Paying the employees is the most complex element of a small business accounting, or any business, for that matter.
Choosing payroll software for your business can be a challenging decision since paying employees on time and accurately is imperative for both retaining and growing a high-functioning team.
Employee engagement is important, as workers have little to no tolerance for mistakes relating to their pay. In fact, 49% of employees will start hunting for a new job after two paycheck errors. That’s where the best payroll software comes to the stage!
Not only do you have to drive accurate payroll processing, you also have to think about the underlying calculations including taxes, benefits and everything in between.
There’s a wide array of payroll software available on the market. They range from free payroll apps with basic, barebones features to full-service payroll systems with various HR addons. How do you choose the best one?
We will answer that question, but first - let’s dive into the basics.
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What Is Payroll Software?
Payroll software is an internet-based technology that helps you manage your company’s payroll.
It has drastically shifted the traditional way in which companies approach paying their employees. Usually, payroll (read on for learning how to do payroll) was left in the hands of a company's HR or accounting departments. Doing everything manually was complex, time-consuming and deadline-driven.
Processing payroll manually comes with tons of details to track, especially if you’re trying to do it all on paper. As we’ve already mentioned, mistakes aren’t tolerated.
These departments would keep detailed records of every single employee, as they have to monitor the staff’s hours, write the workforce checks and ultimately, calculate and file the business’s taxes.
With so many tasks on their plate, it’s no wonder that more and more companies are switching over to payroll software to streamline the process for everyone involved. Not to mention that even the US Internal Revenue Service (IRS) deduced that outsourcing payroll duties is, and we quote, “a sound business decision”
Payroll software allows you to work within a system specially designed to ease the payroll process. You input the information on your company in one of these programs, including its finances and your employees’ information. By automating the process, you can quickly run your business’s payroll with just a few clicks on your payroll provider’s website or within its application.
Bottom line, it saves time that you can allocate to other core tasks involved in running your business. Software for payroll can also be seamlessly integrated with accounting and time tracking software.
How Does Online Payroll Software Work?
Payroll software provides a user-friendly UI to run your business’s payroll. After you first set up your account, you need to link your company’s banking info as well as employees’ bank accounts to your payroll software.
Once you input all of the necessary information you can easily run your payroll calendar and even automate the process. From the chosen payroll provider’s website and/or mobile app, you wrap up payroll processing with a couple of clicks and make sure your staff's salaries (and/or bonuses) are directly deposited into their bank account on selected payday.
According to the Getting Paid In America survey, more than 93% of respondents receive their pay through direct deposit.
Some of them offer step-by-step guides that help you pass through the time-consuming process of creating records for employees and supplying the information needed for withholding. Additionally, they also do all the necessary calculations and most of them submit your payroll taxes and filings to the appropriate agencies.
Additionally, the best payroll software can help you calculate and manage taxes. In fact, many providers include options to automatically file and pay your federal, state, and local taxes.
Key Benefits of Using Payroll Programs
The top three areas of improvement when business opts for a payroll program are compliance, process accuracy and integration.
Acquiring payroll software that automatically files your taxes is a smart decision for companies that lack an internal accounting team to manage business taxes. Most software providers guarantee accuracy and compliance, which means business owners can sleep soundly knowing that they won’t be required to pay additional penalties when tax season hits.
The main advantages of payroll software are:
- Quicker payroll calculations and deductions quicker
- Accurate payslip generation
- Bonuses, expenses, holiday pay calculations with minimum effort
- Year-end reporting and task automation
- Easily accessible data storage (annual reports, etc.)
- Personnel records storage
- Planning future costs
- Providing support with unemployment claims
- And more
Luckily, there are no major disadvantages. However, as is the case with any IT system, software for payroll can have certain weak points. To prevent issues such as data loss and/or theft, you should boost your cybersecurity efforts.
Other concerns with payroll software often arise around costs. Full-featured payroll management system will generally be more expensive than manual payroll systems. It requires robust computer equipment and internal systems, resources and skilled operators. If you don't have these in-house, you will need to invest money into producing them.
How Much Does Software For Payroll Cost?
Most international payroll software companies work on a monthly fee pricing structure plus a smaller additional fee per employee. For example, the average cost of payroll software is about $30 per month for the base fee and then around $4 to $8 per employee per month. Some of the more expensive plans start at $150 per month, plus $10 to $12 per person per month.
For businesses trying to cut costs, the initial step may be the biggest obstacle. However, the monthly cost of payroll software is worth it as it provides much more than payroll processing, saving you both time and money while avoiding costly tax errors.
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3 Best Payroll Software Providers For Any Business
Going back to our initial question – Which payroll software solution is the best?
Here are some of the best options on the market to consider:
It’s simple, Gusto offers the fullest package at an affordable price. This platform is ideal for small businesses, starting at just $45 a month with an added option for contractor-only businesses (no base price and a monthly fee of $6 per person).
Each Gusto plan comes with these features:
- Unlimited payroll runs
- Employee self-service options with lifetime access
- Health benefits administration
- Employee’ comp administration
- Live customer support
- Accounting, time tracking and other integrations
The Gusto Complete plan is a whole new ballpark. It has the same $39 base price but is an additional $12 per employee per month. The added features are:
- Next-day direct deposit option
- Time tracking and time off management
- Employee offers and onboarding
- Workers’ directory, org charts, and surveys
Gusto Concierge, the most-expensive plan costs $149 per month plus an additional $12 per employee with the added features of:
- Dedicated customer support
- Certified HR professionals
- HR resource center
OnPay offers a single plan with pricing readily available on their website. The cost is $36 per month plus $4 per person (first month is free).
OnPay is ideal for businesses that pay contractors or part-time employees because they’re only billed for the people actually paid during the month.
OnPay Payroll plan includes:
- Unlimited monthly payroll runs
- Tax filing and payments
- Direct deposit, debit card, or printed check
- Employee self-onboarding and lifetime account access
- Accounting and other software integrations
- Live support
- HR tools including state new hire reporting
- Health and dental benefits across the USA.
Patriot Software Payroll is ideal for small businesses (up to 100 employees). It comes in two versions and also offers a month-period free trial.
The Basic version costs $10 a month plus $4 per employee or contractor. All the standard payroll features are included, minus the payment and filing of payroll taxes:
- Payroll setup and support
- Unlimited payroll runs
- Direct deposit or the option to print checks
- Employee portal
- Workers’ comp, accounting and time management integrations
Another option is Full-Service payroll which includes payroll tax features ($30 per month plus $4 per employee and/or contractor):
- Federal, state, and local taxes filing and payment
- Guaranteed tax filing accuracy
How to Choose the Best Payroll Software for Your Business?
When deciding what payroll software is best for you, you need to consider the specific nature of your business and your requirements.
- What size is your business?
- How many employees do you have?
- Do your employees work full-time, part-time or hourly, per project?
- How often do you pay your employees?
- What is your budget?
- Who will manage your payroll calendar?
Having clear answers to these questions is imperative as they can determine which plans are ideal for your business specifically. Certain plans are designed to meet the needs of different-sized businesses.
You also need to consider the talent you employ. Employees that work hourly may dictate the need for time tracking integrations to easily monitor the hours your employees are being paid for. This, however, isn’t all that important for salaried workers.
If you work exclusively with contractors, you should probably opt for providers that offer contractor-specific options at discounted rates.
Finally, the number of employees will also affect the overall price of your payroll software. A monthly fee plus a per payee cost can quickly add up depending on the size of your company and should be factored in when deciding your payroll budget.
Alternatively, instead of opting for payroll software, you can always go for payroll service providers.
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