Looking for the all-things-guide around payroll software for small businesses? Then, this is it. You have found the right page. Such software is essential for small businesses as they contribute payroll to more than a third of the private sector. This is a significant amount, which we can’t ignore.
Did you know that around 30% of small businesses make payroll errors? To us, it is an alarming rate. On the other hand, small organizations that use software for payroll avoid these errors. Honestly speaking, we cannot avoid making a few manual payroll mistakes manually. In fact, all manual payroll and invoicing mistakes are inevitable.
Overall, payroll software for small businesses transforms payroll procedures in a significant way in today’s digital era. In this post, you will get various insights to accrue your payroll including why it is crucial and more. Plus, we will leave you with the best software solution.
Why is Payroll Essential for Small Businesses?
Payroll with or without the software for payroll for HR is an important aspect of running a small business. Simply put, it’s the backbone, which keeps everything in the enterprise standing straight and running smoothly. To summarize, how you process your payroll can make or break your day-to-day operations. Here are a few reasons why.
- Efficiently processing payroll is essential for filing taxes as per the federal law of your state or nation. It is crucial as failure can lead to fines and/or penalties.
- It helps in correctly compensating your employees, resulting in higher employee retention rates.
- Correctly paying the salaries and bonuses of employees leads to better work performance as employees get the motivation to earn more. Plus, it also strengthens trust between you and your employees.
- Efficient payroll also ensures that you don’t go bankrupt as it ensures optimal expenses and financial management.
Read Also: Top 10 Office Management Software for Your Business
17 Challenges of Manual Payroll Processing
So now we know why payroll is important for small enterprises. However, processing it without payroll software for small businesses can have dire consequences. So, let’s take a look at these 17 disadvantages of manual payroll processing.
1. Manual Attendance Tracking
Without payroll processing software, you will also have no choice but to manually track employee attendance. A thing to remember about employee attendance is that it is uncertain. You will have to account for many things, which is a lot of work including:
- Emergency leaves
- Paid and unpaid vacations
- Half days
- Casual leaves
- Resignations and terminations
You can make many errors here including still paying a terminated employee because you forgot to cross off their name from the payroll list. Overall, this is just one of the many issues without payroll software for small businesses.
2. Inefficient Calculations
Without the right payroll for small business software, the possibility of inefficiencies and errors in calculations increases by up to 69%. Plus, around 60% of small businesses face payroll fluctuations according to the no. of employees they hire.
3. Security Issues
Without payroll software for small businesses, up-and-coming enterprises will have serious security issues with their data. Here’s why.
- Storing the personal information of your employees in paper copies or Excel sheets is not at all secure.
- Failing to protect sensitive data can decrease or eliminate the trust your employees have in you.
- Manual payroll processing increases the chance of confidential data leaking. You don’t want this information to fall into the wrong hands. Don’t you?
4. Costly
Let’s consider not using small business software with payroll for a moment. You can hire an entire payroll team. However, won’t that be expensive? Even large enterprises don’t do such a thing these days.
5. Low HR Productivity
Payroll is an essential task for your HRs and administrators. However, other duties are as important if not more. Without payroll software for small businesses:
- The entire focus of your HR will be on payroll, which will lead to securing less time for other tasks.
- It will significantly impact and reduce the HR productivity, which directly affects:
- Employee onboarding.
- Employee retention.
- Behavior analytics and reporting.
- Employee grievance.
6. Documenting Issues
Even a small business has at least 10-49 employees, which is seemingly a lot. Especially when it comes to documentation. Without the right software for payroll.
- Documenting your employees will consume a lot of time.
- Paper files can get lost due to any major or minor handling mistakes.
- Re-documenting lost information adds more unnecessary time to the work.
- There are also high chances of errors in documentation, which can lead to non-compliance fines, and penalties.
7. Challenging Compliance
Even small enterprises need to meet compliance standards. Payroll software for small businesses plays an important part in it. Without such tools:
- You can fail to meet compliance regulations as it’s challenging to perform manually.
- It can impose harsh penalties and fines on your business.
8. Time-Consuming
Processing payroll without software for payroll for HR will consume a lot of your valuable time. It is because payroll is not as simple as it sounds.
- It involves compliance with your state’s labor laws.
- You also need to balance adhering to your business policies with it.
- You also need to account for the total work hours of employees, which also includes idle and break hours.
- Considering your pay cycle is also essential. Whether you pay your employees weekly, monthly, yearly, bi-weekly, or semi-monthly payroll will affect how you calculate salaries.
Other than that, payroll calculations are also complex. There is also the need to convert hours and minutes into the decimal format. Overall, all of this is time-consuming.
9. Employee Performance Considerations
Your administrators need to manage many major and minor tasks and work. However, without the right payroll software for small businesses, they will be extensively managing employee compensation. Here’s why:
- The employee data is extensive. It includes:
- Leave requests.
- Reimbursement applications.
- Overtime pay requests and more.
- Manually recording this data in Excel sheets and uploading is tedious and inefficient.
- It will involve complex time-consuming computations without the right tool.
10. Additional Hiring Expenses
Without payroll processing software, you will need to hire an additional permanent or temporary workforce to calculate employee salaries and payments. So what do you think? Will they join you for free? Overall, hiring additional staff just for one task that software can automate will add to your expenses, which include:
- Business equipment and software expenses.
- Maintenance costs.
- Corporate celebrations and tour expenses.
- Customer refund expenses.
- Paid vacations and leaves.
- Overtime pay and more.
Read Also: Human Resource Management Software: The Complete Guide
11. Slow Evaluation
Without the right payroll software for small businesses, you won’t have instant access to payroll data. So in case you want to evaluate past data for reporting, you will have to tediously search for the right information, which is again time-consuming.
12. Anxiety and Burnout
If your payroll ship is not sailing smoothly, there will be more consequences to it than just fines and penalties. Let’s see what else can happen if you don’t have the payroll for small business software.
- There is no guarantee that your HRs can fix the errors on the first try. Re-errors will only add to their total work hours.
- It will reduce overall administrative efficiency.
- There’s a lot of pressure on your HRs. Thus, they will be scolded for mistakes they didn’t even make.
- It will lead to anxiety and burnout, which will have a poor impact on their mental health.
- Overall, you will be looking for a new HR expert even before you realize it.
13. No Remote Access
Suppose you need all the extensive payroll data urgently and your HR is at home. In that case, your HR will not have remote access to it without the right payroll software for small businesses. Plus, you can’t expect your administrative head to take all these files and documents home every day.
14. Extensive Resource Requirement
Without the right small business software with payroll, you will need extensive resources to accurately calculate employee pay. These resources including genuine Microsoft Excel, calculators, and advanced systems will incur unnecessary expenses.
15. Limited Reporting
Manual payroll systems as opposed to payroll software for small businesses don’t provide you with advanced reporting. What it does is create problems in tracking data and analyzing employee information.
16. Difficult Maintenance
Maintaining manual software for payroll is a tough job, especially as businesses grow and hire new employees. As a result, we can see that you will face challenges including:
- Inconsistent calculations.
- Inconsistent reporting.
17. Misclassification
Other than your regular employees, you also have other people working for your small business. These include contractors, part-time employees, investors, and stakeholders. Each of these have specific permissions. For example, your employees may be entitled to certain benefits, which you may accidentally provide to contractors due to misclassification. Overall, the chances of it happening are higher if you are not using payroll software for small businesses.
What is Payroll Software for Small Businesses?
So now you know the need for software for payroll for HR. However, what is it? Simply put, it is a feature-rich advanced digital solution, which simplifies and accrues your payroll processes via automation. What it does is:
- Streamline payroll management and other functions.
- Automates and accrues payroll calculations.
- Secures employee information.
- Helps you adhere to compliance standards, labor laws, and regulations.
- Saves valuable time for your HRs to attend to other crucial matters.
Read Also: Calculating Payroll Hours: The Complete Guide
11 Features and Benefits of Payroll Software for Small Businesses
So now you know what payroll software for small businesses does. However, how does it do it? Let’s take a look at the 11 features and benefits.
1. Automated Payroll Processing
As the name suggests, payroll processing software automates all the payroll calculations. This not only saves time but also provides you with accurate results. Overall, it eliminates the issue of recalculations and checks.
2. Direct Deposit
Another great thing about payroll software for small businesses is that it boosts employee satisfaction. Because of the direct salary deposit feature, employees’ salaries will be transferred to their bank account within a few clicks.
3. Tax Withholding and Filing
An essential part of payroll processing is tax withholding and filing, which can be tedious. Fortunately, payroll for small business software also provides you with the feature of automated tax management, which ensures there are no mistakes.
4. Employee Self-Service Dashboards
In a usual case scenario, employees storm HR offices with many questions regarding their salaries, pending leaves, bonuses, and other queries. Typically, answering all of these questions wastes time. Well, not anymore, payroll software for small businesses provides your employees with self-service dashboards, where they can track and manage all their information.
5. Analytics and Reporting
Choosing the right small business software with payroll will also ensure detailed analysis and reporting. This is a feature, which helps a lot. Especially when the need is to compare payroll data for evaluations.
6. Accounting Software Integration
A good thing about payroll software for small businesses is that it can also integrate with your accounting software. What this does is:
- Brings accounting and payroll together on a single platform.
- Streamlines the entire accounting and payroll process.
- Adds additional functionality to the software.
7. Security and Compliance
What we like about software for payroll is that it also provides you with excellent security features to keep your confidential and personal employee data safe. Plus, the software also helps you stay updated with the latest compliance standards, labor laws, and regulations.
8. Affordable
The biggest issue with small enterprises when buying any asset is to look for affordability first. However, we can assure you that payroll software for small businesses is affordable. Plus, the best ones even provide additional features other than just payroll.
9. Seamless Scaling
Your small enterprise will surely grow into a medium-scale and then become a large business. So will your payroll processing software. It means that you can:
- Add and remove features as per your changing requirements.
- Allow more integrations.
- Frequently update and upgrade the software to meet your new requirements.
10. Customizable
No 2 businesses are the same. So the payroll software for small businesses isn’t. That’s the great thing about such software. You can customize the features as per your varying business requirements to get the best output. Software personalization can be done:
- Based on business size.
- As per the number, size, and diversity of your teams.
- According to your needs, goal settings, targets, and objectives.
11. Remote Access
That’s the great thing about software for payroll. You can access employee data from anywhere with either the mobile app or the mobile version (browser, integration, and/or extension). It ensures that you will have the necessary information whenever you need it.
Read Also: Best 5 Ways to Calculate Employee Productivity in 2024-25
5 Steps to Choose the Best Payroll Software for Small Businesses
As we mentioned before, payroll software for small businesses is affordable. However, you can’t just pick any software and hope it works as per your requirements and goal settings. Fortunately choosing the right solution for payroll takes only a few steps.
1. Cost Analysis
Although software for payroll for HR is affordable, you still need to evaluate the costs involved. It is essential to determine the return on investment to select the best software. Furthermore, having a budget ensures that you don’t spend all your profits on mere software.
2. Requirement Analysis
What will the payroll software for small businesses automate for you? Which features and functions do you require? What is the expected boost in accuracy? Answering such questions will help you make a better shortlist of the best-fit options.
3. Essential Features Check
The next step in selecting the best software for payroll for your organization is feature analysis. Here, you will need to check for the required features and their scalability levels.
4. Shortlisting
Now that we are done checking the features, costs, and requirement analysis, you can make a list of the best payroll software for businesses. So far if you have done everything right, your list will only have a few best-fit options as per your needs.
5. Get a Free Trial
Now that we have a shortlist of the best software for payroll, we can get down to business. Availing of free trials ensures that:
- Whether the software will work as per your diverse requirements or not.
- It helps you cut off software solutions that aren’t the best fit.
Top 10 Payroll Software for Small Businesses
Unless you have a dedicated team for it, it’s wise to choose the best payroll software for small businesses from expert shortlists. Otherwise, it will waste your time contrary to the purpose for which you are looking for tools for payroll automation.
- DeskTrack
- Deel
- Rippling
- Paycor
- Remofirst
- RUN Powered by ADP
- myHR Partner
- OnPay
- Xero
- Paychex Flex
1. DeskTrack
DeskTrack is more than just software for payroll automation. It’s an integration of intuitive employee monitoring, project management, productivity tracking, and time tracking features. In our opinion, DeskTrack is the best for your remote, field, and in-office teams and employees.
| Best For | Initial Pricing | User Rating |
| Best overall | $5.99/user/month | 5/5 |
2. Deel
Deel is a cloud-based software for payroll for HR, which claims to be ideal for businesses of all sizes. What we like about it is that it lets you hire additional workforce from anywhere hassle-free. I.e., the software will take care of local laws, international payroll, and tax systems.
| Best For | Initial Pricing | User Rating |
| Global payroll service with free HR tools | Flat rate user pricing | 4.8/5 |
3. Rippling
Rippling is the payroll software for small businesses, best known for workflow and payment templates. It’s a global tool that lets you pay international employees and contractors worldwide. Furthermore, you can send payments via checks or direct deposits, which is a convenient feature.
| Best For | Initial Pricing | User Rating |
| Workflow and payment templates | $8/user/month | 4.8/5 |
4. Paycor
Paycor is one of the leading human resource tools and the best software for payroll for automating processes. The best thing about Paycor is the integration with accounting and 401K software solutions, allowing you to manage payroll and employee benefits without any difficulties.
| Best For | Initial Pricing | User Rating |
| Single solution for payroll and benefits management | Quote on contact | 4.1/5 |
5. Remofirst
Remofirst is one of the best payroll software for small businesses for payroll and employee benefits management. The software is the most effective for your global and remote teams. However, what we like about Remofirst is that it also provides you with a complete HRIS.
| Best For | Initial Pricing | User Rating |
| Global workforce payroll management and EOR system | $25/user/month | 4.4/5 |
6. RUN Powered by ADP
RUN from ADP is an HR and payroll processing software, which offers quick and accurate payroll and tax services for small businesses. Plus, it also helps you adhere to federal and state tax laws.
| Best For | Initial Pricing | User Rating |
| Automating payroll processes | Quote on contact | 4.5/5 |
7. myHR Partner
myHR Partner is all about tailor-made HR solutions and payroll software for small businesses. It provides you with a plethora of features including payroll management, compliance management, and benefits administration.
| Best For | Initial Pricing | User Rating |
| Personalized payroll administration | Quote on contact | 4.8/5 |
8. OnPay
Looking for a payroll for small business software for handling tax filings? We recommend OnPay. Thanks to its automated tax filing feature, it will manage your federal, local, and state taxes.
| Best For | Initial Pricing | User Rating |
| Automated tax filings | $6/user/month | 4.8/5 |
9. Xero
Xero is one of the best payroll software for small businesses for enterprises that want and need simple features. Plus, the best part is that it’s primarily a cloud-based accounting software, meaning that you won’t have to look anywhere else for additional accountancy features.
| Best For | Initial Pricing | User Rating |
| Businesses that want simple features | $15/month | 4.4/5 |
10. Paychex Flex
This software for payroll for HR on our list lets you run your payroll on desktops and smartphones. What makes this one unique is that you can submit payroll to one of its specialists for hands-free payroll checks, approvals, and submissions via the voice assist feature.
| Best For | Initial Pricing | User Rating |
| Hands-free payroll reviews and approvals | Quote on contact | 4.2/5 |
Read Also: Top 15 Best HR Software for Your Business in 2024
Why is DeskTrack the Best Payroll Software for Small Businesses?
As we mentioned before, DeskTrack is more than just software for payroll automation. It is the best, most affordable, and intuitive time tracking, employee monitoring, productivity monitoring, and project management integration with these helpful features, tools, and functionalities:
- Seamless integrations with the other tools and apps you use including accounting software.
- Direct transmission of employee work hours for faster and more accurate payroll processing.
- Real-time and automated detailed analysis and reporting and more.
Conclusion
We hope that now you are clear about payroll software for small businesses. Payroll is an essential part of even small enterprises. So how you do it can make or break your day-to-day operations. On one hand, manually processing payroll is prone to errors, is inefficient, time-consuming, and can cause stress and burnout, reducing administrative productivity. However, the bigger picture is that payroll errors can have you facing many fines, lawsuits, and penalties. Alternatively, automating payroll processes with dedicated advanced software solutions will help you accrue payroll, boost efficiencies, secure data, and even access from anywhere remotely. But to get the best output, you need to choose the best-fit software solution for payroll automation for your business. Otherwise, it will be a waste of time. So unless you have a dedicated team for it, searching shortlists is better. However, what if you need more than payroll automation? We recommend DeskTrack.
Frequently Asked Questions (FAQ)
Q. What is Small Business Software with Payroll?
Ans. Small business software with payroll is a feature-rich digital solution that helps small businesses eliminate payroll errors with automated processing and simplification. It helps you streamline payroll management and comply with the latest labor laws, tax rules, and standards.
Q. What are the Benefits of Using Software for Payroll for HR?
Ans. Using software tools for payroll automation provides you with many advantages including:
- Automated Payroll Processing
- Direct Salary Deposit
- Tax Withholding and Filing Automation
- Employee Self-Service Dashboards
- Detailed Analytics and Reporting
- Accounting Software Integration
- Robust Security and Compliance
- Affordable
- Seamless Scaling
- Customizable
- Remote Access
Q. Which are the Best Software Solutions for Payroll?
Ans. To help you choose the best software for payroll for your small business, we shortlisted the best options for you.
- DeskTrack
- Deel
- Rippling
- Paycor
- Remofirst
- RUN Powered by ADP
- myHR Partner
- OnPay
- Xero
- Paychex Flex
