Unless you plan on staying a single proprietor for the life of your business, you’re eventually going to hire employees. And that means managing payroll.
If you’re one of those merchants who hates dealing with the numbers side of running a business, then hearing “payroll” might make you want to run for cover. Understandable. Lucky for you, though, there’s technology out there that can significantly simplify payroll for you. In short, this payroll software for small business is an essential way to become more productive and add time back into your day.
If this sounds like music to your ears, then you’ll want to keep reading this post. We’ll show you how payroll software can help your business, cover the major features you’ll want to look for when selecting a vendor, and recommend a few options with think will work for your small business.
What is Payroll Software?
As you might be able to guess from its name, payroll software is software that makes it easier for you to run payroll each pay period, whether that’s weekly, bi-weekly, or monthly. Good payroll software should automate the tedious aspects of running payroll and help you store payroll records digitally, among other features.
Even if taking care of payroll is a pretty easy task for you, there are many reasons why you might still want payroll software. Running a small business isn’t simple, and savvy merchants know how vital it is to take advantage of every opportunity that’s presented to them. Payroll software is one such opportunity.
How Payroll Software Can Help Your Small Business
As we’ve been hinting at, there are various reasons why you might want payroll software. Let’s take a quick look at a few of them.
As an entrepreneur, time is your most valuable resource, and it’s always in short supply. Let’s say that running payroll takes you around 2 hours each week. What if you were able to cut it down 30 minutes? That works out to 6 hours saved each month and 72 hours saved in one year.
Just think about what you could do with that newly found time:
- Brainstorm innovative and more profitable marketing campaigns
- Negotiate more favorable relationships with suppliers/distributors
- Implement a new visual merchandising strategy
The list goes on.
SEE ALSO: 29 Time Management Tips For Retailers
Less Tedious Work
As the owner, it’s your responsibility to oversee the administrative side of running your business. That means dealing with paperwork, recordkeeping, accounting, filing taxes, and more. Sounds fun, doesn’t it? The good news is that payroll software can eliminate some of these headaches for you.
The right payroll software is going to make administrative tasks less tedious by:
- Automating digital payroll recordkeeping
- Helping you calculate quarterly and annual payroll taxes
- Automating the process of filing payroll taxes
- Ensuring you comply with the latest changes to payroll regulations and tax law
- Creating paychecks and payslips for your employees
With these benefits in mind, let’s look at some of the most significant features and qualities that you’ll want to consider when comparing different payroll software vendors.
Key Features of Payroll Software
We can talk about all of the reasons in the world to use payroll software, but if you select the wrong vendor when the time comes to make a purchase, then you’ll never benefit from them. With that in mind, let’s take a look at some of the key features your payroll software needs to include.
Like most of the tools you use to run your business, there’s table stakes functionality that your software must include for it to even be in the realm of consideration. For payroll software, this includes basic functionality like calculating gross and net pay, paying your team via direct deposit or paychecks, creating W2s, viewing payroll reports, and calculating taxes owed.
When evaluating a payroll system, ensure that it has the essential features before signing on any dotted lines. The best way to do this is to make a master list of all of the features you expect from a payroll solution. This can include anything from the basic functionality we just discussed to an advanced accounting integration or professional service component.
Once your list is built, divide the features into columns like “must-have” and “nice-to-have.” This helps you separate the deal-breakers from the things you can live without. When you’re talking to vendors, your goal should be to find one that includes everything in your must-have column at a price you’re willing to pay.
With the rapid technological advances of the last decade, it’s likely that your employees are far more comfortable with software than pen and paper. If that rings true for you, then we recommend looking for a solution that offers your employees a portal where they can manage their own account.
An employee portal allows your team to do things like setup or make changes to their direct deposit, change their tax withholding, view their work schedule, and request time off, among other tasks. It’s even possible that your software of choice might offer this functionality in the form of a mobile app, which is perfect for younger employees and workers that often use a smartphone as their primary computer.
As you can imagine payroll software is an essential part of your overall suite of business tools. Anything that involves paying your team and managing highly sensitive information requires careful evaluation. To that end, you’ll also want to look at how the software integrates with some of the tools you use to run your business. Consider payroll software that integrates with tools like:
- Cloud-based accounting software like QuickBooks or Xero
- Time tracking tools like Homebase or TSheets
- Expense management platforms like Xpensify
When investigating integrations, be sure to read the fine print and ask vendors follow up questions. What you want to find is a direct integration between the payroll software and the other tool. Some platforms will claim they integrate with other tools, but that process means that you need to export the data from one system as a CSV file and manually import it into the other one.
In theory, this sounds manageable, but it’s the kind of extra step that you’ll neglect on busy days and late nights. Instead, look for payroll software that integrates directly with the tools you have. With this kind of integration, the data is automatically synced between platforms, saving you time and effort.
Many employers and employees view payroll as a subset of a more substantial human resources (HR) function. In terms of payroll and compensation, this means benefits. If you’re a young business, it’s likely that you aren’t providing your employees with a comprehensive benefits package. But if you know that’s something you’d like to do eventually, then it’s worth looking at platforms that can help you deliver and manage different benefits packages for your employees. This could mean anything from basic health insurance to a 401(k) or workers’ compensation.
Some of the more modern payroll software solutions one-up the ability to offer employees access to benefits. These solutions include a complete benefits management solution built into them. This gives each employee a self-service way to manage their benefits. An employee can make changes to their healthcare during open enrollment, update contributions to their 401(k), and modify or access any other perks that you decide to offer to them.
As you’ve almost certainly realized by now, payroll isn’t something you can take lightly. You are, after all, dealing with the livelihoods of your employees. To that end, you might feel more comfortable having an experienced professional help you set up your initial payroll workflow. The good news is that full-service payroll platforms offer this as an included or add-on service.
Depending on your needs, you might pay for this service once to get your payroll up and running, or it could be an ongoing arrangement that deals with tax and other issues for you. Just be sure to weigh the cost of the service versus the time it takes you to set up and manage payroll on an ongoing basis. It could be more cost-effective for you to learn how to manage payroll yourself.
Point of Sale (POS) Integration
While we discussed integrations earlier in the post, we felt that an integration with a POS system warranted a full call out. Why? For businesses that have one, a point of sale system is often the central hub of their business. A POS does far more than run sales transactions. It also gives a business marketing capabilities, analytics, inventory management, and most important for this post, employee management tools. This makes the integration between payroll software and POS software more important than almost any other integration.
Most businesses with a POS use it as a timeclock replacement. Their employees clock-in and clock-out of each shift, with all of the shift data stored in the POS system. When you integrate your POS and payroll software, this shift data is sent to the payroll software automatically. This improves the accuracy of your payroll calculations. More accurate accounting ensures you pay your employees correctly and that you’re filing the right amount of taxes each quarter and year. This keeps your employees happy and allows you to avoid any costly tax penalties.
Cloud-Based Payroll Software
In addition to the actual capabilities of the software, savvy small businesses will also consider how the software is actually delivered to them by their vendor. Earlier in the post, we mentioned that your employees might be more comfortable accessing an employee self-service portal via their smartphone. How would you, as the person responsible for payroll management each pay period, like to access your payroll software? Is access from any computer important to you? Or would you rather it was only installed on one computer, which means you can only access information from the office?
We’re going to guess that just like your employees, you want some flexibility with your business tools, and that’s where cloud-based payroll software comes in. Just as it has with other types of software, the cloud and the software-as-a-service (SaaS) model are now the dominant way that vendors deliver payroll software to small businesses. This is all for a good reason. The capabilities of cloud-based software are transforming the way that businesses operate.
Access Tools From Anywhere
With cloud-based payroll software, you’ll be able to access your software from any computer or tablet, as long as you have an internet connection. This is very convenient when you want to wrap up a last bit of work from the comfort of your own home or if you need to take care of a significant issue (like an incorrect tax filing or accounting error) while you’re away on vacation.
More Powerful Features and Integrations
Cloud-based software is modern software. That means you’ll get powerful, cutting-edge features that outstrip older pieces of software. It’s also more likely that your POS software will integrate with the other tools you use (like a POS) because most of the popular software for small businesses is cloud-based as well.
Businesses typically pay for cloud-based software via a monthly subscription fee. Because the cost of the software is spread throughout the course of a year, it’s often more affordable than traditional on-premise software. A month-to-month fee also allows you to avoid a long-term contract that can quickly become an unwelcome burden for your business. You may even find that your preferred vendor offers a free trial, allowing you to test the software to see if it’s worth your time and money.
Recommended Payroll Software Vendors
Now that we’ve gone over the most significant benefits and features of payroll software, let’s look at some of the specific payroll systems that we recommend. Before we jump in, it’s important to note that all of our options are cloud-based. For small businesses, cloud-based SaaS platforms are the clear winner when it comes to balancing cost and value. With that said, let’s get started.
As a relative newcomer to the payroll scene, Gusto is out to shake up the market by delivering an extensive list of capabilities that make it a one-stop-shop for small businesses. Besides offering a comprehensive payroll solution, Gusto can also help you find and sign up for a complete benefits package for you and your employees. They also provide HR tools that can simplify onboarding new team members, and their professional services component can connect you with certified HR professionals for more complex HR tasks. Lastly, they feature a considerable number of integrations, significantly more than their competitors.
This payroll solution from Intuit, the makers of QuickBooks, is a robust option from one of the most trusted brands in the small business space. As with Gusto, you get a comprehensive payroll solution that can handle all of your major payroll tasks, along with a professional services component. The big difference between the services offered by Gusto and Intuit is that Gusto focuses on ongoing HR support across a broad scope of needs and Intuit’s have a very specific payroll focus.
There are also some significant benefits to choosing a tool in the Intuit ecosystem. For example, their experience creating TurboTax, enables them to calculate your payroll taxes automatically, and guarantee their accuracy. Additionally, no other payroll solution on the market offers a tighter integration with Intuit’s widely used QuickBooks accounting software. If you’re a heavy QuickBooks user, then this might be reason enough to choose Intuit for your payroll solution.
Last but not least in our list of recommended vendors is SurePayroll. Like Gusto and Intuit, SurePayroll checks all of the major boxes. It can handle all of your major payroll tasks, calculate and file payroll taxes, and pay workers via direct deposit or printed checks. One unique aspect of SurePayroll is their suite of mobile apps. Not only can you manage payroll with your app, but they have an employee app for viewing paychecks and checking on available sick or vacation days.
While it checks all of the major boxes, ultimately SurePayroll isn’t as fully featured as Gusto and Intuit. What it lacks in features it does make up for in ease of use and speed, claiming that a typical business owner can take care of payroll in minutes.
Payroll Vendor Pricing
For any of the vendors that we recommend below, you can expect to pay between $24 and $160 per month as your starting price points. Each offers a variety of pricing plans. With more features comes a higher monthly fee. Additionally, all of these vendors charge an additional monthly fee per employee. Based on our review of the payroll software landscape, this fee is commonplace. For our recommended solutions, you can expect to pay between $2 and $12 per employee per month.
Ultimately, selecting the right payroll software solution for your small business is a highly personal choice. You need to balance the right features against the amount you’re willing to pay. Only you know your unique needs today, as well as where you want to take your business in the coming years. With that in mind, we hope that this post has given you the information you need to properly evaluate the payroll software options available to you and pick the right one for your business.