Are you tired of making payroll errors and losing your employees?
For any business, getting payroll right is extremely important. After all, timely paychecks are what lead to…
- Happy employees
- Improved retention rates
But here’s the problem…
Manual payroll management is a big risk. In fact, 40% of small businesses face IRS penalties each year from payroll mistakes.
Without the right payroll software, you’re playing with fire
Payroll software solutions offer peace of mind and prevent big problems. That’s why in this article, I show you exactly how to choose the best payroll software for your business needs.
Let’s get started.
Here’s What You’ll Discover:
- Why Payroll Software Is Essential For Your Business
- What Makes One Payroll Solution Better Than Another
- 6x Key Features Your Payroll Software Must Have
- How To Choose The Right Solution For Your Business Size
Why Payroll Software Is Essential For Your Business
Payroll software solutions are a boon for any modern business. If you haven’t made the switch to payroll software yet, here are three good reasons to do so now.
Eliminate Costly Errors
Manual payroll processing is one of the biggest causes of payroll errors and subsequent financial losses.
Why? Because 33% of employers make payroll errors, which cost businesses billions of dollars each year. When you automate payroll processes with quality payroll software solutions, you dramatically reduce the number of errors made.
Here’s what’s crazy…
On average, it costs an employer $291 to correct a payroll error. With 100 employees making $900/week, if you make the “minor” mistakes above in the calculation example, you just lost $56,647 that year.
Makes sense, right? Payroll software solutions take the human error out of the equation by automating:
- Tax calculations
- Deductions
- Compliance tasks
Save Massive Amounts Of Time
You must also consider how much time payroll management takes every month.
Owners of small businesses spend nearly 5 hours per pay period managing payroll processing. This is time that is taken away from more valuable business-building activities and spent troubleshooting spreadsheets.
Businesses that have payroll automation systems are 33% more effective than those that don’t. Payroll software automates complex calculations in a matter of seconds and allows you to focus on the things that really matter.
Note: If you haven’t already realized it, 51% of organizations are using spreadsheets to process their payroll. This is a big risk.
Keep Employees Happy & Engaged
Arguably, the biggest benefit of all is having happier, more engaged employees.
The impact of getting paid correctly (or not) should not be underestimated. It can have a big impact on employee morale and retention.
For example, 50% of employees will begin their job search after making just two payroll mistakes.
Modern payroll software provides employees with on-demand access to their pay stubs, tax documents, and benefits information. This transparency builds trust and reduces the number of payroll questions your employees ask.
What Makes One Payroll Solution Better Than Another
Payroll software solutions are not all created equal. The differentiator between a basic and advanced solution will determine whether your payroll process is a success or a failure.
Factors that make a quality solution better than others include:
- Multiple pay schedules
- Complex deductions
- Integration capabilities
- Compliance management
The key to getting the most out of payroll software is finding a system that can handle the unique complexity of your business.
6x Key Features Your Payroll Software Must Have
Now we get to the good stuff. Here are the essential features that every quality payroll software solution must have to deliver streamlined payroll operations and error-free processes.
If your payroll system can’t do these things, you need better software.
1. Automated Tax Calculations & Filing
When it comes to payroll software and maintaining compliance… Automation is critical.
Why? Tax rates and regulations are constantly changing and can differ by location. Manual calculation = $$$ in mistakes and penalties.
For example, payroll software must automatically calculate federal, state, and local taxes based on current rates and employee data.
Automated systems will also track changes to tax laws and apply them automatically to avoid having to stay up all night learning new tax code changes yourself.
Quality software-generated forms should also handle the complex filing requirements for you. The system should be able to prepare and submit all required tax documents to keep you compliant and reduce administrative burdens.
2. Direct Deposit & Multiple Payment Options
Another way in which the best payroll systems separate themselves from the pack is through flexible and employee-preferred payment methods.
According to the data, 95% of Americans receive pay through direct deposit, making this an essential feature for any payroll solution. Modern workers also want their pay on prepaid debit cards, digital wallets, and through on-demand pay access.
3. Employee Self-Service Portal
Are you sick of employees constantly asking you payroll questions?
Employee self-service portals are the solution. It allows workers 24/7 access to their own payroll information, including the ability to view pay stubs, update personal information, and access tax documents, without having to involve you.
This feature saves time and effort while at the same time improving employee satisfaction. Happy employees = employees who get their answers in real-time.
4. Integration With Existing Systems
Ideally, your payroll software should not exist in isolation. Ideally, payroll software will seamlessly integrate with your other HR and business systems.
In fact, 94% of business leaders want their payroll software integrated across all HR systems. This eliminates duplicate data entry and reduces human error.
Look for systems that offer integration capabilities with accounting software, time tracking tools, benefits administration, and HR management systems.
5. Compliance & Reporting Tools
If you’ve been in business for any length of time, you already know that it is an ever-evolving challenge to stay compliant with the latest employment laws and regulations.
Quality payroll software systems come complete with built-in compliance features that automatically do all the heavy lifting for you. The system should also be capable of generating the reports you need while tracking policy changes, and alerting you to potential compliance issues.
This is a biggie: According to my research 25% of small businesses are fined for payroll tax mistakes each year. Using the right payroll software helps you prevent these costly mistakes and fines through automated compliance management.
6. Scalability For Business Growth
The payroll software you choose today must also grow with your business over time.
Simple start-ups might only require basic payroll processing capabilities, but as your company expands, you’ll need more advanced features such as multi-location support, complex benefits administration, and detailed reporting.
Select a system that offers flexible pricing and feature upgrades.
How To Choose The Right Solution For Your Business Size
It should be obvious by now that differently sized businesses have different needs. 74% of businesses are adopting cloud-based payroll technology today simply because of the scalability it provides.
So here is my recommendation to you.
- Small Businesses (1-50 employees): Ease of use and core functionality are important to you. You want payroll software with automated tax calculations, direct deposit, and basic reporting functions.
- Medium Businesses (51-200 employees): You will also need HR integration, employee self-service portals, and advanced reporting. Multi-pay schedule support is also a must.
- Large Enterprises (200+ employees): Focus on all of the above, plus advanced analytics, multi-location support, and custom reporting.
Wrapping Up The Selection Process
Choosing the right payroll software for your business is critical to eliminating big, expensive mistakes and achieving massive time savings. The stress and risks involved with manual payroll processing just aren’t worth it for modern businesses.
If you don’t have the technical resources to select and set up payroll software yourself, don’t worry. Many business owners outsource payroll software selection and implementation to payroll specialists.
As always, before you implement any payroll system, be sure that it can fully handle your compliance requirements and integrate with your other business systems.
