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Payroll systems are beneficial for any business, regardless of size, but many people incorrectly believe this software is only for big corporations. Whether you’re already considering a payroll system or have never thought about one before, this buyer’s guide will walk you through every step of buying a payroll system for your company. Join Matchr in getting the ultimate education in payroll systems.
A payroll system is designed to manage every aspect of paying employees and filing employment taxes. These systems can easily track hours, calculate wages — including overtime — withhold required taxes, print or deposit paychecks, and more.
A payroll system can usually function with minimal input from employers. When you first implement the system or add a new employee to it, you need to add basic details such as employee information, current wages, and hours worked.
Once the basic information is added to the system, the payroll software can be set to automatically calculate employee wages, including deducting tax withholdings, before distributing employee pay through checks or direct deposit. The payroll system works by minimizing the time-consuming tasks of manual payroll processing and decreasing the risk of error with automated processes.
The biggest reason that companies choose to use payroll software is the convenience. However, there are many other reasons why a company should use a payroll system.
A payroll system gives companies complete flexibility and control over payroll management. The system can automatically calculate employee wages on a preset calendar (weekly, bi-monthly, monthly) so your payroll management employees don’t have to do manual calculations. Once you set the system to your preferences, it can run on its own with minimal human intervention.
For any company that pays employees at an hourly rate, you need to know when and how long they are working to pay them accurately. Time and attendance tracking features also monitor time off, sick leaves, absences, overtime, and more. A payroll system that offers payroll management plus time and attendance tracking streamlines the process and makes payroll easier.
A good payroll system should have built-in tax reporting capabilities. This ensures you are properly withholding taxes for your employees and complying with all state and federal tax laws. Additionally, since tax laws are frequently changing, most payroll systems will automatically update to new tax laws and requirements when they arise.
A payroll system doesn’t just help with regular paychecks. You can also have expense, benefit, and bonus management included in the system. Any compensation-related benefits that your company offers can be handled through a payroll system.
There are common features that come standard with most payroll systems, and these are the features you should be looking for when you choose this software for your company. Do keep in mind that some features may be an additional cost from basic software but on the whole, these features are common for all types of payroll systems.
No matter if you have 50 employees or 500, a good payroll system can accommodate payroll processing for all of them. Unlimited payroll processing allows your HR department to run as many paychecks as they need without a cap or extra fees.
It is important to note that many payroll systems do charge per check or payment cycle. If you want or need unlimited payroll processing for your business, keep this in mind when choosing the best payroll software for your company.
With a payroll system, you gain the flexibility to pay your employees in different ways. These options include:
When you use a payroll system, it automatically calculates payroll taxes for you, including Social Security and Medicare. These taxes are a federal requirement and need to be correctly calculated for accuracy. A payroll system makes this process easier for your HR department.
At the end of the year, your HR department needs to compile tax forms for every employee. These forms include information such as gross and net earnings, tax withholdings, and company tax numbers. With a payroll system, you can automatically create these forms, which makes it easier and faster to get them to your employees.
A good payroll system includes a PTO management feature. With PTO management, you can easily add earned time off to your employees’ profiles as well as calculate how much PTO has been taken and how much is left. You also have the ability to approve or deny time-off requests within the payroll system.
The employee self-service feature gives employees more access to their HR information. This information includes payroll details, schedules, employment benefits, and more. Additionally, employees can update their personal information, banking details for direct deposit, and request time off. When a payroll system includes employee self-service options, HR departments don’t have to handle every interaction, freeing up their time for other company tasks.
The best payroll system is the ones that meet your company’s needs while staying within budget. However, the goal of a payroll system is to streamline payroll processes and make them easier for you. These are some functions that make a good payroll system.
A payroll system should make things easier for your HR department, employees, and the company as a whole. If the system is complicated to use or hard to navigate, it won’t be efficient for your business. The best payroll systems are easy to use for everyone.
As with any technology, problems can arise with payroll systems. However, a good payroll system has built-in tech support to resolve any problems that may happen. Your HR department already has enough to do with business-related tasks. They don’t need to be trouble-shooting a payroll system on top of everything else. Find a payroll system that has great tech support available.
Good payroll software should also have the option for document management. Documents are stored electronically within the software, keeping them secure and saving space in the office. Some documents that can be stored in a payroll system include:
The best payroll software offers all the functionality you need at a price you can afford. These systems need to work for all business types and sizes, so they need to be affordable for everyone. Don’t be afraid to compare multiple payroll systems to find one that fits your needs and your budget.
Payroll programs can — and should — offer PTO tracking capabilities. You can easily track how much PTO an employee has used and how much they have left at any time.
A payroll system should offer a general overview of payroll data, including your budget, taxes, workers’ compensation, and other information. Having this information makes it easier for HR professionals to better grasp trends and patterns within the company. The HR department can then work to improve operations based on the data they gain from these reports.
Many considerations go into choosing the best payroll software for your company. You should know what features you need, your budget for the software, and what factors will enhance your payroll processing procedure. Below are some considerations to think about when choosing a payroll system.
When choosing the best payroll system for your company, you need to think about the features you most need. Different things affect the features you may need, including:
Once you know which features work best for your company’s needs, you can pick the best payroll system for your company.
There are different types of payroll cost structures, depending on the base services and the additional features you choose. When you are comparing different payroll systems and the features they have, you can determine what you can afford based on what they offer.
There are other costs to consider, including:
If you need time and attendance tracking or a payroll system that integrates into your current HR software, look for a payroll system that offers these features. Does the payroll system fulfill these needs? If not, it’s not the payroll system you need.
A payroll system with an employee self-service feature gives employees more access to their HR information while lightening the workload for HR employees. Many companies prefer this feature to make HR processes easier and more efficient.
Are you currently manually managing time-off requests for your employees? Do you want an easier way to handle these requests? As you consider different payroll systems, look for one that offers time-off management to help you streamline the process.
There are federal reforms that require some companies to report new hires to state agencies. This is usually a manual process, but fast-growing companies find the constant reporting to be tiresome. You can find a payroll system that automatically reports this information for you, helping you avoid the manual effort.
Many people use payroll systems for various reasons. However, HR or accounting departments are the typical users of this type of software. This is because these departments usually handle all aspects of employee information, including wages and taxes, and need a system that streamlines the process.
Other payroll system users include:
There are six different types of payroll systems available on the market today: free, paid, in-house, outsourced, on-premise, and cloud-based SaaS. Each system type has its benefits to help you get the best payroll system for your company. Take a look at the options below.
Most free payroll software offers basic standard features such as automated payroll, automated taxes, and PTO tracking. Free options rarely — if ever — include additional features unless you pay for them, and may have restrictions for how often they can be used and for how many employees. While the software may be free, it will still cost your employees extra time to handle processes that the software doesn’t cover. Consider this carefully when considering a free payroll system.
Paid payroll systems are the more common option, especially for midsize and large companies. You pay for a system that automates a variety of payroll processing functions as well as additional features that make payroll easier for your company. With the paid option, you also have additional benefits, including payroll protection, streamlined services, and lower costs and time commitments for in-house HR departments.
An in-house payroll system is ideal for small businesses, usually with 10 employees or fewer. You can use basic payroll software to handle easy, straightforward payroll processes, especially when you have a dedicated employee to run the system. This employee can manage the system, answer questions for other employees, and deal with any potential problems that may arise.
The payroll employee must stay up-to-date on payroll tax laws, tax withholdings, and filing procedures as well as any staffing changes and company procedures. In-house payroll processing carries a lower security risk and may be less expensive than other processing options.
If you can’t use in-house payroll services due to your company size, outsourced payroll may be the right option for you. When you outsource payroll services, you are using a third-party company to handle administrative and compliance tasks surrounding employee payroll.
Many companies prefer payroll outsourcing since it saves time and money and ensures compliance without burdening HR departments with payroll tasks.
With an on-premise payroll system, the company is responsible for hosting the payroll software on its own servers. This option is ideal for companies with proficient IT teams as the software needs constant tweaking and operating surveillance, which can be overwhelming for smaller, less-experienced IT teams. If you choose an on-premise payroll system, be prepared for:
When companies use cloud-based SaaS payroll services, there are documents or software to download since it is all contained in a remote server. Cloud-based payroll options are a popular choice for many reasons, including:
Payroll system costs vary greatly depending on which type of plan you choose. As you research the right payroll system for your company’s needs, take notice of the payment options below to help you make the best decision.
If you choose a cloud-based payroll system, you will likely pay on a per month, per employee basis. With this option, you pay monthly to access the cloud with an added fee based on how many employees are using the system.
Typically, the monthly fee to access the cloud is relatively low, but the overall cost will vary depending on the cost per employee and how many employees you have. This is a popular option since it is easily scalable as a company changes and grows.
This is a monthly subscription plan where you pay for cloud access but can have an unlimited number of employees in the system. However, this plan generally has limited features and support. Smaller companies tend to choose the per month option if they have simple functionality and payroll needs.
For in-house or on-premise payroll solutions, a perpetual license payment may be the ideal solution. A perpetual license is a one-time payment that gives companies access to basic payroll software for life. This option is usually more expensive since you are paying for the entire software upfront, but it also allows for better customization and system integration.
There are other costs to consider, including:
One of the biggest advantages of using payroll software is the ability to automate standard payroll functions. The best payroll systems can automate almost everything, including:
There are many options you can choose from when it comes to payroll systems. However, the best payroll system meets your company’s needs to make payroll more efficient. Here are some recommendations for the best payroll systems available.
A payroll system is meant to make payroll processing easier, but finding the right software for your business can be difficult. At Matchr, we offer customized, hand-picked payroll system recommendations that fit your company’s needs. These solutions are tailored to how your company functions and allow you to connect with payroll system providers who make payroll processing simple.
To find the best payroll system for your company, use Matchr’s Software Match tool today.
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