What is the best payroll software for small business - man running payroll from home office

What is the best payroll software for small business?

Thursday, December 04, 2014

As your small business grows, the need to simplify the payroll process can get daunting as you add more employees to the roster.

Payroll is the compensation provided for employees. It is a company's largest expense, and managing it gets complicated quickly. Having a system ensures they are paid the right amount for their work on time. With a small staff, you may manage the payroll on your own using a program like Excel. However, at some point, it’ll get tricky to stay on top of details and keep everyone’s data secure. 

The proper payroll software helps with payroll processing and tax preparation and provides valuable reports. Here, we will take out the guesswork and help you choose the best payroll software for your small business.

What is payroll software?

Save time, prevent mistakes, secure data

Unless your business is running with very few employees, in which case using a program like Excel might be manageable and realistic for staying on top of payroll, it’s a good idea to consider different types of software to do this work for you. In most cases, it just makes sense. Not only is it easier to organize all of the data at hand, but payroll software offers data security, accuracy in handling calculations (including taxes), automatic time tracking, and tax filing, all with the invaluable bonus of speed. This frees up your time and efficiency, so you don’t have to worry about errors.

What businesses would benefit from payroll software?

You would benefit from using payroll software if you:

  • Run a small to midsize business 
  • Have full-time hourly or salaried employees 
  • Spend too much time each month on payroll 
  • Want the convenience, safety, and accuracy of payroll software

Or, if you have concerns with the way you currently:

  • Track time
  • Manage paid time off (PTO), vacation pay, sick leave, holiday pay, worker’s compensation
  • Provide employee benefits
  • Provide and manage direct deposit
  • Organize and file end-of-year taxes and tax forms

There is no rule for who can or cannot use payroll software, so consider the needs of your business.

What are the benefits of a payroll software?

No human error 

Each year, about 40% of small businesses pay nearly $1000 in tax penalties, according to the IRS. So, one of the most significant benefits of using payroll software is the accuracy it ensures. 

Even the most organized human resources team can make mistakes; it’s human nature. But using software designed to juggle all of the data and provide paychecks, tax forms, and so on will drastically improve the accuracy and therefore cut end-of-year costs caused by mistakes.

Not only can accuracy help you avoid penalization or extra costs, but your employees will be happier with it, as well. Who wants to be paid late, and in the wrong amount? Having guaranteed accuracy means your employees will get precisely the amount they expect when they expect it–that’s key to fostering a healthy, happy workplace.

Stress-free tax management

If taxes are the headache you find yourself facing when managing payroll each year, payroll software offers several ways of simplifying this process, too. Good software will include tax tables, where you calculate deductions. Then, it can provide payroll reports which detail tax filings, deductions, and contributions. These payroll reports can detail your business’s largest expense, for example, which simplifies HR’s tasks, and allows them to focus on other issues at hand.

Data security

Using payroll software is the most secure way of storing employee personal data, such as their social security number and banking information.

With personal employee data stored securely in the software, there is no need to keep paper files lying around in an office, where they could land in the wrong hands or be misplaced. With more and more employees on your team, data security will be a pressing issue that always requires your utmost care and attention. 

Save time and money 

Ultimately, not only will these benefits save your HR lots of time and energy, but they will save you money as well. As we previously mentioned, doing payroll on your own can result in human error, including tax penalties that may occur by accidentally reporting the wrong income figures, for example. 

Simplified onboarding

Most of the paperwork necessary for new hires can be done through a good online payroll service. That way, data stays secure in one place and is where it needs to be for the employee’s first payroll run. This is far more efficient than attempting to keep all of the paperwork straight on your own. 

What features will the best payroll software solution have?

Most payroll software options will offer the same payroll features, but you can find the best possible software by considering these factors in your research. Hint: the best payroll software is full-service payroll software. Meaning the best one will have:

  • Accuracy guarantees
  • Good reviews
  • Automatic tax-filing features
  • Employee portal options
  • Paycheck options
  • Employee benefits
  • HR software and integration (for time tracking, etc.)
  • PTO management
  • Readily available customer and HR support

And, most importantly, the best payroll software should be user-friendly! No one wants to spend hours struggling with software that is supposed to make your life easier. 

Here are some more details on each of these key components, so you can consider your own growing business needs.

Accuracy guarantees

Simply put, the best payroll service will guarantee the accuracy of your data. You will not have to pay out of pocket for preventable issues. The software will update tax changes automatically, and with an automated process for paperwork and time tracking, mistakes are avoidable. 

Good reputation and reviews

Just as you may read through reviews for car repair shops or the sandwich place down the road, you’ll want to find the payroll software whose reputation precedes it. Look not only on their website but on small business forums and see which software is being used and raved about. Five stars is a good sign anywhere you find it.

Automatic tax-filing features

Tax filing can be incredibly tricky no matter how long you have been doing it, especially for a small business with a growing number of employees and paperwork. The best payroll software will offer automatic tax filing features such as:

  • Automatic local, state, and federal tax filing
  • Automatic end-of-year tax-form filing, including W-2s and 1099s 
  • Automatic state new-hire form filing

It is also a helpful feature to be notified of tax updates as they occur. It is nearly impossible to run into errors and be penalized with an automated system. Not every software will offer this, so watch for those that do.

You can also save time calculating hours and handing out paychecks by utilizing direct deposit options through your payroll software–another win for you and your staff. Speaking of your employees, the next feature to look for is the employee portal.

Employee self-service portal

A payroll service should allow for some employee access, whether through an employee portal online or at the clock-in station, or a mobile app that your employees can access with their login information from their device. 

With a self-service portal, employees can keep track of their:

  • Employee hours 
  • PTO/Workers’ compensation 
  • Federal taxes, local taxes
  • Schedule/work calendar 
  • Paystubs
  • Paycheck options

You will want a payroll service that offers pay options, so you have the flexibility for your employees to decide which way they prefer to be paid. With direct deposit, pay will be automatically deposited to the employee’s bank account after taking out taxes or other deductions. Their money will arrive in their account on payday, which is a very convenient option for some, but others may prefer to have a paper check to keep track of their earnings and tax deductions throughout their payroll runs.

Employee benefits

While payment accuracy and punctuality, employee portals, and payment flexibility in terms of direct deposit versus paper checks are all great ways to make your employees feel valued and comfortable, offering good benefits is probably the best way to boost morale. The payroll software you want should offer you good employee benefit options including: 

  • Health benefits
  • Retirement plans
  • Workers’ compensation

Of course, the benefits you feel you need for your business will vary, but there are payroll services that offer them, and it is crucial to find one that includes them in your monthly cost. It’s important to note that although you are a small business owner attempting to manage your expenses, a payroll service is a good place to invest to keep the insides of your operation not only functional but also beneficial for everyone involved.

This is an area you should not skimp on, if you can help it.

HR software

HR software is often offered as an add-on to good payroll services out there, and it is a worthy investment. With this software, you can keep your documents, time tracking, data, and other information in one accessible workspace. It is essentially a tool to help you with data entry and organization.

Gone are the days of cluttered desks and stacks of paper that never seemed relevant. The payroll software you’re considering should have integration capabilities or offer HR software as an add-on to make your life easier and more organized.

PTO management

Along the same lines as HR software, you will want the capability to manage your paid time off requests and approvals and pay your employees for those allocated hours within your payroll system. Look for software that can offer this. That way, you can pay employees without needing to “clock in” for hours they are not working. Again, just another tool to keep your system as simple and streamlined as possible.

Customer and HR support

A good payroll provider service will come with solid support so that you do not have to rely on one employee who knows the software in and out. This makes it easy enough for anyone on your HR team to use the service, as it should be user-friendly on top of having adequate support for those moments when things just aren’t making sense.That’s what general customer support is there for, so make sure that the service you land on is able to offer that.


As we have mentioned, it is important to find a service that is easy for you to use. That’s the whole point here, to find a system that’s better-than-your-system. The right payroll provider software should boast positive reviews of its simplicity and user-friendliness. You’re dealing with lots of data, lots of employee information, lots and lots of time tracking and scheduling and tax files here. The system you put it all in should be as intuitive and efficient as possible. 

A payroll software solution for small businesses makes sense

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us