Today, I’m going to explain the most important things to look for when buying payroll software. Payroll software comes in all different levels of price and quality. Unfortunately, it’s becoming more and more difficult to find objective, unbiased information online.
What Does Payroll Software Actually Do?
Payroll software is designed to minimize payroll errors and reduce the time you spend calculating and submitting payroll information. Most payroll software includes the core functions listed below:
- Calculate gross employee pay each cycle (every 2 weeks, for example), based on the number of hours worked and the designated salary
- Calculate net employee paycheck after deductions and taxes
- Send paycheck to employees via direct deposit or by printing off checks
- Create year-end tax forms for state and federal government agencies and employees, including W-2s, W-3s, and Form 940s
- Calculate employer payments required to state and federal government agencies
- Calculate payments due for state and federal unemployment insurance
Top 5 Most Important Qualities Used To Compare Payroll Software
5) The number of employees in your business
Some payroll software is designed for companies with 5 employees. Other software is built for companies with 500 employees. Consider the needs of your business and the number of employees and contractors you pay on a regular basis.
Payroll software is often ranked according to its price for 10 employees. A typical “Price for 10 Employees” will range between $50 to $150 per month. Some payroll software provides users with a discount after adding a certain number of employees. Ultimately, you need to find payroll software that is designed to fit the unique needs of your business and its employees.
4) Pricing plans
Pricing plans vary considerably between payroll software programs. In general, payroll software pricing is based off a base monthly fee plus an additional charge for each employee added to the payroll.
Let’s say one payroll software charges a $25 base fee plus $2 per employee. The price for 10 employees would be $45 per month.
When you’re comparing payroll software pricing plans, it’s important to look at the price you’re going to pay for the number of employees in your organization. In some cases, the base charge might be small, but the cost per employee is comparatively large.
3) State coverage
Payroll software helps employers navigate complex employment rules from state to state. For that reason, each state must be individually programmed into the software. Most payroll software supports all 50 states in the U.S. However, some popular software programs only support a handful of states. When researching payroll software, be sure to check this eligibility before you buy.
2) Additional features and support
If all things are equal up to this point, then you need to consider additional software features and support. Every payroll software program has unique features that attempt to differentiate it from the crowd. Those features could include:
- Federal & state payroll tax forms pre-populated with employee information
- Ability to purchase worker’s compensation and easily add it to the software
- Phone-based tech support available 24 hours a day
- Signup bonuses
- Email reminders when taxes and forms are due
- Free direct deposit
- Mobile app compatibility, which means you can access payroll software from your smartphone or tablet
- Integration with QuickBooks or other bookkeeping software
Ultimately, the goal with free payroll software is to automate tasks, minimize errors, and save time. If you can find a software program that does those three things, then buy it.
1) User reviews
Find out what other small business owners think about the payroll software. Was it difficult to learn how to use? Did it actually save time? Did it help them avoid payroll headaches? Finding objective reviews on the internet can be difficult because every website is trying to sell you some payroll software or another.
However, with enough research, you can get a general idea for which payroll software is widely regarded as being the best in the industry. Once you’ve identified that software and considered the unique needs of your business (based on this top 5 list), it’s time to make the purchase.
Above all, remember that you’re buying payroll software and not a nuclear warhead: at the end of the day, most payroll software features largely the same qualities and there are only small differences between brands. Don’t overthink the problem: if you spend too much time researching payroll software, you’re going to wipe out the time savings you’re trying to create!
Cheap Payroll Software Versus Expensive Software
Using the research tips listed above, you may have narrowed your choice down to two different software programs: one program is cheap and has basic payroll functionality and is ideal for a small or medium-sized business. The other payroll software is loaded with features but is significantly more expensive. Which one should you choose? What’s the major difference between cheap and expensive payroll software?
Here are some major ways in which payroll software at different pricing levels tends to differ from one another:
Tech support: More expensive payroll software programs tend to have better tech support, which can make a world of difference when the end of the fiscal year rolls around.
Form submission: More expensive payroll software programs often do all of your work for you when it comes to submitting payment forms to the IRS and other government agencies. Less expensive software might tell you which forms you need to fill out but force you to manually enter information into each one. How much time are you going to save?
Additional features: Compare the two software programs on a feature-by-feature basis and ask yourself if the additional features in the more expensive software are worth the extra price per month. Ask yourself if you’re really going to use all the extra features.
Remember: the difference between two payroll software programs might only be $40 per month, but that works out to nearly $500 per year. Choose carefully.
What Are The Most popular Payroll Software Programs Available Today?
If you’re trying to buy payroll software and have no idea where to start, then we’re going to narrow down the search for you: here are the top 6 most popular payroll software programs available to small and medium-sized businesses today:
Intuit Online Payroll
Out of the top six payroll software programs listed here, Intuit is responsible for half of them. Intuit – creator of QuickBooks – is a world leader in small business software and their payroll software programs reflect that. Intuit Online Payroll is a payroll software subscription service that can be accessed from any internet-connected device. There are mobile apps for iPhone and Android and two versions are available: basic and enhanced.
Intuit Enhanced Payroll
Intuit Enhanced Payroll is the feature-rich version of Intuit Online Payroll. While the basic version of Intuit Online Payroll only allows users to pay employees, the Enhanced version lets employers pay employees and contractors and also file federal and state taxes. For $8 more per month, Intuit Enhanced Payroll is a no-brainer decision for any business with more than one employee. It also offers free direct deposit and includes apps for the iPad, iPhone, and Android devices.
QuickBooks is one of the world’s most popular software programs for small and medium-sized businesses. With QuickBooks Online, subscribers pay around $50 per month for powerful online bookkeeping functionality. QuickBooks Online combines bookkeeping with payroll information to provide significant time-saving opportunities for your business. Intuit is so confident in the success of its software that it promises it will pay for itself within 60 days or your money back.
FreshBooks is the first payroll software on this list not made by Intuit. FreshBooks promises to help users take advantage of the cloud using “cloud accounting”. What does that mean? It means your payroll data is always backed up and secure. It also means you can access it from anywhere, including the iPhone, iPad, and Android. FreshBooks is less of a payroll software program and more of an invoice and payment program. It won’t submit taxes and forms to government agencies, but it will help you manage core elements of your business wherever you go.
Patriot Software is specifically designed for businesses with between 1 to 50 employees. Patriot Software is the most affordable payroll software program on this list. If you have 1 employee, Patriot Software costs just $10 per month. For a business with 10 employees, it costs $14.43 per month. That’s significantly cheaper than anything else listed here. But what’s the catch? The basic version of Patriot Software does not include many of the basic features included in other payroll companies. Instead, employers can pay an extra $2 to $12 per month for additional features like tracking employee hours or handling local, state, and federal taxes.The convenient pay as you go system is ideal for business owners who don’t need all the bells and whistles added onto other payroll software programs.
PenSoft Payroll Software
PenSoft Payroll Software is one of the pricier options on this list. There are six different versions of PenSoft, including Lite, Standard, Professional, Enterprise, Platinum, and Accounting. Some versions of the software are designed for businesses with over 500 employees, while the lowest option on the list is designed for companies with between 1 and 50 employees. Packages start at $249 per year. As one of the most expensive payroll software programs out there today, PenSoft is packed with features. It includes comprehensive tax support at the federal and state level and advises clients on which government agency forms they might require.
Take Advantage of Free Payroll Trials
Most of the payroll software programs listed above offer free trials to new users. Spend an hour taking advantage of these free trials. Play around with the different software programs and decide which interface you like the best.
The typical trial period lasts 30 days, giving you more than enough time to test out different features and payroll capabilities. Once again, remember that payroll software is just one of many elements of running a business. Research your options, take advantage of one or two free trials, and don’t overthink it.
How To Use Payroll Software
Payroll software is generally quite easy to use. Since the software is specifically designed to simplify your business and save time, most programs only feature a small learning curve.
Here’s the basic step by step guide to using any payroll software:
Step 1) Open your payroll software system. Some programs are downloaded onto your computer’s desktop, while others are accessible via your software company’s website.
Step 2) Once you’ve opened your payroll solution, you can begin entering various HR data, including:
- Pay data for regular pay, overtime pay, and shift pay
- Bonuses or commissions paid to employees for each pay date
- Employee personal information
- Deduction information and up-to-date tax tables
- Direct deposit information and check payment information
Step 3) Look for a payroll preview option to get an idea of what the final payroll report will look like. Check that report to ensure all information is correct and accurate.
Step 4) Transfer your payroll by the given deadline and review the final report
Step 5) Use the payroll software to print checks if not using direct deposit
Step 6) Transfer business reports to your bookkeeping software or print out a report to keep as a physical copy. One of the biggest advantages of payroll software is being able to instantly generate a report on your business and print off that report for record keeping purposes.
Ultimately, payroll software is something that could change your business. It’s virtually guaranteed to reduce payroll errors and it’s priceless if your business is ever audited. Today’s payroll software uses cloud computing and mobile apps to make your payroll information available at all times, which means the software has never been more convenient.
Whether you’re running a business with 5 employees or 500, certified payroll software is one investment that tends to pay for itself in a very short period of time.