Congratulations! You’ve gotten to a point that many other small business owners have only hoped for — growth. But now you’re required to find a more robust payroll system.
Sure, when it was you and a couple of co-founders it was pretty easy to sort out payment. But now that you’re growing, it’s necessary to put a process to your operations, offload some of the tedious work you’ve been doing since the beginning, and free up your time and resources to focus on bigger issues at hand.
One smart way to do this is to invest in a payroll software platform that can take care of one of the most important parts of your business for you: paying your employees on time, every time.
Yet, as you know, it’s not nearly as easy as just cutting a check. From properly withholding taxes and reporting to the IRS to tracking PTO hours earned and much in between, there’s a lot to consider when deciding which payroll software system is right for you.
Here are a few of the major features to look at.
How to choose the best payroll software for your small business
Overall, the best thing that you can do is get a solid understanding of your business’ unique individual needs. As you dive into the capabilities and features of the many payroll systems out there, it can be easy to get swept up in thinking that you need fancy features that will actually go unused or forget an important need you have until it’s too late. So, above all else, know what you need (and what you don’t) and compare everything to that.
For small businesses — well, any business really — cost is always a major factor. You’ll want to evaluate both what each program will run you, but how they charge as well.
Is it a flat fee every month, or is it based on the number of employees you add to the system? Understanding how the cost of your payroll software will change as your business does.
While every payroll processing software clearly digitizes payroll, not every payroll platform is the same. There are all kinds of features — from benefit deductions to overtime pay and much in between — that will impact how your payroll is calculated.
Are these automatic adjustments that the system will make for you through shift tracking and other capabilities, or will they be something that you and managers will be expected to do manually?
Tax withholding and reporting
One of the biggest headaches associated with payroll is tax withholding and reporting. Depending on the system you choose, some can file quarterly taxes to the proper local, state, and federal agencies.
Some can send out IRS paperwork like W9s and 1099s for independent contractors and W2s for former employees. Some payroll services guarantee error-free tax services, which means that they’re responsible for any slip-ups and corresponding fees that come as a result.
Direct deposit and other payment methods
Will your employees and contractors be satisfied with paper checks or do you use remote consultants who will require being paid by direct deposit? This is something you’ll want to sort out at the beginning because each payroll software platform offers something different.
If you already have other systems in place or are planning to use different platforms for payroll, HR, scheduling, and the like, then integration with the other systems you use will likely be a component you’ll want to look for to keep from tearing your hair out in the process of trying to export and import data between platforms.
Alternatively, if you’re looking for a 1-stop shop, then you’ll want to take a look at broader systems like HR software platforms that offer payroll functionality as part of their suite of services.
As things digitize, employees (especially younger ones) expect a greater level of access than ever before. As we move away from paper checks and toward direct deposit and other digital means of payment, it doesn’t mean that employees don’t want to be able to view their pay stubs and track their tax forms.
Most people will still need pay stubs for things like filling out an application for an apartment or a home loan, and bank statements sometimes don’t fly. If this is something that you want to offer your employees, make sure that the payroll platform you select offers self-service for employees in the system.
As you move from your old spreadsheet way of managing payroll to a fancy new digital service, will you want some help navigating the transition or will you be content to figure things out on your own? Customer service offerings range from sparse to 24/7 support, making this a major point of departure from one brand to the next. Some platforms will give you a dedicated person for your account while others will have a large team available to everyone. Think about what you’ll need and choose accordingly.
Do you travel a lot for work and require remote access to the software systems that keep your business running (and your employees paid), or will there always be a manager or someone else in-house who can take care of things in person while you’re away, eliminating the need for mobile access? While it can be a convenient option that is necessary for some, it’s certainly not a requirement for all small businesses.
Similar to the customer service element, is it important to you that your payroll platform be an intuitive software that’s easy for you to learn, understand, and use? Or are you OK with paying a little less for a system that’s a bit harder to move through, especially at the beginning? Like all of the other features on this list, it’s entirely up to you — what your wants and needs are and what your budget allows for.
Like all things small business, there is very rarely a true right or wrong answer. Instead, it’s all about matching needs to service offerings.