If you run a small business, there’s a good chance that you’ve at least heard of payroll software. But knowing of something and knowing all about something are two different things! We’re here to teach you everything you need to know about software—and, most importantly, how to choose the best payroll software for your small business.
What is payroll software?
Let’s start with the basics before we dive into more about choosing a payroll system for small businesses. Although different systems have different features (which we’ll cover below), a payroll software system’s primary duty is to manage, maintain, and automate employees’ payments, payroll deductions, and tax information. Instead of manually handling HR work ahead of each payday, small businesses can sign up for a program that handles all of the dirty work.
What are the benefits of payroll software?
We could probably write an entire article about the benefits of a payroll system for your small business, but for this article we’ll just stick with two of the top reasons: time management and error reduction.
The best payroll software for small business saves you time because you no longer have to do the manual labor involved with entering everyone’s pay. This gives you more time back to focus on other tasks that can’t be performed by a computer.
Another leading reason to sign up for a software system is that it vastly reduces the possibility of human error (or payroll fraud) when it comes to payroll. Even the best employees slip up and make mistakes. A high-quality software system can prevent mistakes, saving everyone a ton of hassle.
What to look for in payroll software
Even if two businesses are in the same industry, no two companies are exactly alike. For that reason, it’s crucial that you take all of these factors into consideration when deciding on payroll software:
- Compliance requirements: It will come as no surprise to HR professionals that local, state, and federal regulations all apply to payroll. Plus, certain industries have additional regulations that must be followed on payday. All of the software systems we’ll outline below should help your business stay compliant with regulations, but it can’t hurt to double check with the American Payroll Association.
- Affordability: Just like any other purchases for your small business, you’ll need to take your payroll software’s price into consideration before making your final decision. Many programs offer a “basic” model with limited features that’s either free or very affordable, as well as a more advanced model that has loads of features and integration options. See if you’re able to get any free 30-day trials so you can take advantage of payroll software without an upfront investment.
- Good customer reviews: Customer reviews, like anything else you read online, should be taken with a grain of salt. But you should probably look elsewhere if a software program has mostly negative reviews, because there’s a good chance you’ll also have a bad experience.
- Tax filing: Filing tax paperwork for yourself is a big enough headache as it is, which is why most people dread tax season. But filing individual taxes is nothing compared to the complexities of filing payroll taxes. Our advice is to choose a software system that automatically files state and federal payroll taxes, taking that burden off your shoulders.
- Direct deposit: In 2023, there’s no reason a business should still be mailing out payroll checks to employees every couple weeks. Not only is this a waste of paper, but it’s inconvenient for employees. Many of the best payroll software programs for small businesses already have direct deposit features.
- Integrations: You probably already use a few different software programs to make your business operations easier. When shopping for a new payroll program, check to make sure it will connect to your existing programs. Integration is the key to making everyone’s job easier!
- Employee self-service portal: You shouldn’t be the only person who has access to your business’ payroll information—every employee should be able to see their personal payroll data. Look for a software program with an employee self-service portal that provides pay stub info, PTO balances, tax information, and more.
- Employment options: Employers often have both full-time and part-time employees on their payroll, and in some circumstances, a business may primarily work with contractors. Keep in mind that some payroll programs only have options for full-time employees. So, if you have part-time workers or contractors, make sure the payroll system can accommodate them.
- Mobile access: This one may be more of a nice-to-have bonus feature, but it never hurts to have access to your payroll software wherever you go! Payroll software programs with mobile-friendly websites or apps make life a whole lot easier.
The best payroll software
What’s right for your business certainly might not be right for another, but in our opinion, these are some of your best bets when you want the best payroll software for small businesses:
- ADP: If you know HR, you’ve heard of ADP—they’re one of the biggest companies in the industry. ADP’s Run payroll system for small businesses is just a small part of their software suite, but it’s a robust system that can scale up as your business grows. Plus, they offer custom pricing for businesses with all different budgets.
- Gusto: With plans starting at just $45 per month, Gusto is one of the most affordable software systems. But just because it’s affordable doesn’t mean its functionality is limited. Even the least expensive plan offers features like time tracking, unlimited payroll runs, and live customer support. It also makes our list of the best payroll software for small businesses because it’s easy to upgrade your plan as your company grows.
- Justworks: With an intuitive, easy-to-use interface and a ton of features needed for daily HR duties, Justworks is a fantastic choice for employers who don’t have time to mess around with multiple software programs. The only downside of Justworks is its price. The Basic plan starts at $39 per month per employee, and the Justworks Plus product starts at $79 per month per employee. If you’re on a tight budget, Justworks might not be the best option for you.
- Patriot Payroll: Business owners on a budget often gravitate toward Patriot Payroll. This program is designed for companies with fewer than 100 employees and comes in two versions. The Basic program starts at $10 per month plus $4 per employee, while the Full-Service option is $30 per month plus $4 per employee. But there’s no need to make a commitment right away—they offer free 30-day trials for both versions.
- Paychex Flex: Your business may be small now, but hopefully you’ll soon start to grow! Business owners focused on growth should consider Paycheck Flex for their payroll software. This program offers four different tiers designed for businesses in different growth phases. Start out with their Essentials plan and upgrade as you grow all the way up to their Enterprise plan.
- Payroll4free: Like the name suggests, Payroll4free is a software program that handles your payroll duties for free. The free version is for small businesses with less than 25 employees and just handles the basics. If you want extra features—like setting up direct deposit—you’ll need the premium model, which costs $30 per month.
- Square: If you’re in retail or the restaurant business, you may already use Square for your point-of-sale (POS) system. But did you know they have their own payroll software? With fair pricing and flexible payment options for employees, their program is ideal for small teams or companies that work exclusively with contractors. Plus, you can even run payroll on your phone using their app.
- TriNet Zenefits: Zenefits makes our list of best payroll software options for small businesses because it seamlessly syncs with many necessary HR functions, like applicant tracking, new hire onboarding, accounting, performance management, benefit deductions, and more. The least expensive plan starts at just $8 per month per employee, but higher-priced options have more features.
- Wave Payroll: If you need some free accounting and invoicing software in addition to payroll software, Wave is one of your best bets. Although Wave Payroll isn’t free like their accounting and invoicing offerings, you can save money by getting all three products since two of the three are free.
Do your banking with NorthOne
Even more important than choosing your payroll software is choosing your bank. Just like a good payroll software system, a good bank makes it easier to run your small business and manage your finances with peace of mind. At NorthOne, we’re dedicated to making it easier for small business owners to do their banking. Better yet, our products can even help make payroll and tax season easier. Apply for an account today to see how much better life can be when banking at NorthOne.