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26 Payroll Software Reviews Found
APS OnLine
Vendor Name: APS Payroll
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BenefitMall
Vendor Name: BenefitMall
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Dayforce Payroll
Vendor Name: Ceridian
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CheckMark Payroll
Vendor Name: CheckMark Inc.
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EPAY Payroll
Vendor Name: EPAY Systems
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Gusto
Vendor Name: Gusto
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Highflyer HR
Vendor Name: Highflyer HR
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iManage
Vendor Name: CBS
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Namely
Vendor Name: Namely
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neonPay
Vendor Name: neon
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Optimum Payroll
Vendor Name: Optimum Solutions
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PrimePay
Vendor Name: PrimePay
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QuickBooks
Vendor Name: Intuit
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CenterPoint Payroll
Vendor Name: Red Wing Software
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SurePayroll
Vendor Name: SurePayroll
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SyncHR
Vendor Name: SyncHR
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Evolution Payroll
Vendor Name: TelePayroll
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Payroll Software Buyer’s Guide 

Introduction 

All businesses need to accurately pay their employees. But manually processing payroll can be expensive and time-consuming. This is where payroll software comes in. 

However, payroll solutions are typically not one-size-fits-all packages. This guide will walk you through the different types of payroll solutions, their features, benefits and challenges. We’ll also provide advice on how to choose the right payroll solution. 

Payroll Statistics 

  • Revenue for cloud-based payroll software is expected to grow to $13.3 million by 2026 at a compound annual growth rate (CAGR) of 6.8% between 2019 and 2026. Source: Zion Market Research 
  • 29% of payroll professionals report that their software is more than 10 years old. Source: Kronos/American Payroll Association 
  • 90% of payroll professionals want their next software to have secure, role-based access features. Source: Kronos/American Payroll Association 
  • 83% of payroll professionals report that their employer uses a payroll solution with self-service functionality. Source: National Payroll Week 
  • 57% of HR professionals use HR software for time and attendance purposes. Source: Paychex 2019 Pulse of HR Survey 
  • 60% of HR professionals feel their software is very effective for their payroll, benefits administration and time tracking needs. Source: Paychex 2017 Pulse of HR Survey 

 

What is Payroll Software? 

Payroll is more than just cutting employees a check. 

There are payroll taxes to withhold (on the federal, state and local level, as well as Social Security and Medicare), deductions for specific benefits (e.g. health insurance or retirement contributions) and even wage garnishment (in the case of child support). 

Another factor to consider is if work is being done by contractors (e.g. freelancers or temp/staffing agencies). Payroll administrators would also need to consider whether employees are exempt from overtime, plus bonuses and any pay raises. And finally, a multinational corporation would need to factor in taxes, payment and labor laws for their employees who reside in another country. 

The payroll process tends to be completed in biweekly increments. However, some businesses pay their employees weekly or monthly. Companies have the option to either pay their employees manually via checks or directly deposit paychecks in their employees’ bank accounts. 

Payroll vs. Accounting Software 

Payroll software and accounting software tend to overlap. Because accounting software focuses on all income and expenses of the business (including taxes and employee pay), payroll management is often included as a standard or add-on feature. Examples of payroll management features include payroll processing, withholding and paying taxes, and issuing paychecks. 

Some businesses may prefer to process payroll via their accounting software, if offered. However, the payroll function may not include all features of a dedicated payroll solution (e.g. tracking benefits or time and attendance).  

Payroll: Outsourcing or In-House? 

Some businesses outsource the payroll function to a third-party company. 

One reason why a company would outsource payroll would be that it’s too small and theres no dedicated payroll administrator, so the business owner or his/her accountant would have the responsibility. Another reason is to eliminate the expense of an in-house administrator or payroll software. Companies also outsource payroll because it’s tough to keep up with the complex payroll tax codes and their annual changes. 

However, outsourcing payroll does have its challenges. Services can cost more than payroll software, there‘s a risk of paycheck mistakes, and employees’ personal information may not be secure. 

For some businesses, outsourcing payroll makes sense. But others may prefer to handle payroll in-house with a payroll system. 

Types of Payroll Software 

Payroll software tends to be targeted toward company size – there is no one-size-fits-all solution. Some vendors may only offer solutions available just for small businesses or large enterprises, while others offer a range of solutions intended for specific industries. 

Here are the breakdowns of software by business types. 

  • Intended for smaller businesses (less than 50 employees) 
  • Intended for medium-sized businesses (50 to 100 employees) 
  • Intended for larger companies (100+ employees, multiple locations, locations in different countries, etc.) 

Common Payroll Software Features 

Payroll software includes many different features. Some features may be standard, while others may be add-ons. We’ve listed several common features below. 

Payroll processing: The payroll processing feature automatically calculates the employee’s gross pay based on hours worked (gathered either from a time-tracking module or manually entered from a timesheet), as well as any deductions for taxes, insurance, retirement contributions, etc. It also takes any bonuses, raises or additional pay into account. 

Tax management: The tax management feature automatically calculates the federal, state, and local tax that is deducted from each employee’s paycheck. It also automatically applies any tax code changes and alerts the user of these changes. 

Tax form preparation: At the end of each year (or quarter, depending on the business), employers need to report their employees’ withholdings and file their taxes. Payroll software helps users file tax forms by preparing them – the users can either print them out or send them electronically. Payroll also prepares W-2 or 1099 forms for employees and contractors. 

Direct deposit and check printing: Direct deposit is a common feature with payroll, and many employers take advantage of it. However, payroll systems also allow the administrator to print paychecks. In some cases, employers have the option to pay their employees by paycard (similar to a debit or credit card). 

Time and attendance management: The time and attendance feature records the time employees work. Employees can clock in via this system (if they’re hourly) or via a manual time clock (where the data is manually entered into the payroll software). Salaried employees can fill out either an electronic or manual timesheet. The feature also tracks vacation and sick time. Some payroll systems have the time and attendance feature built in, but others may require integration to an attendance module. 

Benefits management: Benefits management can either be a built-in feature or a separate module, depending on the software. Employers can keep track of benefits they offer, such as insurance, retirement, vacation/sick time, and other benefits. 

Employee self-service: With employee self-service, workers can view their current paystubs as well as past paychecks. Depending on the software, they can also view their benefits information and request time off. The self-service portal can be accessed via a web browser or even as a mobile app. 

Reporting: Many payroll software provides users with reporting functionality, such as gross-to-net payroll register, compensation analysis, tax reports, deduction analysis and more. Reporting templates are typically offered; however, the user can also create custom reports. 

Integration with accounting or HR systems: Most payroll software can integrate with another system, such as an accounting software or a human resources management system (HRMS). Users may also have separate modules for benefits and time and attendance that can integrate with payroll systems. 

Top Benefits of Payroll Software 

Using payroll software has several benefits, including: 

Ensures accuracy with employees’ paychecks: By using payroll systems, payroll administrators won’t need to worry about inaccuracies with employees’ paychecks, as there’s a reduced risk of mistakes. 

Less time-consuming than manual payroll: If an administrator has other tasks, he or she won’t have a lot of time to process payroll. And manually calculating taxes and other deductions can be a hassle. With many payroll solutions, the user just needs to enter the number of hours the employee worked (and other information from a timesheet), and the software takes care of the rest.  

Reduces costs for outsourcing payroll tasks: Depending on the payroll provider, payroll outsourcing tends to be expensive. Companies save money by having a dedicated in-house payroll solution. And more solutions are offered in the cloud on a subscription basis – companies will only need to pay a monthly or yearly subscription fee. 

Fewer worries about security of employees’ personal information: When using an outside company for processing payroll, there’s always a risk that employees’ personal information can be compromised. This can be the case even with due diligence in researching companies and if the company has the most secure servers or software. 

Reduced risk of non-compliance with payroll taxes/IRS: It’s difficult and time consuming for companies to keep up with tax codes and other IRS changes, especially since they change yearly or even quarterly. Many payroll software solutions can automatically make tax updates and then notify users of these updates. 

How to Choose a Payroll Solution 

There are many payroll solutions out there that vary in features and pricing. It’s key to research all of your options before making a purchase. We’ve listed four important steps below. 

1.) Knowing your company’s needs 

Before researching any vendors, you’ll need to consider your needs and requirements. Are you a small business that currently relies on an outside accountant or third-party company for payroll processing? Would a dedicated payroll solution fit your needs or is it better to purchase an HRMS for its payroll features? 

You’ll also want to ensure the key players at your company (e.g., top executives or accounting staff) are on board with implementing payroll software. 

2.) Creating a shortlist 

Once you’ve established your objectives for a payroll software solution, create a shortlist of vendors that best fit your needs. We recommend listing out the must-have features, as well as the nice-to-have ones, to help determine the type of solution you’re looking for. 

In addition to features, you’ll need to consider the vendor’s deployment options (e.g., on-premise, cloud), implementation processes and customer support. 

3.) Contacting vendors 

After making a shortlist of vendors, it’s time to reach out to them. Explain your objectives and the features you require in a solution. You’ll also want to request a demo of the software with real-data scenarios, if possible. Vendors offer virtual demonstrations, but it can also be useful to ask if a vendor is willing to meet with you at your office. Another way to test the software is to participate in a free trial, if there is one. Most vendors offer a 14-day or 30-day free trial. 

You’ll also want to compare different price quotes you received. We explain more on pricing in a separate section below. 

4.) Conducting due diligence 

When you’ve selected your top two or three vendors, ask for references from their current or previous clients. While vendors tend to give you the clients with the most glowing recommendations or experiences, ask to speak to clients that are in the same industry or are the same size as your company. You’ll want to see not just the positives of the solution or vendor, but any issues the client has experienced as well. 

Pricing 

Payroll software prices usually depend on the number of employees and level of features. There are three common payroll software pricing plans. 

Per month, plus per employee monthly subscription plan: In a software-as-a-service (SaaS) pricing model, companies pay a monthly fee to access software through the cloud. The most common subscription plan for payroll software is a per month, plus per employee monthly fee. 

Monthly subscription plans often come in several tiers with varying levels of features and services. The most expensive plans may include more technical support, HR advice and a dedicated accountant to review and file taxes. 

This option is popular with companies of all sizes because the monthly fee is small and the per employee, per month fee is scalable. Companies also have flexibility in the features they choose to deploy. 

Per month subscription plan: Some vendors offer a per month subscription plan that includes an unlimited number of employees. These solutions, however, generally have limited functionality and support. 

The ideal customers for per month subscription plans are small businesses that don’t have extensive payroll needs. Larger companies will likely need more comprehensive features like tax filing and the ability to edit employee checks. 

Perpetual license fee: Companies that deploy enterprise resource planning (ERP), HRMS or accounting solutions on-premise can often purchase a perpetual license for a payroll module as well. This one-time fee is generally much higher than a monthly subscription price and doesn’t include upgrades. 

With a perpetual license, however, companies have more control over their data. In addition, the payroll module is better integrated with the solution’s other modules for accounting, HR, and time and attendance. 

For more specific vendor pricing, head over to our payroll software pricing guide. 

Challenges of Payroll Software 

Payroll systems, while beneficial, come with challenges, including: 

Getting buy-in from top executives or accounting staff:  Getting buy-in from your key players can be a challenge, especially if they prefer outsourcing payroll versus having it in house. Or if they aren’t sure about purchasing a dedicated payroll system. 

Getting buy-in from IT: Another challenge is getting buy-in from IT staff, as they’ll have concerns on security and software hosting. IT may feel they don’t have enough resources to host the solution on-premise, so having the vendor host the solution is better. On the other hand, IT may prefer to host the software on-premise for security reasons, so having a cloud solution may not be a good choice. 

Lacking the required features:  Issues with features may be more challenging for small businesses, as solutions targeted to that audience may not include every payroll feature. Also, certain HR functions (such as time and attendance management or benefits management) may either be optional add-ons or not offered at all. 

Lack of integration with existing systems: Having a payroll solution integrate with a business’ existing systems (e.g. accounting or HRMS) is important so all the info is in one place without manual data entry. However, not all vendors offer this feature. 

Market Trends 

Like many other software markets, the payroll market has experienced changes in recent years. We’ve listed a few key market trends below. 

Pay schedules become more flexible: The traditional pay cycle tends to be biweekly or monthly. However, according to a CareerBuilder survey, 78% of employees are living paycheck-to-paycheck, and if unexpected expenses come up, they can’t wait until their next scheduled paycheck. There could be cases where an employee asks for a partial advance on their next paycheck, so payroll software vendors have come up with ways to pay employees outside the regular cycle. 

For example, Gusto’s Flexible Pay lets employees choose the day they want to get paid and then advances funds to the employee’s account. The funds are then repaid during the next regular payroll cycle.   

Artificial intelligence (AI) will be a key feature: AI technology is becoming prevalent in HR software, especially employee lifecycle management. And payroll is no exception. One key example of how AI benefits payroll software is in time and attendance. To help fight issues with buddy punching and time clock fraud, and to verify time worked, AI can predict regular time tracking patterns and spot any discrepancies.  

More businesses are migrating to cloud-based software: In the past, payroll solutions were only deployed on-premise. Now that many vendors offer cloud-based deployment, more businesses are opting for it. The key benefits the cloud provides users are lower costs and no worries about having to install or maintain software and server upgrades. 

Hybrid payroll solutions: Companies are beginning to offer hybrid payroll solutions, which combine payroll software (available in the cloud) and payroll outsourcing. 

Hybrid solutions are especially beneficial for small businesses that still want some control over payroll data, but not the headaches of fully running payroll and ensuring tax compliance. One example is Patriot Software. Its Full Service Payroll package allows the business to process payroll straight from the software, while Patriot handles the tax withholdings and ensures proper tax compliance. 

Recent Payroll Software Blog Posts 

To stay up to date on what’s happening in the payroll software market, check out our most recent blog posts.