Whether you’re a startup or an enterprise-level business, efficient payroll software is essential. Yet it isn’t always cost-effective to hire an in-house team to manage payroll, especially for businesses with a small headcount.
Subscribing to a specialist payroll process not only ensures that you pay employees accurately and on time, but also helps reduce errors and automate tax calculations, making it easier to stay compliant with changing tax regulations.So, out of the numerous payroll services on the market that boast different features, integrations, and pricing structures, it can be a challenge to find the best payroll for small business.
In this blog, we’re going to explore the essential factors to consider when selecting a payroll software and list the ten best payroll software for small businesses’ needs.
TL;DR
- Small businesses have specific payroll needs thanks to challenges such as growing headcount, limited resources, and a lack of internal payroll expertise.
- Businesses should look for ease of use, cost-effectiveness, scalability, compliance, and integration capabilities in potential payroll systems.
- Factors to consider when choosing a payroll software include headcount, budget, and tax compliance.
A Step-by-Step Guide to Finding the Right Payroll Provider or Payroll Company for Your Small Business
As with finding any other solution provider, homing in on the right payroll service requires you to assess your needs and research your options. Here’s a practical guide to help you do just that.
1. Define your needs
Before you even start comparing payroll providers, it’s important to get crystal clear on what you need. Every small business is unique, so the right payroll solution for one company might not fit another. Start by answering questions like:
- How many employees do you need to pay?
- Will you be issuing contractor payments?
- Do you need support for health benefits, workers comp, or retirement plans?
Also think about the complexity of your payroll process. Some small businesses need payroll and HR bundled together, while others simply want an easy way to run payroll, generate pay stubs, and file tax forms.
If you’re already using accounting software or POS systems, consider whether integration with those tools is essential.
Outlining your needs up front will save you time, help you avoid costly mistakes, and make it easier to choose the best payroll service for your small business.
2. Research top payroll providers
Once you know your requirements, it’s time to research the payroll services available to you. The best payroll providers for small businesses vary in terms of features, pricing, and support, so it’s worth casting a wide net.
Look beyond the sales pages and gather insights from sources like:
- Review websites: Business-focused sites often compare payroll software and highlight what real users love (and dislike) about each option.
- YouTube tutorials and demos: Helpful for seeing how the payroll system actually works in practice.
- Business forums or Facebook groups: Great for hearing how other small business owners manage payroll.
- How-to guides and blog articles: These can give you frameworks for evaluating payroll features, tax filing capabilities, and compliance needs.
As you explore your options, focus on whether the payroll provider can simplify small business payroll processing with minimal effort, ensure accurate payroll tax calculations, and offer ongoing guidance. Remember—choosing a payroll company isn’t just about today’s needs, but also about setting your business journey up for long-term success.
3. Compare features
Not all payroll features are created equal. A payroll solution that works for one company may lack essential capabilities for another. That’s why it’s smart to compare providers side by side and zero in on the tools that matter most.
Key features to look for include:
- Automated payroll tax calculations and tax filing: Avoid costly penalties by ensuring payroll taxes are filed correctly and on time.
- Employee self-service: Make it easy for staff to access pay stubs, W-2s, or earned wages without extra HR tasks on your end.
- Direct deposit and payment method options: Same-day direct deposit or flexible payout options can boost employee satisfaction.
- HR functions and benefits administration: From new hire reporting and employee onboarding to managing health insurance and retirement plans, payroll and HR often go hand in hand.
- Time tracking and job costing: Helpful if you need to track hours, pay periods, or labor costs across projects.
- Payroll reports and dashboards: Gain visibility into compensation management, payroll data, and payroll calendar details.
4. Compare pricing
Cost is always a factor, but the cheapest payroll company isn’t necessarily the best payroll service for your business. Pricing models for small business payroll services usually include a base fee plus a per-employee cost, with add-ons for HR features, health benefits, or workers comp.
Ask yourself: What’s included in the monthly fee, and what might trigger extra charges? For example, is tax penalty protection covered, or is it an upgrade? Are features like compensation management, same-day direct deposit, or HR support bundled in—or do they cost more?
Also weigh the time savings. A payroll system that automates tax filing and payroll reports may save you hours of manual work, which offsets the upfront cost. Small business owners should look beyond sticker price and consider the full value of the payroll solution, especially when factoring in compliance, accuracy, and potential penalties for mistakes.
5. Take advantage of trials or deals
Many payroll services offer free trials, demos, or limited-time deals, so take advantage of them. A trial lets you test the payroll system firsthand and evaluate whether it fits your payroll process, workflow, and team size.
During the trial, try running a mock payroll calendar, approving payroll, or generating payroll reports. See how easy it is to pay employees, manage payroll data, and handle tax forms. Don’t forget to test HR features like employee onboarding or benefits administration if those are important to you.
Some payroll companies also offer discounts for new customers or bundled payroll and HR packages. These can be a cost-effective way to get started. Just be sure you’re not compromising on compliance or long-term support in exchange for a short-term deal. A trial period is one of the most powerful ways to avoid costly penalties and confirm you’ve chosen the right payroll provider.
6. Evaluate support and compliance
Beyond just enabling you to pay employees, your payroll service should also help you stay compliant with tax laws and avoid costly penalties.
As such, look for payroll experts who can provide ongoing guidance, help you stay compliant with ever-changing tax rules, and answer questions about payroll taxes, new hire reporting, or HR tasks. Reliable support ensures that when issues arise, you won’t be left figuring things out alone.
7. Plan for scalability
Whether you’re adding more employees, expanding HR functions, or offering new payroll options like health benefits or contractor payments, scalability is key. Small business payroll software that can adapt as you grow saves you from switching systems later and makes it easier to process payroll with minimal effort as your business journey evolves.
Final Words
Payroll software may not be the most exciting topic, but it is vital for any business with employees. By choosing a payroll service provider that aligns with key business needs and goals, you can turn away from tax documents and spreadsheets and instead focus on growing your business. Another way to streamline and save time, energy, and money in your business is to ensure you are getting the best credit card processing rates for your business needs. This is where Stax comes in. Contact us today for a customized quote.
FAQs about Payroll
Q: What factors should I consider when choosing a payroll system for my small business?
A prospective buyer should consider the ease of use, cost-effectiveness, scalability, compliance with legal regulations, integration capabilities with other business tools, headcount, budget, and tax compliance.
Q: What are the main features I should look for in a payroll system?
Key features to look for in a payroll system include a user-friendly interface for benefits management, self-service capabilities for onboarding and customer support, scalability to grow with your business needs, automatic tax calculations for federal, state, and local taxes, and seamless integration with accounting software or HR tools.
Q: Why is cost-effectiveness important when selecting a payroll system?
Not every payroll solution offers the same pricing structure. It’s essential to assess what specific features you require so you don’t pay for tools you aren’t using. A full-service payroll system may cost more, but it might be overkill for many small businesses.
Q: What does a scalable payroll system mean?
A scalable payroll system allows you to upgrade plans for more capacity or subscribe to add-on services as your business grows. It essentially grows with your business, ensuring that you and your employees are always covered.
Q: How can a payroll system help with compliance and taxes?
A good payroll solution offers automatic tax calculations for all levels of taxes and stays updated with regulation changes. It is beneficial to opt for a payroll provider that also includes year-end tax filing services.
Q: Why is it crucial for a payroll system to integrate with other business tools?
Integration capabilities allow for the easy sharing of information between systems. This ensures business owners and human resources personnel have access to important data when they need it.
Q: How does the ease of use feature aid in handling payroll tasks in a small business?
A user-friendly payroll system simplifies what can often be complex payroll tasks, streamlining processes or benefits management. Additionally, self-service capabilities aid in onboarding and customer support, making the entire process more manageable for businesses.
Q: What are some of the potential drawbacks of payroll systems?
Some common critiques can include a lack of transparency, over pricing, core features such as employee benefits management only being available as add-ons, and poor customer support. Other possible issues could include limited functionality for filling multistate taxes or a lack of HR and benefits services.
Q: What are the benefits of implementing a payroll system for a small business?
Implementing a payroll system ensures accurate and timely payment of salaries, helps with tax calculations and compliance, possible integration with other systems for smooth data sharing, and contributes to overall cost savings. Small businesses can then focus more on growth and less on administrative tasks.
