Payroll Software

Payroll software is a suite of tools for managing and automating payroll processing, distributing employee paychecks, and calculating taxes. Payroll software is an efficient software for all types of companies that want to ensure accurate payments to employees, stay in compliance with tax laws, and automate payroll processes for reduced costs and efficiency. 

Payroll software works by automating payroll processing and empowering employees with options to edit their personal information, update details, and choose how they want to receive payments (check, direct deposit, or payment card). Payroll software integrates with core business systems, such as HR and Accounting software, to help ensure that employees receive their paychecks on time.

HR and Payroll software are often combined into a singular system so that employee payroll, benefits, training, career development, and time & attendance can be managed in a centralized platform. However, there are also stand-alone Payroll software systems that benefit smaller companies or businesses looking to streamline payroll alongside their existing accounting and HR systems. 

The main elements of payroll include:

• Processing paychecks for employees (Salary, Hourly, Contract)
• Calculating Income Tax, Social Security Withholding, and Payroll Tax
• Storing employee records and payroll data
• Providing employees and admins tools to simplify and streamline payroll processes

The common features of Payroll Software are:

• Accurate, On-Time Payroll Processing
• Direct Deposit and ACH
• Tax Calculation and Filing
• Admin Tools for Managing Compensation
• Self-Service Tools for Employees
• Compliance Management
• Reporting & Analytics

The benefits of Payroll Software include:

• Eliminates Payroll Errors and Costly Mistakes
• Ensures payroll processing is accurate and on-time
• Automates payment methods for employees (check, direct deposit, payment card, etc)
• Saves Time, Reduces Costs, and Improves Efficiency
• Easy to use without technical expertise
• Improves compliance with tax calculations and filing options

Payroll software is needed by a company because it helps avoid critical, costly mistakes in processing payroll, calculating taxes and withholding, and storing employee payroll data. 

You likely need payroll software if you have one or more employees. Payroll software can help companies of all sizes with tools for preparing and processing payroll and accurately calculating taxes and withholding. Some payroll software also offers tools and services to help with tax filing.

The challenges with payroll software include:

• Accurately paying employees while relying on manual payroll processing and payment disbursement.
• Staying updated on labor laws, payroll tax changes, and other regulatory changes impacting how employees are paid. 
• Accurately keeping payroll records for all employees.
• Maintaining data privacy and security.
• Managing payroll activities in a streamlined, efficient manner.
• Overcoming software incompatibilities when introducing payroll tools to a business.

Compliance is a payroll challenge because there are large penalties for incorrectly filing taxes or failing to adhere to tax laws and payroll regulations. 

Payroll systems cost anywhere from $25 a month to $200 a month for basic payroll tools like payroll processing, paycheck disbursement, self-service portals for employees and admin, tax calculation and filing, and direct deposit payment options. 

You can use the following checklist to help you determine how to buy the best Payroll software for your business.

• Focus on business needs, payment issues, and growth goals driving the decision to get a new or upgraded Payroll system.
• Plan for data migration, implementation costs, IT involvement, and any downtime that may impact ongoing employee payroll.
• Make a plan to support user adoption through training.
• Understand the Payroll processes you’re looking to streamline and automate.
• Don’t skip the product demos offered by Payroll software vendors to show features and functionality.
• Understand reporting and analytics needs for Payroll and HR.

The top payroll software trends include:

• All-inclusive software systems that manage HR, Benefits, Payroll, Time & Attendance, and Tax Calculation
• More business adoption of cloud-based payroll software
• Flexible payment options (check, direct deposit, wire, payment card, etc) to meet the needs of employees
• Artificial Intelligence (AI) technology for automating processes and improving accuracy and reporting
• Tax compliance tools to ensure correct calculations and filing