Choosing Payroll Software

Most companies, both large and small, already have some type of payroll system in place because any sort of mistake due to human error could be costly for a business. However, depending on the features of the tool and the size of the business, you might need an upgrade.

A good payroll system removes administrative overhead from your staff, alleviates compliance obstacles, and creates consistency and a process flow your employees can count on. Simply put: a good payroll system is worth the investment.

So, how do you choose the payroll software that’s perfect for your business? Here are some helpful tips and things to think about when making your selection:

1. Define your payroll needs.

Before you start looking into different payroll systems, you need to understand what your company needs in terms of features, costs, size, ease of use and durability.

First, let’s answer some questions about your company:

• How many employees do you have?

• Do you have seasonal or temporary employees?

• Do you offer benefits to your employees?

• What is your payroll budget?

• How often do you run payroll?

• Who currently runs your company’s payroll?

  • Do they have experience with payroll software?

• Do you need to print off payroll slips?

Answering these questions will help you determine what type of software you need and help eliminate tools that don’t suit your business needs.

2. Understand what you need this software to do.

The best payroll software does most of the heavy lifting for you and offers the features you need to keep payroll running smoothly and worry-free.

Some payroll software features to consider are:

• Basic to Advanced Payroll Functions. The main reason companies use a payroll software is to automate the process to pay your employees. Every payroll software will help you accomplish this, but you may also need the software to help you manage direct deposit and ensure you send money to the correct accounts, help you pay based on salary types if you have both hourly and salary employees, and garnishments.

• Managed Taxes. One of the most complex and time-consuming aspects of payroll, income tax filing, should be a key component of your payroll software. It should take care of multi-state filings, tax deposits and e-filing of tax forms without you having to manually trigger them.

• Compliance. The best payroll software will automatically download and install compliance updates as they are released. This is key to staying compliant, especially when rate tables change on a regular basis.

3. Determine your payroll budget.

No matter the size of the company you own or work for, the biggest decision to choosing a payroll software is budget. The final cost of the payroll software you choose will come down to functionality and how many employees you need to pay. Most payroll software companies charge you a base fee to use the program and then may charge you extra for additional features or for the number of employees you have.

Here's a breakdown of how cost is determined:

• Base Fee: Most payroll software companies charge a base fee for a yearly, or other time frame, subscription. Make sure to find out what features are included in this price.

• Taxes and Compliance: Some companies charge extra to support with taxes and other types of compliance, including fees for W-2 printing, mailing and reporting.

• Pay Runs: There will either be a base fee for how often payroll is administered or you will be charged based on the number of employees you have.

• Setup and Support: Depending on the software you choose and how intricate your setup is, you may need help implementing the software. Companies usually offer packages for additional support.

Taking the time to determine your company needs and the budget you have available will help make the process of choosing the right vendor and payroll solution easier.