As a business owner, you know payroll is one of your most important responsibilities. Not only do you have to make sure your employees are paid on time, but you also have to comply with federal and state regulations.
Choosing the right payroll software can be tricky as there are dozens of options available, each with their own features and price tag. So, how do you know which one is right for your business?
In this guide, we’ll help you navigate the world of payroll software and find the best solution for you and your budget. We’ll also discuss the benefits of cloud-based software and how to choose the best option for small businesses.
Payroll software automates the payroll process—that is, it helps you manage your employees’ wages and hours. It does this by tracking employees’ time worked, calculating their paychecks, and issuing payments.
Payroll software offers many benefits to business owners. Firstly, the software can calculate your payroll taxes accurately and on time. This is crucial, as mistakes can lead to costly fines from the IRS.
The software should also interface with your accounting software to easily track your expenses and revenue.
The biggest benefit, however, is automating the entire process, so you don’t have to either pay someone to do it manually or spend the time doing it yourself. While you pay for the payroll software, the ROI is huge because it saves you huge amounts of time. You will also save money since you don’t need to hire anyone for the job, and the software’s accuracy avoids those aforementioned costly mistakes.
What Are the Main Features of Payroll Software?
Of course, features differ from brand to brand, so check the features of each type of payroll software before making a purchase. And if you need something specific, be sure to ask the vendor if they can accommodate your needs.
When it comes to payroll software, one of the main things employees appreciate is convenience. With everything automatically tracked and updated, they know exactly how much money they will get paid each week—no surprises.
Plus, with everything being online-based, they can access their pay stubs and other information from any device, anywhere. This makes it easy for them to keep track of their finances, and since the software is always up-to-date, there are no nasty surprises regarding tax time.
Payroll software is an essential piece of business infrastructure, and choosing the right one for your needs and budget is important. Here are some things you should keep in mind as you make your decision.
First, consider the features you need, and then find software that matches your requirements.
Second, think about how much you’re willing to spend. Payroll software can be expensive, but there are options for businesses of all sizes. Some software is subscription-based, while others have one-time fees. Plus, you can always upgrade later down the line if you need more features.
Third, think about where you want your payroll software to live. Do you want it on your computer? On the cloud? Or both? Make sure the software you choose can work the way you want it to.
Finally, talk to other business owners and see what they’re using. Ask for recommendations, and see if there’s software that fits your needs and budget that nobody’s talked about yet.
ADP: Best for companies intending to grow and people on the move. It can be used via a phone app.
Paychex: Best for all business sizes. It can be expensive.
Flex: Best for scalability. Very affordable.
Roll: Best for small businesses. A more affordable version of ADP (same company).
Rippling: Best for non-technical people. Extremely user-friendly.
Xero: Best for cloud-based software. Lacks flexibility.
Gusto: Best for startups. Very cheap to run.
OnPay: Best all-rounder. Has many features.
QuickBooks: Best for integrating with other software. More expensive than other options.
Think about what features are important to you and your business. Are you looking for straightforward software that only deals with payroll, or do you want integrated options that also deal with HR, Training, and IT?
Cloud-based software should be high on your list of requirements as this will allow you to check your payroll system from anywhere in the world. Additionally, if you hire virtual accountants or staff, they will be able to easily access the software too.
Finally, integration with other accounting software is vital if you employ freelance accountants. Having the ability to send data across platforms is a huge convenience and prevents data from getting lost and mistakes happening.
While these are just general estimates, the average cost for payroll software is around $30 per month for the monthly base fee. On top of that, you can expect to pay from $4 to $8 per month per employee.
At the upper end of the scale, you’ll be looking at paying around $150 per month, plus $12 per employee per month.
Cloud-based software is vital for two main reasons. Firstly, as previously mentioned, you can access your data from anywhere. You can also share the data with whoever needs to see it. All you need to do is give them a login, and they can access it, no matter where they are.
Secondly, if you experience a power outage or your IT equipment is damaged or stolen, all your data will be safe in the cloud. Essentially, you’ll never lose it.
Employers need to make sure their payroll software is compliant with all the relevant regulations. These can differ slightly from state to state.
Usually, this is something that the software vendor will be able to help you with. They will have a good understanding of the requirements in your area and can work with you to make sure that your software is up to date.
It is not mandatory for businesses to purchase payroll software; however, the convenience and time-saving elements make it a worthwhile investment.
Think about it—paying your employees can be a lot of work. You have to keep track of their hours, make sure they’re getting the right pay rate, and submit all of that information to the government. Not to mention all of the tax paperwork! While you can do it manually, it’s better not to.
First, don’t try and switch to a new system when you’re in the middle of filing taxes or other important financial processes. The most convenient time to switch is at the end of the calendar year, as this is when things are most quiet.
Next, you need to gather all your payroll and employee information, including:
Your vendor will train you on how to upload all the information onto the new system. Once that’s done, go through it several times to ensure no mistakes have been made.
Finally, roll out a training program for all employees, so they know how to use it.
You want to make sure your employees are properly trained on the new system. This means taking the time to go over the basics and having them practice using the new software.
You can also hire a service to help with the transition. This will take some of the burdens off your shoulders and ensure that everything goes smoothly.
Have all the processes mapped out on training documents so if an employee can’t remember how to do something, all they need to do is refer to the documents and follow the steps to do what they need.
If you’re unsure what type of payroll software to go for or even how to deal with other financial aspects of your business, then it can be a great investment to hire an accountant or payroll expert. However, we know that such individuals come with high salaries, which may not be achievable for small businesses and startups.
In this case, hiring a virtual accountant or payroll professional is the perfect solution. You only pay for the services you need, so they are much more affordable than hiring someone full-time. By using cloud-based payroll software, your virtual financial assistant can access what they need to get the job done properly.
At Finvisor, we’ve become the go-to for businesses who need someone to take the reigns on their financials. We offer a full suite of financial support, including payroll, accountancy, bookkeeping, HR and employee benefits, and more.
*This blog does not constitute solicitation or provision of legal advice and does not establish an attorney-client relationship. This blog should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction.*