Best Payroll Software Systems
Buyer's Guide
Whether your business is large or small, having reliable payroll management is essential. Mitigate risks, save time on payroll tasks, manage employee benefits and conduct compensation operations with payroll software. In addition to simplifying your wage management, payroll systems protect your most valuable asset — your employees.
Managing payroll isn’t as simple as signing a check. Processing payroll means tracking hours, running reports and calculating wages. Payroll software helps factor in withholdings, instill flexible deposit types and stay tax compliant with an end-to-end employee wage system.
Are you looking to streamline your business operations and increase productivity? Payroll software makes a huge difference! In this buyer’s guide, we’ll go over what payroll software is, how it could help your business and ways to pick the best solution.
Executive Summary
- Payroll software is a system that encompasses payment, tax calculations and higher-level HR functions. Payroll tools help organizations adapt to new types of work, manage financial responsibilities and stay up to date on technology changes.
- The top payroll software features are data analysis, reporting, integration and compliance.
- The benefits of using payroll software include eliminating human error in payroll, setting flexible pay schedules, simplifying compensation management, adapting to new types of work, accommodating technological advances, improving compliance and enhancing communication.
- Key features of payroll software are core functionality, employee self-servicing, compensation management, payment options and tax filing assistance.
- Before committing to a purchase, be sure to ask potential vendors any questions you have about the software.
- What Is Payroll Software?
- Primary Benefits
- Implementation Goals
- Basic Features and Functionality
- Advanced Features & Functionality
- Current & Upcoming Trends
- Software Comparison Strategy
- Cost & Pricing Considerations
- The Best Payroll Software
- Questions To Ask Yourself
- Questions to Ask Vendors
- FAQs
- Next Steps
- Product Comparisons
- Additional Resources
What Is Payroll Software?
Payroll software is a system that helps alleviate stress for your HR team by automating compensation. Payroll software processes and manages salaries, bonuses, perks, time off and benefits.
It may stand independently or be part of a larger software suite. The functionality ranges from basic and only involve compensation or branch into HR and more advanced functions depending on your needs. Payroll solutions accommodate your current payroll needs, as well as scale up as your business grows.
No company is exactly alike — your business has specific needs and operates on different scales, but all industries share a need for reliable payroll software. Whether your company is a small, medium-sized, or large enterprise, you need a payroll provider to prevent errors, automate payments and assist you with all things payroll.
Your company encompasses multiple departments, from accounting to inventory management. With that in mind, your payroll solution needs a range of access for the departments under your umbrella. Most importantly, individuals need secure access to view paystubs, manage benefits and better control payments.
Primary Benefits
Check out the benefits of payroll software to better understand how a new payroll solution enhances your workflow.
Eliminate Payroll Errors
Payroll is no easy task and it’s often stressful even for the most experienced HR professionals. Set up automatic payments and get automatic tax deduction calculations, ensuring HR compliance with the law. Using a payroll solution lightens your manual workload, saving time and most importantly, eliminate human-errors in payroll.
Another way payroll software helps to eliminate errors is by enabling you to set up reminders for important tasks like submitting tax returns and making payments. This reduces the likelihood of missing deadlines that result in hefty penalties and fines. Also, integrate with your other systems like accounting software to automate your bookkeeping processes, eliminating the need for double-entry.
Set Flexible Payroll Schedules
Make scheduling your payroll easier, faster and more flexible. Employee management and payroll management go hand in hand. While most businesses opt for bi-weekly payments, it's okay if you need to conduct payroll scheduling a different way.
Sometimes different departments require different pay schedules, like full-time employees compared to freelance workers. Ensure everyone gets paid accurately and promptly by setting up pay schedules that work for your specific needs.
Simplify Compensation Management
Don’t wait until your employees are shouting “show me the money” to upgrade your compensation processes. Compensation management directly affects employee satisfaction and your retention rates. When employees get paid accurately and on time, they feel valued and motivated to work harder, leading to increased productivity.
Make managing expenses, bonuses, reimbursements and travel expenses a breeze. And the best part? Payroll tools ensure HR compliance by ensuring your company is adhering to local, state, and federal labor laws by accurately tracking overtime, benefits, and taxes.
Adapt to New Types of Work and Technological Advancements
Are you one of the many businesses that have had to shift to a remote or hybrid work environment due to the pandemic? You're not alone! The number of people working from home has tripled since 2019, making flexible working options the new norm. So, how can you keep track of hours and ensure accurate timesheets when your staff is scattered across various locations? The answer is simple — payroll software.
Payroll tools can help you facilitate a flexible work environment while maintaining productivity and keeping confidential data safe from unauthorized access. And with over 5.2 billion people using mobile devices as their primary way of accessing the web, it's crucial to ensure your employees have secure, mobile access to critical business information.
Don't let firewalls or location restrictions hinder your employees' productivity. With optimized mobile devices and access to internal documents from anywhere with reception, you can keep your team connected and engaged. And when it comes to compensation, eliminate the possibility of human error with automated payroll processes.
Stay ahead of the game and prioritize your employees' flexibility, convenience, and security with the help of payroll tools. Whether you're adapting to the current pandemic situation or looking for long-term solutions, let technology work for you.
Improve Compliance and Manage Taxes
Managing taxes is often confusing and overwhelming. Luckily, thanks to modern payroll software, the challenges of tax management can now be faced head-on with ease!
Payroll software provides support and updates on compliance mandates while aggregating multi-level policies. Not only that, but it can also automatically apply these policies, increase data accuracy, and reduce errors in data entry while eliminating the need for manual labor and piles of paperwork.
Payroll software is particularly useful for businesses that have limited manpower and want to process paychecks effectively. One of the most significant benefits of these programs is their ease of use, accessibility, and transparency.
Everyone from administrators and business development teams to employees can simultaneously access payroll software, which makes managing data, processing paychecks, and maintaining compliance all the more straightforward.
Ultimately, the implementation of payroll software leads to greater accountability. So, while tax season may remain stressful at least your payroll processing can be stress-free.
Enhance Communication
Gone are the days of bottlenecks and missed deadlines caused by a lack of communication. Stay connected, productive and on top of tasks with notifications and reminders.
Customization capabilities tailor your software to meet the specific needs of your industry. Keep tabs on important metrics, like HR compliance, with custom fields designed to track and report on these vital data points. Seamlessly add custom fields to help the process of remitting taxes, pulling reports and enrolling new employees.
Then, when you deploy the solution to your employees, the system is branded or white-labeled which is perfect for organizations with multiple branches.
Expert recommendations and analysis on the top software
Implementation Goals
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Goal 1 Ensure Proper Compensation |
At its core, payroll software processes payments and runs payroll. It also handles things like attendance tracking and salary rates, which are crucial for ensuring everyone gets paid what they deserve. From direct deposit to physical checks, you can choose the most suitable way to distribute compensation to your team. Ensuring HR compliance and payroll regulations, reduce your risk of running into any issues with your employees' pay. |
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Goal 2 Analyze Processes and Make Data-Driven Decisions |
Payroll software comes equipped with business intelligence tools that help HR managers make data-driven decisions. Collect real-time data and gain valuable insights to adjust salaries, bonuses and other pay-related decisions ultimately improving your company's bottom line. |
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Goal 3 View and Manage Employee Information |
Your employees’ availability isn’t set in stone, maybe they need to access information after hours. That’s where self-service capabilities are essential. With self-servce portals, employees have access to see their information without waiting on HR for assistance, saving time across the departments. |
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Goal 4 Manage Expenses |
Smoothly track, calculate and pay perks, per diems, benefits programs, resources, reimbursements and other monetary aspects. Simplifying this process by making expenses more transparent and traceable saves time and money, while also eliminating frustration. |
Expert recommendations and analysis on the top payroll processing software
Basic Features & Functionality
| Core Functionality and Employee Self Service |
It’s important to have a payroll system that’s relatively easy to learn. At the most basic level, users need to navigate registering, sign in to their portal and look over their information, preferably through a dashboard that’s easy to use. Depending on the complexity of your business needs, it may have many built-in modules to accommodate a multitude of requirements like onboarding, recruiting, ATS and knowledge management. Employee self-service also allows employees to modify any information that may impact their payment status. They can access important information and documents such as pay stubs and payment history. Through self-service portals employees may access their pay rates, rules and payment history. Having an intuitive UI makes a huge difference as well, because it simplifies the training process. |
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| Compensation Management |
Compensation processes facilitate a wide range of payment and compensation tasks. It covers the ins and outs of paying employees by automating and running the program. It accommodates multiple types of employees — full-time, part-time, contract and freelance workers — and different payment cycles, like weekly, biweekly or monthly. Get assistance with various expense reporting and managing perks like bonuses, reimbursements, moving costs, per diems, travel expenses and advances. |
| Payment Options |
Provide convenient options when it comes to paying your employees. Direct deposits are usually the best option, but companies should provide other options — like checks, invoices to the employees that prefer them. |
| Tax Filing |
Manage all the applicable taxes, ensuring correct calculations. Prefill forms for local, state and federal tax management purposes. Automatically process calculations while allowing users to override and perform calculations manually when needed. Some taxes and related functions include garnishments, employee taxes, deductions, charitable contributions, withholdings, benefits, reconciliations, 401(k) contributions, unemployment insurance, Medicare, Medicaid, social security, disability insurance and all other taxes. Tax capabilities store and handle the necessary forms and paperwork for new hires, contractors and full-time workers. Tax filing services include the 1099 and 1099-misc, 940, 941, 944, new hire paperwork, W-2 and W-4 forms and invoices. Print out the information for various months, quarters or year-to-date periods. |
| Benefits Management |
Manage insurance benefits with payroll software. Benefits management includes self-service features allow users to select and manage their medical, dental, vision and general life insurance. Track auto-deductions from a check for various other benefits, including 401(k)s and other retirement funds, workers’ compensation and continuing education dollars. Allow feedback from employees to provide an open dialog when it comes to employee benefits. |
| Leave Management |
The key to an efficient workplace is transparency and open communication when it comes to scheduling. Approve, request, track and calculate PTO. Administrators, leadership and workers alike can see the hours they’ve accrued, upcoming vacations and sick time. |
| Security |
Companies are nothing without secure data. Ensure a solution has the right firewalls, user roles, access levels and permissions to keep proprietary data safe. Check the physical location’s security and ensure that servers are locked away and only accessible by select staff. For network security, make sure you have encrypted data with SSL connections. Regular updates and constant information about incidents are especially important for organizations with sensitive data. |
| Mobile Capabilities and Compatibility |
Check financials on the go. Decide which services are most important, whether checking payments, creating invoices, approving runs or timesheets, carrying out payments, submitting and approving PTO requests, or the other important features that are helpful to have at your fingertips. |
Expert recommendations and analysis on the top payroll processing software
Advanced Features & Functionality
| Data Analysis |
Accurate data keeps track of labor costs and provides the information for compliance purposes, while also tracking and analyzing how different components change over time. Whether your business is on the smaller side or a larger enterprise, you need to be able to forecast future costs, budget accordingly and try to estimate how changes impact their bottom line. |
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| Reporting |
Reporting features compile data, often into a visual portrait of charts and graphs. Increase shareability with easy report exporting in various file formats and get faster access to data insights. Having insights projected live allows users to visualize data in real-time and understand new insights. Other important functionality includes viewing and sending benefits reports, leave summaries and salary statements. Track specific variables and send them between departments like HR and accounting to streamline workflows. |
| Integration |
Payroll systems require data collected by workforce management and time and attendance software and devices. Use integrations to connect your payroll software with your time tracking and approve timesheets faster. Using this data, the company tracks who worked where, for how long, at what rate, etc. This information is then transferred to the accounting department for processing payments and determining the total cost of running the business. HR or HCM may also use this data to manage compensation. Other important systems to consider before implementation and during integration include recruiting tools, an ATS, knowledge management — where asset management, worker records and forms must be stored — an ERP, other HR software, accounting, bookkeeping, performance management and talent management. |
| Compliance |
Compliance goes beyond applying the right taxes for each job and location. There are also lots of reports and documents that companies need to provide to all levels of government to comply with regulations. Get standard templates for the most common compliance documents and predefined reports for the same purpose. Automatically pull reports for compliance, send alerts and alarms as compliance deadlines approach or certifications empire, set deductions at the right level and make it easy for HR to complete compliance with national, international and industry-specific compliance. Track tax rules obsessively at the local, state and federal level, updating automatically when things change to reduce time spent hunting for answers by accounting. |
Expert recommendations and analysis on the top software
Current & Upcoming Trends
AI & Machine Learning
Say goodbye to answering simple questions about paychecks and hello to a more efficient workflow thanks to chatbots. Between automation and smart data integrations, AI-driven software makes a huge difference in payroll by freeing up the time for HR to focus on other tasks.
AI also has machine learning to make algorithms that analyze your data and detect any payroll inaccuracies. It’s ideal for businesses that scale quickly or are looking to expand internationally but don’t have an enormous staff.
Professional Employer Organization
If completely outsourcing HR sounds like a dream come true, you're not alone. The rise of Professional Employee Organizations (PEOs) has made it easier than ever to find outside experts who can handle everything from taxes to compliance and regulatory issues.
Let PEOs help you with setup, transitions, implementation, and ongoing support, leaving you to handle the more important aspects of your business. Trust us, your employees will thank you.
Remote and Work From Home Options
Since the pandemic, the demand for remote work continues to rise. With more people working out of the office, more payments need to be flexible worldwide.
Having employees scattered across the globe makes time tracking and payroll management suddenly feel like a mighty quest. Don’t worry! Ease tracking employee hours with modern methods like geotagging to ensure they’re in the right locations, more flexible scheduling software to see who’s online and better cloud technology to ensure data is private, secure and shareable.
Broader HR Functionality
Scaling is challenging when companies expand geographically or diversify their interests. That’s part of why payroll adapts to accommodate different types of work (temporary, unionized, etc.) and broader HR functionality such as time tracking.
Growing companies need to decide should they choose a stand-alone option or invest in a software suite with HR management software?
If a company chooses an isolated system, it’s important to ensure that it integrates with other necessary programs, whetheran ERP, performance management, recruiting and hiring, or any other type of solution. Having a system with an open API is essential in this case.
It’s also important to consider capabilities that add value to the staff, like benefits management, financial wellness, training and upskilling. It's like building a house - having all the necessary components such as walls, windows, and doors is essential, but having additional features like a deck, a garden, and a pool can really make the house stand out and make it more enjoyable for those living in it. Linking these HR functions makes navigating a system with a wealth of resources is easier.
Expert recommendations and analysis on the top software
Software Comparison Strategy
Just like there are different payment methods, there are different payroll solutions to choose from. On the outside, it may seem like any option would get the job done, but it's important to consider what payroll software works best for your business specifically.
A great starting point is thinking about what your business needs most. How many employees will use your payroll software platform? How much time can you provide for training? Another major determining factor is looking at what your current payroll process is lacking. Noting what's missing is the best way to ensure a new payroll software can help bridge shortcomings.
When comparing software options take time to research vendors too. Excellent resources for evaluating vendors include online reviews, industry guides and recommendations from peers. Some vendors offer free trials, allowing you to experience the platform before fully committing.
Lastly, cover all your bases by checking out our Lean Selection methodology.
Cost & Pricing Considerations
Generally, there's either a yearly or monthly subscription fee or in some cases, a one-time upfront cost for payroll software. The price of most plans depends on the number of employees using it.
Additional contributing factors for your final cost are data migration and if you opt for any customization.
Does the capacity match your organization’s size? Some products are better suited for small businesses, and others work best for enterprise solutions. Free trials are a great way to try before you buy. Consider the time it’s currently taking employees to process payroll. Sometimes these savings alone might make adopting a system or switching to a new one worth it.
Most importantly, know the industry standards, so you have a general idea of how much things should cost. When comparing payroll providers making bullet point lists is a great organized way of contrasting information. Check out our pricing guide for more details.
See prices for the top Payroll Management Systems... Plus get important questions to ask.
The Best Payroll Software
Save the best for first. Check out our leaderboard, calculated by our research team, for our top-rated payroll processing software. Only you can decide if they meet your needs, but it at least gives you an idea of the industry standard.
Paylocity
Paylocity is a task, data and payroll lifecycle management tool. Collect, secure, and store data with encryptions and real-time backups. It offers notification capabilities, engagement tools and training resources. Streamline workflows and automate simple tasks for enhanced productivity. Integrate with third-party programs for extended platform functionality.
Paylocity Payment Dashboard.
Paychex
Manage various HR tasks, including employee benefits, hiring and consulting in one hub with Paychex. It is a cloud-based program that offers 24-hour support for expediting inquiry processing. Improve data transparency by communicating information across multiple channels. Utilize various time and attendance capabilities like physical time and recognition clocks. Simplify the hiring process by automating simple tasks.
Human Resources Dashboard.
Workday HCM
This HRIS helps with various HR tasks, including compensation, talent management, learning management, workforce planning and compliance. It comes with enhanced reporting, recruiting, hiring, absence management and time management tools. The positive reviews mention its simple UI and expansive functionality, while negative ones said they felt it was slow and required extensive training.
Benefits Dashboard.
Namely
A platform for mid-sized businesses, Namely provides employee benefits management, deductions, tax calculation, compliance and other compensation management capabilities. Its ability to organize workflows, build organizational charts and enhance communication make it uniquely helpful for putting the necessary structure in place for a growing company. In its reviews, users are pleased with the role-based access, customization options and consistent update schedule while being unhappy with its time and attendance feature and customer support.
Namely Payroll Dashboard.
Zenefits
Zenefits is a cloud-based solution that provides management tools for HR tasks, payroll and employee benefits. Visualize different data assets with real-time information and detailed analytics. Automate workflows throughout the payroll lifecycle, allowing employeesto view and manage important information quickly. Integrate with various applications, including Office 365, QuickBooks, and Salesforce.
Zenefits Payroll Dashboard.
Expert recommendations and analysis on the top software
Questions To Ask Yourself
Use these questions as a starting point for internal conversations:
- What’s your current payroll system lacking?
- If your business doesn’t currently use software, why are you interested in adopting a system?
- Which features are most important to your organization?
- Will your current infrastructure be responsive to adoption? If not, what changes do you need to make?
- What are your budget and time constraints?
- What is the biggest priority of your organization? How will payroll processing software support that?
- Do you have the technical know-how to operate payroll in-house?
- What are the biggest pain points in your current compensation processes?
Questions To Ask Vendors
Once you have identified your shortlist of payroll companies, consider asking them the following questions:
What you need to ask to find the right payroll system.
About the Software
- How much is the core plan? How much are the add-ons for HR functionality? ERP integrations? Time and attendance modules?
- Is a core HR base included in the payroll management system?
- Does the system have mobile capabilities?
- Does the software include analytic functions?
- Is the system scalable?
About the Company
- Do you automatically update the payroll management system for changes in industry regulations and tax laws? Does this include local, state, national and international changes?
- Do you pay tax penalties incurred by errors in the system?
- How do you stay in compliance with state and federal employment regulations?
- What assurances do you have that you’re calculating payroll tax correctly?
Expert recommendations and analysis on the top payroll processing software
FAQs
What payment method should I use for my payroll?
The requirement for the method of paying employees may vary depending on your state. Common pay methods are paychecks, direct deposits and even paycards.
When adding a new employee to my payroll system, what tax forms do I need from them?
To add a new employee, you'd need their Social Security Number, Form I-9, Form W-4, Employee's Withholding Certificate and Employment Eligibility Verification.
What's the difference between holiday pay and overtime pay?
Holiday pay requirements vary depending on your location. Generally, when it's a holiday employers may choose either to pay their staff higher rates for working on these dates or allow a paid day off.
Overtime pay also varies depending on your location. When employees work over 40 hours, typically overtime pay is 1.5 times their hourly rate.
Next Steps
Finding a streamlined and affordable payroll solution that has the correct capabilities, helps with HR needs, and anticipates future growth has never been more important. Companies continue to automate and use AI to ensure that payment and compliance are handled accurately and instantaneously.
Taking advantage of the heightened analytic and strategic functions is indispensable to success. With the right payroll software, you can take control of your payroll management and see a positive impact on your business operations.
If you’re ready for the next step, check out our comparison report for more details on the leading payroll software options in your industry. Good luck!
Product Comparisons
- Paylocity vs. Paychex
- Paylocity vs. Workday HCM
- Paychex vs. Workday HCM
- Namely vs. Workday HCM
- Paychex vs. Namely
- Zenefits vs. Namely
- Zenefits vs. Workday HCM
- Paylocity vs. Zenefits
- Paychex vs. Zenefits
Additional Resources
- Payroll System Implementation Requirements Checklist
- Payroll Software vs. Payroll Services
- The Most Important Payroll Software Features and Leaders
- The Best Online Payroll Software Vendors for 2021
- Small Business Payroll Software: Which Solutions Should Be On Your Shortlist?
- What is Payroll Software and Why Should Your Business Use It?
Top 10 Payroll Software Leaders by Analyst Rating (of 302 products)
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