Using payroll software will save you time and money and likely keep you from making some very costly mistakes.
What is payroll software? Payroll software manages, organizes and automates employee payment. The software tracks all payments and maintains payment records. Payroll software varies in price and features and is used from small businesses to large corporations.
Payroll software is one of the essential platforms for a business. Employees need to be paid correctly and on time. Any error in this process can be fatal for your company in the form of penalties or fines by the IRS or government body.
What Are the Benefits of Using Payroll Software?
Running a small business is not easy. There are times when smart delegation and strategic decision-making can improve your business and allow you to get more done. Payroll management should be one of the first areas you automate. There are many advantages to using payroll software, including these benefits:
Make fewer mistakes
One of the most significant benefits of using payroll software is that it reduces the chances of making costly errors. If you make an error that affects your employees, it could lead to legal issues.
Let’s face it — payroll is tedious for those stuck doing it each month. A huge benefit of using payroll software means you can make their jobs easier, allowing them to focus on other essential business areas.
Skip the expert
If you use payroll software, you don’t need to have a background in payroll. This means you can delegate the payroll task to employees who have no experience, which removes the need to hire a pro.
What Factors Make a Good Payroll Software?
While searching for the best payroll software vendors, keep an eye out for the most critical payroll features. Most payroll providers have plenty of automation capabilities, but the following factors are the most important:
Factor #1: Payroll processing and management
Payroll processing and management is the most critical factor of any payroll system. A good platform will make sure every employee is compensated correctly via their preferred method of payment.
Factor #2: Direct deposit
Most prefer direct deposit. Direct deposit is a win-win for businesses and their employees. Businesses save both time and money by avoiding the printing and distribution of paychecks. At the same time, employees don’t have to worry about losing their checks or experiencing check fraud. It’s also better for the environment — less paper.
Factor #3: Good UI/UX design
Payroll software needs to have a user-friendly interface that makes it easy to use. Mobile-ready platforms are also critical.
Factor #4: Tax filing services
The best payroll software for small businesses provides tax filing features. Like any manual calculation, calculating tax takes time and has the potential for mistakes. To avoid any issues with federal, state, local, Social Security and other payroll taxes, it’s best to leave it to software.
Factor #5: Analytics and reporting
Analytics and reporting give you insights into your payroll processes. Payroll reports provide a detailed overview of your budget, taxes, workers’ compensation and other payroll data. These reports reveal trends and patterns that HR and accounting departments can use to improve their operations.
The Best Payroll Software
There are several intuitive payroll software solutions available to small businesses. They help to streamline activities and automate significant parts of payroll calculation. Small businesses rely on payroll software to automate monthly leave calculations, deductions and payments. This article covers five of the best payroll software companies for small businesses.
Gusto – Files payroll taxes in a snap
Gusto is consistently ranked as the best payroll software on the market. Gusto makes it easy to onboard, pay, insure and support your hardworking team.
One of the best things about Gusto is its payroll features. With just a few clicks, Gusto calculates and files your payroll taxes. From there, everything syncs automatically — time tracking, new hires, benefits plans and more.
One downside is that Gusto is not the cheapest payroll software. However, most of the more affordable options don’t offer the wide range of payroll and HR services that Gusto does.
Gusto is built for modern employers looking for easy-to-use, cloud-based HR software backed by expert support.
Gust offers month-to-month payment plans. There are no setup fees or penalties for canceling the service, either. This allows you to test the service for a couple of payroll runs and cancel for no charge if it isn’t meeting your needs. Plans start at $39 per month, plus $6 per employee. You can add services such as retirement savings plans or 529 college savings plans for an additional monthly charge.
Workful – Mobile friendly
Workful is one of our top picks for the best payroll software for small businesses due to its top-notch customer support and user-friendly mobile features.
Workful’s mobile phone clock-in option for hourly employees is easy to use. The time and attendance features are free, so employees can easily clock in and out from Workful’s app. The mobile app also allows your employees to update direct deposit information and submit expenses and mileage.
One con about Workful is that the software doesn’t file payroll taxes in all states and lacks some of the customization available on other platforms.
Workful is best suited for small businesses with 3 to 20 employees that want timesheets and payroll in one place.
Workful’s pricing is clearly stated on their website. The cost is $25 per month and $5 per employee per month. There is one price for everyone, and it includes payroll and time tracking features and employee tools.
OnPay – On-point user experience
OnPay is an excellent choice for payroll software. OnPay’s flexibility and depth make payroll processing understandable and fast. It’s a perfect choice for many small businesses as the user experience is top of the line.
The biggest plus to choosing OnPay is that it is a complete payroll solution, allowing managers to create detailed employee records and run unlimited payrolls each month. It also supplies multiple reports that can be easily modified and displayed.
A major drawback of OnPay is that the mobile app is missing some features and functions. This sets the platform behind some of its competitors.
OnPay is best for small businesses.
OnPay’s pricing is very clear. There is one price for everyone, which is $36 per month and $4 per employee per month. The website has a slide feature that quickly calculates your cost based on the number of people you employ.
QuickBooks Payroll – Lots of choices
We recommend QuickBooks Payroll as one of the best online payroll services for small businesses because of its flexibility and variety. The service offers many service plans at different prices, so businesses of any size and budget can find a plan to meet their needs.
One of the biggest pros to QuickBooks Payroll is that it integrates with QuickBooks’ accounting software, which many small businesses already use. Every time you run payroll, information such as check amounts, state and federal taxes and deductions automatically download into your QuickBooks accounting software.
Poor customer service reviews plague QuickBooks Payroll. Hold times can be very long, and users report a lack of online resources to solve problems.
QuickBooks Payroll is an excellent choice for smaller businesses. It helps 1.4 million businesses with payroll and filing taxes.
QuickBooks Payroll has 3 different service plans ranging from $45 per month, plus $4 per employee per month to $125 per month, plus $10 per employee per month. With each plan, you can get either 1 month free or a 50% discount for the first 3 months of service. You can also add QuickBooks Online accounting software, which will cost $25 and $150 per month.
Payroll4Free – It’s actually free (for the most part)
Payroll4Free is our pick for the best FREE payroll service on the market. However, you do have to do a bit of manual work, and you won’t be able to file payroll taxes or pay your employees via direct deposit unless you are willing to pay a low monthly fee. If you have a business with fewer than 25 employees, Payroll4Free is a step up from a pen-and-paper method of doing payroll.
It’s free to use for businesses under 25 people who do not require payroll tax filing or direct deposit.
Due to its low price, some drawbacks are that Payroll4Free has limited features, minimal integrations and a manual setup.
Payroll4Free is the best option for small businesses with less than 25 employees looking to automate certain aspects of their payroll process.
It is free to use Payroll4Free unless you have more than 25 employees or you want Payroll4Free to file your payroll taxes for you. Payroll tax filing costs $12.50 per month as a flat fee. If you’re going to pay your employees via direct deposit, that will be another $12.50 per month.
Grow Your Business, Not Your Stress Level
It’s clear that using payroll software will help small businesses to streamline their accounting processes and reduce costs. It can also help to massively reduce stress by removing the need to perform endless complex calculations all by yourself.
Implementing payroll software will free up time for you and your employees to focus on growing your business.