How to Select & Implement Payroll Software You’ll Love?

payroll software
Source: Pexels by Tima Miroshnichenko

You need a software that meets your business needs—reduces manual work for teams, saves time and is budget-friendly.

Here’s the thing, every business has different needs. Maybe you are looking for a payroll software with an average budget, or you might be looking for a software that is durable and easy to use.

Buying a payroll software for your business becomes stressful when you have no idea where to start from.

To help you find the right payroll software that meets your business guide, keep reading.

How To Choose Payroll Software?

How often do you scroll through Google to determine whether product ‘X’ is suitable for you or not? Well, that’s the same before selecting the payroll software. Understand what are your exact requirements.

To find this out, ask yourself a few questions to determine the right payroll software for you:

  • How many full-time and contractual employees does your business support?
  • How large is your business?
  • What is your budget for payroll software?
  • How often would you use payroll software?
  • Who will execute the payroll, and do they have the experience to use payroll software?
  • Would you be printing out payroll slips?

By asking these questions, you will find out your business needs: features, costs, ease of use, durability, and size of the payroll software.

Make sure you choose the software that can manage your reporting requirements. This includes payroll summary, deductions, payment, tax summary, tax liability, and W-2 summary reports.

Make sure your payroll software complies with federal, local, and state legislations. This will help save your business from legal penalties and financial losses.

Research is that you don’t know, but are willing to find out.

— Charles F. Kettering

Once you have laid the foundation of what type of payroll you need to select, understand your payroll software features.

Some of these features include self-service terminals, tax filings, integrations, etc. By knowing the characteristics of payroll software, you will find out the payroll software best suited to your business needs.

First, analyse the size of your company, your business requirements, and the features that you desire to have in your payroll system. Once this is done, you can decide your payroll budget and shortlist the payroll software that meets your budget.

To determine your budget, let’s break down the pricing into smaller sections:

  • Base fee

This is the flat fee that the payroll software subscription charges you.

  • Taxes

Make sure there are no hidden costs before buying the subscription. Check if any additional tax charges are applied along with the subscription.

  • Pay Runs

Know on what basis you want to be charged for the payroll software. There are two ways in which the payroll software charges the base fee — how often do you use the payroll or the number of employees you’re performing payroll for.

  • Set-Up Costs

You have to decide if you will be setting up the payroll software by yourself or require a helping hand from the payroll service team. If you take help from the service centre, you will be charged an additional setup cost.

I don’t read reviews. I measure them.

— Arnold Bennett

Social reviews are an excellent way to assess any product. Go through the customer reviews and analyse a payroll software before making a decision.

Capterra, G2 and Trust Radius are some of the websites where you can read reviews for payroll softwares.

software review
Image: Review for payroll software on Capterra

Once you have gone through these stages, look back and review your budget, the free trial, the features, your business requirements, and the customer reviews. Analyse the pros and cons of the softwares & select the right one for your business needs.

Most of the payroll softwares offer a free trial. Some of them might offer a freemium, 7, 14 or 40 days trial. Opt for these free trials and see if they meet your requirement.

free trial offered by payroll software
Free Trial Offered by Zoho Payroll

Here, Zoho Payroll offers a free trial to its customers. The customer has to sign up for their tool. By doing this, you would be able to access their software for free for 30 days.

If the product meets your business needs, you would end up purchasing it and if not, you will move to another software. There’s no harm opting for the free trial.

How to implement Payroll?

Set up your employer identification number (EIN) using the IRS. If you are new to the business, you can apply for EIN online from the IRS website. The goal of this identification number is to help the IRS identify your business.

Collect all the tax information from your employees. This means every employee in your company should fill W-4 & I-9. For contractual and freelance employees, collect the 1099s.

In this payroll form, employees need to fill in all the important details about their work status, tax collection, and deductions. When the employees fill out all these details, only then can you process the payroll for them.

Decide how you want to pay your employees. There are four different types of payroll schedules you can choose from: weekly, biweekly, semi-weekly, monthly. Find out which payroll schedule works the best for your business.

Gross pay is the number of hours an employee has worked in a given pay period multiplied by the hourly rate.

Let’s understand how to calculate gross pay with an example:

Your employee, Ritu has worked for 95 hours in a monthly pay period. She is paid $15 per hour. Your pay period for a month is 90 hours. Let’s calculate this now:

  • 90 hours * $15 per hour = $1350

Ritu has overworked for 5 hours. So let’s calculate her overtime pay.

  • 5 hours * $ 15 per hour = $75

By adding the pay period and the overtime pay, you get the gross pay.

  • $1350 + $75 = $1425

So, the gross pay for Ritu is $1425.

Allowances are the money that is taken out of your paycheck during the year. Deductions are the taxes that the employee allows to get deducted from their monthly salaries. For this, the employee fills the 1040EZ form.

Net pay is the total payment that the employees get after all the deductions.

To calculate the net pay of your employees, subtract the deductions from the gross pay. Here’s the formula to make it clear for you-

Net Pay = Gross Pay - Deductions

Here’s what you need to know..

  • Understand your business needs and what goal you want to accomplish with the payroll system.
  • Know the features that you need in the payroll software — tax filing, direct deposit, payroll reports, employment options, and more. The key is to understand what features you want and focus on the software that will fulfil your requirements.