Best Payroll Software

In today’s digital world, there is a growing demand for solutions that helps in enhancing productivity and ensuring good return on investment by employing fewer resources. But at the same time, several companies do not wish to spend much money and time on a solution.

It can be time-consuming for businesses to stay updated with the regulations, calculate tax, and process payroll. To efficiently transform business operations, the technology of payroll software is needed.

With the help of payroll software, the businesses can save their valuable time as the payroll management system can manage all the calculations along with it and can reduce mathematical errors.

This buyer’s guide can assist readers in selecting the best available payroll software option for their needs. Before discussing that, let’s understand what payroll software is and how it can be helpful for the organization?

Payroll is the process undertaken by the company to manage the payment of the employees. The payroll process includes the distribution and calculation of paychecks to the employees. It also includes all the financial records for employee wages and salaries, withholding, deductions, bonuses, and employee paychecks. The payroll process records the total earnings of all employees for a company in a fiscal year.

The payroll programs can be separated into the following components for smooth functioning:

• Employee Information – Payroll includes a collection of information regarding medical insurance and W-4 forms (employee’s withholding allowance certificate). The form will have data like; the employee's social security number and their withholding amount for federal and state tax purposes.
• Gross wages- The total amount paid to the workers before any deductions are known as gross wages. It may include commissions, tax deductions, and bonuses. Typically, gross pay is employee’s salaries or wage figures. But, the take-home amount on the employee’s paycheck is lower after accounting for payroll deductions.
• Applicable taxes and deductions- Here, employers consider year-to-date annual earnings, wage levels, and tax allowances when summarizing applicable taxes. Payroll programs calculate deductions, which are made through pension plans, insurance plans, garnishments, and union dues. 
• Fringe benefits- Fringe benefits serves as the type of compensation that includes education assistance, health insurance, employee discounts, and retirement plans. All benefits are included in payroll programs, and some benefits are taxable too.
• Employee payroll records- The payroll service keeps employees' payroll records that include current pay rates, actual hours worked, overtime or double overtime worked, paid time off used, non-paid time off used, and tips received. 
• Social Security and Medicare- The payroll solutions keep records of the amount deducted as the employee’s portion of social security and Medicare payments from gross wages. 

The manual payroll approach is cumbersome and is highly challenging for the HR department and finance teams. A lot of time, hard work, and efforts are required to make the manual payroll processes successful. The challenges associated with maintaining a payroll program manually are as follows:

• Ineffective time records- The manual payroll process can create complications in tracking attendance and can even cause inaccurate recording of time. During data entry, any error or improper interpretations can result in underpaying or overpaying of an employee. The handwriting of the employee might be indecipherable. 

• Human Errors – The manual payroll process overburdens the human resource and finance departments with repetitive cross-checking tasks and documentation. These activities are highly prone to human error, which can result in incorrect and untimely payments. Moreover, there can be a wrong calculation of employee leaves, and employees can suffer from complicated salary structures that demand gross-up calculations.

• Taxation related issues – Manual calculations are complicated, time-consuming, and lack accuracy for calculating taxes and penalties. Organizations can suffer from penalties and inconvenience in addition to extra work due to incorrect tax calculations. The tax rules keep on changing with time-to-time, so manual payroll processes cannot be an efficient method. 

• Administrative issues- Much smaller types of businesses carry out their payroll process manually, which in turn creates an administrative burden for the business and HR staff. There can be payment issues and misapplication of rules due to errors in data entry. Hiring the additional staff to handle a growing manual process can create lots of administrative matters in the organization.

• Compromised information security- The manual payroll processing method fails to maintain privacy and does not guarantee data security that includes sensitive employee information (like address, bank account, and social security number). 

• Time and attendance- The manual payroll functioning can create significant errors and can take a lot of time in managing and calculating the manual leaves. It is tough to keep track of piles of documents consisting of the manual recording of attendance and time tracking of employees. Due to miscalculation, there can be lower employee satisfaction in an organization. 

To avoid all the payroll mentioned above problems and challenges, many businesses prefer to implement payroll management software that helps internal HR teams to work efficiently. 

Payroll software is an application that helps in managing, automating, and organizing employee payment. All size businesses can keep track of all payments and can maintain all payment records by employing payroll service. With an advanced payroll system, the management can monitor the time and attendance of the employees; can look after-tax information along with pay structure. 

The following must-have features of online payroll software help in accomplishing the numerous aspects of payroll:

• Direct deposit- Direct deposit is the critical functionality of the payroll app. It means that money is directly transferred from the company’s bank account to the employees’ bank accounts. This functionality is safer as there is no risk of losing a check in the mail. It is considered one of the most common and preferred methods of payroll payment. Direct deposit functionality keeps the digital record of every transaction for bookkeeping purposes. It serves as a reasonable solution that helps in the quick arrangement of funds. 

• Record –keeping- Payroll management software keeps detailed and accurate records that can be stored in the main database or other record-keeping facilities. This functionality enables to monitor how much overtime is being paid and how many employees participate in the company’s retirement plans. 

• Payroll Processing- The payroll system software can facilitate on-time payroll processing. Payroll processing helps manage the employees’ financial records, including salaries, wages, bonuses, and deductions. The payroll process allows for accurate payments to salaried, hourly, and contract workers, along with managing automatic benefits deductions and tax withholdings. The payroll processing is carried out with an easy-to-navigate interface for employees and employers. 

• Expense Management – The payroll software manages the expenses, deductions, loans, advances, and other types of employee costs with the help of expense management features. This functionality enters, tracks, and calculates the value of the employees. In some payroll systems, there is also a feature of loan ledger that keeps accounts for all approved employee loans. It can also handle reimbursement based on approved expenses.

• Tax Filing – The payroll system calculates the local, state, and federal taxes of the business with the help of tax filing functionality. The payroll software for small business can file the return and generate W-2 forms and 1099 forms (types used to report payments to independent contractors, rental property income, and income from interest and dividends) for the employees. For remote workforces, there can be multistate and multicountry tax filing options.

• Proper training and support- The payroll platform also comes with adequate training and support features. The staff member with little technical knowledge can use the payroll app easily if the proper training is provided to these staff members. The payroll program in which vendors provide both online and onsite training is an apt solution for staff members.

• Compliance Management – The payroll system comes with the compliance management feature in the background. Whenever law changes with any local, state, or federal employment, then compliance management functionality automatically updates the software to ensure that the time entries, payroll data, and tax returns are in line with the laws running in the specific area.

• High level of accuracy – The payroll software works as a neutral third party that helps record the working hours accurately when there is a need to outsource the payroll functions. The top payroll software system can accommodate the employees and their working hours correctly. The accuracy minimizes the possibility of human error. 

• Payroll reports- The payroll platform should be able to give payroll reports across several business areas, which in turn helps in gaining a more in-depth look regarding how the business operates. The payroll reports allow to view payroll across departments, see taxes, and benefit deductions, granular employee-level payment details, and company-level overviews.

• Leave management – The payroll solution enables employees to submit leave claims and monitor their leave balance. The managers can review the request of the employees and can notify the employees regarding approved or declined applications. This leave management functionality calculates accrued leaves for wage calculation.

• Extreme security – The payroll software has the functionality of database encryption to restrict the highly valued resources like tax files, employee personal details, and other types of payroll information. Several payroll systems come with password-protected and sensitive information. Security can save companies from fraud. 

• Compensation administration – The payroll management system holds the compensation administration feature that manages worker’s compensation, bonuses, cost of living, and adjustments for changes in the minimum wage. This feature provides an extra layer to the overall payroll strategy. 

Other required features of payroll software are as follows:

• Employee self-service site – The payroll management system has employee self-service site that helps employees to have easy access to their payslip and W2 forms (tax forms that show the amount of taxes withheld from the paycheck for the year)
• Integrates with the existing systems- Many of the payroll software for small businesses are capable of integrating with the company's existing systems, which includes accounting solutions, time –tracking, employee database, or HR system.
• Notifications- The payroll solution holds system notifications or alerts that help in notifying and alerting the users on a regular basis. Timely alerts help in completing several payroll-related tasks easily. Some payroll software for accountants also gets updated timely with tax law changes, especially at year-end which in turn helps ensure a smooth start to the new year and end of year tax filings.
• Scalable- The payroll system software should be highly scalable so that organization can run smoothly even when there is an increased workforce. 
• Payroll card- Some payroll programs provide payroll cards to the employees that give them the flexibility to receive paycheck funds through a preloaded debit card. This functionality serves as the best alternative to direct deposit. 
• Benefits and bonus management- The online payroll software manages benefits claims that include CBA (collective bargaining agreement), allowances, and other types of employee perks. 
• Data Conversion – The payroll management system should be able to maintain historical data. If the business is running on any other software solution, then payroll solution should be able to convert and migrate all crucial data into the new software. 
• Streamlining- The payroll system software should streamline the operations so that workers can effortlessly access the records with the help of the automatic generation of the payroll system. 
• Customization – The payroll system can customize every check and form with the help of customization functionality. The reports, screens, service fields, tables, and menus can be customized. 

Organizations can make things a whole lot easier by employing payroll management software. Here are the following reasons that explain why organizations need payroll software:

• Saves time- Businesses can save their valuable time with the help of the payroll app. Manual payroll processing takes a lot of time doing calculations. The payroll software performs all the calculations efficiently and reduces mathematical errors, which in turn helps save time.

• Avoid crucial mistakes – The proper payroll programming enables systematic management in the HR operations. There can be more opportunities in the businesses to interact with customers, bond with the employees, figure out marketing, and brainstorm new ideas with the help of payroll software.

• More affordable–The payroll management software for accountants can eliminate the need for an accountant or in-house employee committed to payroll operations. The businesses can save money spent on printing costs as everything is managed paperless. Moreover, some software packages guarantee the accuracy, so there can be fewer IRS (Internal Revenue Service). 

• Access to documentation – The online payroll software helps find vital records that include the information on a previous paycheck or any other specific report. The supervisors or managers can securely access and review the stored online payroll reports. 

• Meet deadlines – The payroll management software is better equipped to meet all deadlines that help direct deposits, payroll tax payments, and other necessities. Manual payroll systems lack this type of reliability. It is essential to meet deadlines as any missed deadlines can result in unwanted costs, penalties, and fines from the IRS.

• Data Security- The online payroll software helps protect personal information, including mailing addresses, dates of birth, bank details, and much more. The top payroll software can effectively secure the information without allowing anyone to access the information outside the organization. 

• No need for expertise- There is no need to have a background in payroll while using the payroll software. Without hiring a professional, the payroll task can be delegated to the employees who have no experience in payroll operations. As a result, small businesses can lower their costs.

• Employee Portal – The payroll software provides an employee portal that enables employees to access their pay and benefits records. The employees can have better access to information and can have efficient control over their work lives with the help of the payroll management system.

Other benefits of employing a payroll app are:

• Reliability- The payroll solution is authentic and highly accurate.
• Customer Support- Payroll software enables users to resolve any issues or problems with the help of customer support.
• Productivity- The payroll management system helps boost the morale of the employees when the salary is paid to the employees in a timely and accurate manner.
• Speed – The payroll management system can make the entire process of preparing payroll quick. With a single click of a button, the payroll solution can instantly prepare reports and statements.
• User-friendly interface- The top-quality payroll software is designed specifically for those users who have little to no experience handling payroll. The payroll management software is intuitive and user-friendly, which helps in relieving the anguish.
• Accurate calculations- The payroll software for small businesses help provide accurate predictions and comprehensive validation checks and procedures. The payroll software helps in delivering tax updates instantly.
• Multiple reports generation – The payroll management software helps in providing numerous reports that include reconciliation reports, ad-hoc and user-defined reports, reports under shops and establishment acts of various states, customizable payroll statements, salary register, and wage register. 

The payroll software helps in generating accurate payslips. With minimum efforts, it helps in calculating bonuses, expenses, and holidays pays. The payroll programs can automate specific tasks such as year-end reporting. It can reduce the burden of compliance and can remove the need to understand the complex tax legislation. The businesses can store data such as payslips and annual reports in a secure and easily accessible system. Several payroll software is accessible from mobile phones.

Businesses need to stay up-to-date with the latest trends in the payroll industry to remain one step ahead. The latest trends in the payroll industry are as follows:

• Cloud-based payroll solutions- The cloud-based payroll service enables users to look at the payroll mechanism from anywhere. The remote employees can handle the operations of the HR payroll system in real-time.

• Artificial Intelligence- AI has revolutionized the way people get paid and ensures the correct tax brackets. The AI-based chatbots assist employees by answering questions, resolving issues, completing transactions, and by serving as a helpdesk. 

• Better data security- The online payroll software that is GDPR (General data protection regulation) compliant helps in saving sensitive information related to wages, addresses, account numbers, and social security numbers. 

• Demand from the gig economy- The payroll software for small businesses can handle the temporary influx of workforce. Many entrepreneurs have started using temporary contractors instead of full-time employees. Payroll systems have the facility to accommodate such workers too.

• The idea of financial wellness – The financial wellness programs can be started by large corporations and small businesses that help in providing the employees with financial counseling so that these employees can make the right decisions with their money. 

• Payment frequency changes – As more and more gig workers are becoming part of the organization, the approach to payment is changing. Both for the organization and employee, the trend of instant cash has become accessible and secure. Now the method of bi-weekly or monthly payment models is changing in the companies.

• HR technology and payroll management- Business can experience efficient results by maintaining the balance between HR technology and payroll management. HR technology can make payroll operations more efficient.

The following points to be considered while purchasing the payroll management software are:

• Features and functionalities – Determine the vital functions, HR, and payroll needs of the organization. Outline the business's exact needs by bringing together leaders and end-users to discuss the current HR processes.

• Support and Customer Service – Ensure that the payroll system software should meet the expectations of customers. Before finalizing the payroll management software system, the buyer should make sure that the company’s customer and support service satisfies the required norms. Make sure that all the necessary support should be made available from the vendor.

• Database security/backup- Verify the vendor's reliability to the utmost before placing any purchase order for the payroll management software. Save yourself from future pitfalls by researching the providers’ security certificates and discovering specific and real information about the vendor. 

• Flexibility- Consider your organization’s current unique needs and its future potential before finalizing the payroll app. Check whether the new payroll solution is adaptable to your business requirement. Also, think about the scalability of the payroll management system. 

• Integration – Make sure that the payroll software that you pick is capable of integrating with other systems, which may include importing and exporting of information via excel sheets or can be from any other software.

• Cost of the software – Find out the price of payroll software along with extra or hidden charges. The more advanced features the payroll app has, the more costly it will likely be. Check whether the payroll software company offers a free trial or demo for the users.

• Mobile devices – Check whether the payroll software that you are planning to pick is mobile-friendly which in turn helps you in processing the payroll from various locations. 

Other essential points to be considered before finalizing the payroll management software:

• Simple workflow- Ensure that the payroll software can offer a consistent workflow to manage the activities like reconciling leaves, attendance, tracking, reviewing salary increments, bonus payments, employee exits, and approval of expenses.
• Ease-of-use- Make sure that the payroll software is easy-to-use. Even a non-technical person should be able to handle the payroll app easily.
• Search the reviews- You can get an idea for the payroll software company by going through the reviews on the company’s website or social media platform.
• Check the tech support- Check whether your chosen payroll system provides the technical support or not. 
•  Business needs- Consider the points like size of the business, number of workers in an organization, kind of workers- contractors or employees, and do employees have benefits from the chosen payroll system. 

The average cost of payroll software can be decided by considering the several crucial factors that are as follows:

• Size of the business 
• Features offered by payroll software
• Key elements of payroll management system software
• Whether the payroll software is cloud-based or not?
• Numbers of users and admins
• Type of interface 

If you are into a startup or associated with growing small organizations, you can have payroll software packages that offer basic features and, at the same time, affordable to buy. On the other side, large scale businesses prefer powerful features, so they go for advanced plans. As a result, the price of payroll software can be a bit costlier.

The cost of payroll software can start as low as $2 per month (for example, WebHR and SentricHR). It can reach as high as 79$ (for instance, Justworks). Along with these costs, there are some other charges associated with the vendors' payroll management software, which includes maintenance, support, and installation.

You can choose the option of free payroll software if you are into a small or start-up organization. If you are looking for the best payroll software, then you can explore the GoodFirms platform. HostBooks Accounting, Baraza HCM, TimeTrex, Kredily, HR.my, Employment Hero HR are all free payroll software that can serve as the best payroll system for your organization. 

GoodFirms platform is consistently growing in terms of listing top-notch quality software categories along with authenticated reviews. Based on the latest business trends, this platform believes in conducting rigorous research. 

If you are new to the payroll software field and looking for the best payroll for small business, then experts of Goodfirms can guide you by providing you the proper guidance of the payroll management software.

The best payroll software page of the GoodFirms platform provides insight into the popular payroll software along with their pricing, reviews, and core functionalities of payroll system software.