direct Deposit?
Yes, you should offer your employees direct deposit – that is a deposit directly from your bank to theirs, electronically. Direct deposit has become a universal standard when it comes to payroll. According to the American Payroll Association’s Getting Paid In America survey, 93.87% of participants are currently paid using direct deposit. Employees want access to their money on payday and most people no longer go to the bank to cash their checks. However, if you’re interested in giving your employees options, many payroll providers offer hard copy paper checks as well as prepaid debit cards, referred to as paycards, for those who prefer a more traditional method of payment.
Do I Need Automated Tax Filing?
Most companies will prefer to go with a payroll provider that offers automated tax filing. Small businesses can especially benefit from this service because oftentimes a smaller business doesn’t have a tax expert on the team to ensure that everything is filed correctly. Taxes can be confusing and overwhelming, and limiting these types of challenges can ultimately mean more time spent focusing on your actual business. Therefore, the more a payroll software can help you with your taxes, the better.
The Internal Revenue Service (IRS) itself notes that “outsourcing payroll duties can be a sound business practice.” But it’s important to know your tax responsibilities. “The employer is ultimately responsible for the deposit and payment of federal tax liabilities.” If a third-party payroll company makes an error, it’s still the responsibility of the employer to make good on all penalties, liabilities, and unpaid taxes.
Do I Need Time Tracking?
Time tracking is a valuable payroll software feature, but may not be necessary for all businesses. If your employees are registering their hours with a time clock or at their computer, time tracking software is likely a payroll feature your business will want. Many payroll software have built-in time-tracking software or are compatible with third-party applications that can integrate and sync the data with your payroll system. Unless you want someone on your staff entering and re-entering worker hours by hand on a regular basis, it’s best to choose payroll software that offers an integration or application programming interface (API) with your time and attendance application. In fact, the American Payroll Association states that “organizations using a solution that has both timekeeping and payroll capabilities were 44% more likely to have a payroll error rate at 2% or less.”
However, time-tracking features may not be as important for your business, if all of your employees are salaried or don’t clock in and out to track their hours.
Do I Need to Integrate With Other Software?
Integrations are one of the best ways to get the most out of your payroll system. The very point of subscribing to a payroll service is to lighten the administrative burden of paying wages, filing taxes and W2s, and managing direct deposits. If you’re already using software for accounting, time tracking, or HR purposes, it’s best all the systems can be integrated to work together and save time on data entry, reporting, and analysis. Most payroll companies offer a variety of integrations and APIs for common business programs, such as JazzHR, Google Workspace, and Adobe. And many payroll providers make the process of integrating as easy as possible, even offering you the opportunity to link your business programs to their system during the setup period.
If you aren’t using software to do any of these business functions, a payroll system is the first step in organizing the wages and taxes you have to pay. While some systems only offer you payroll, others can provide you with add-on services to help build out your network of business software. And some providers also offer all-in-one platforms that can help you take on all your business needs under one company without the need to integrate third-party applications.
Do I Need a Mobile App?
A mobile app offers you flexibility and is one of the quickest and easiest ways to run payroll on the go. While some payroll providers offer mobile-optimized browser experiences that can easily be run on your tablet or smartphone, a mobile app gives you an easy interface to manage your payroll. You can access your payroll account simply by logging into your payroll provider’s website, but apps are convenient and efficient, allowing you to complete payroll with a few clicks.
Do I Need Customer Service?
Customer service is an important factor when choosing a payroll provider. Customer support gives you peace of mind and ensures you’re not left alone to try and solve a payroll problem. If something goes wrong with someone’s pay, there needs to be a fast resolution. Contacting your service should be effortless and problems should be resolved quickly.
With the range of payroll systems available, support options vary. Some offer priority support, in which certain tiers of service allow you to jump to the front of the customer-service line. Some even offer a dedicated support specialist to help solve issues. Many payroll services also have a method in place so your employees can contact support services directly if they experience a problem or have questions.
Other common customer support services include community forums (where users answer one another questions), training videos, or how-to guides that help address common issues your may face.
Conclusion
Payroll software is used to process payroll records for a variety of small business employers, ranging from final salary pension schemes, to businesses with employees on the minimum wage. There are many different types of payroll software available to choose from and they vary greatly in functionality and price. Finding free payroll software for small business may be possible depending on which country you are operating in.