Payroll Software for Small Businesses: What to Know
It’s completely normal to have a love-hate relationship with payroll processing. You are not alone if payroll is one of the most challenging processes in operating your small business. Some would even say it’s the most time-consuming responsibility.
Depending on the size and profitability of your business, you likely fall into one of three buckets:
- Manage payroll yourself
- Outsource your payroll services to an outside provider
- Use a form of integrated payroll and HR software
There is nothing wrong with having payroll handled as an internal task. It only is problematic when processes become inefficient, software gets outdated, or if errors are a major concern.
Small businesses with dedicated HR managers tend to have a smaller error margin window because as professionals, they are experienced and aware of common pitfalls. When owners or general managers take on the task of payroll, their focus is already split among other operational functions. Being that stretched thin and having mental overload, you’ll face a greater risk of making errors. No matter who is managing your HR functions and payroll processing, there’s always going to be outside opinions telling you what to do.
Alternatives may be to try this outsourced provider or consider that certified payroll software. Trust your gut when it comes to determining which is the right decision for your business. If you are open to educating yourself about integrated payroll and HR software options, ask these questions.
What are the best software options to do payroll for small businesses?
Some are cloud-based or open source payroll for small business software. Top-rated ones for small businesses include Zenefits, Paycor, Gusto, Workday, Intuit, and more. Each is going to have its differentiating factors that make them different from their competitors.
Which certified payroll software features should I look for?
The HR software industry will continue to grow and will inundate the market. Before you become overwhelmed with all the popular platforms, limit your search. Narrow the results with criterion like these:
- Number of employees
- Need to track 401(k) and retirement plans
- Inclusion of health benefits
- Worker’s comp administrative features
- Employee-self-service (ESS) modules and limit of ESS profiles
- PTO tracking
- Auto-file and deposit state and/or federal taxes
- Filing W-2s and W-9s
The payroll software features that are most important to your company will become clearer to you as you pick and choose features. This will furthermore take you a step closer to finding the right payroll software for you.
Remember, the main responsibilities and importance of payroll software are getting accurate records and helping your company stay compliant. Meaning you don’t need to go with a version with all the bells and whistles if you’re not going to use all those features.
How much does the payroll software cost?
The biggest reason why small business owners are leery to try payroll software is the cost. With a narrowed pool of options in the earlier question, the cost may still have a wide spectrum.
Some of the criteria you selected earlier on will factor in affordability. For example, your total number of employees may place you in a lower price tier than a medium-sized business. If you do not need health benefits or retirement plan tracking, removing this feature could result in savings.
Here are some cost-focused parameters to watch for:
- Free Trials – Elect a free trial whenever possible to try the product before committing to a monthly or annual fee, even if you have limited access to the software features during the tryout timeframe
- Annual Fees – Paying once a year may have some savings that you’d miss out on if you’re paying for the software monthly
- Base Cost – The Fundera or business.org links in the first question featured some software options with a base fee, where extra fees can be tacked on depending on business needs
- Free Month(s) Upon Sign-up – Similar to free trials, this savings benefit lets you have full access to the software for a month or so just for signing up for a monthly or annual contract
- Third-Party Providers – Larger payroll software companies sometimes work out partnerships with select third-party providers like PayTech. These partnerships can result in cost-effective packages for you that would not be otherwise available.
What employee information is required for processing payroll?
All payroll processing programs need the same amount of core information. The initial start-up of using new software will be heavy data entry, but once it starts running, the amount of time you spend on HR duties will drop at a drastic rate. Here’s a quick checklist of what information you need from your employees:
- Employee name and address
- W-4 or W-9 with verified social security number and withholding selections
- Form I-9 (employment verification)
- Bank information for direct deposit (account number and routing number)
- Benefits selections for medical, dental, and/or vision insurance plans, retirement plans, HSA/FSA plans, and any other opt-in options available at your company
Outside of this information, the program will also want to know how employee timekeeping is being recorded. Paycheck distribution frequency is another item to tell the software.
For timekeeping, some software offers timeclock modules for easy coordination. It’s possible to sync your payroll software with some pre-existing modules. Those with outdated time clocks may need to invest in new timekeeping equipment. Newer technology also comes with employee self-service platforms for on-the-go employees.
Can I still process paychecks manually with an open source payroll software for small businesses?
Yes! You are not limited to outsourcing your HR functions or using outside providers for payroll needs. Open source payroll gives you full accessibility. You will also gain peace of mind because you will have full access to program support and other technical assistance when needed.
Say you or your HR manager need access to put in new information for payroll processing. You can do this without affecting your paycheck distribution schedule. Another way this software version is ideal is when you need to override certain information, like overtime entries or employment status and wage changes.
The HR market is full of payroll software to consider. Keep your must-haves close by, so you can narrow your search. Once you find the one meant for your small business, you can begin to operate at full steam ahead for autonomous and easy-to-operate HR functionality.
If you simply do not have the bandwidth to run in-house HR duties, there are payroll software providers who can run your paycheck processing for you. PayTech in Phoenix, AZ is a full-service payroll and HR support team that is ready to help. Send us a message or give us a call – 602-900-8807 – to start a conversation.