What Is Payroll Software?
Payroll software is a vital tool for any business that needs to pay its employees. It can be used to make tax payments, manage employee benefits and benefits selections, track time worked and attendance, calculate how much an employee should be paid based on hours worked, and more. Payroll software makes the process of managing payrolls easy by automating many of the tasks involved in managing a company's finances.
Blog: 3 Ways to Rule Out Vendors Without Getting on a Demo
What Payroll Services Can Come with Payroll Software?
Payroll software providers can help you with a variety of services, depending on your needs. Some of these include:
- Compliance Management- Ensuring that you are following all federal, state and local rules when hiring and firing employees, processing payroll and reporting to government agencies
- State Registration Services - Vendors can sometimes help you get set-up with state and local tax authorities, so you can file taxes automatically
- Payroll Outsourcing - Some vendors will provide payroll services that include fully outsourcing the payroll management process
How Are Payroll Taxes Managed by a Payroll Software Provider?
Payroll taxes are filed with state, federal and local authorities. Payroll tax rates vary by state and city, so payroll companies stay up-to-date on differences in tax codes.
Payroll taxes are calculated based on gross wages which the payroll system knows. Payroll taxes are deducted from employee paychecks and automatically paid to the proper authorities.
Payroll companies will file end of quarter and end of year tax filings on a company’s behalf
Blog: The 8 Best Modern HRIS Systems for Small Businesses
Best Payroll Software of 2022
Finding the right payroll software requires looking for a vendor that can meet today's needs and can support your business's growth over time too.
Learn More: Use our free Payroll matching tool to see which vendors are most aligned with your project goals
Gusto is a modern leader for companies who are looking for payroll and HR but don’t want to get stuck with the ADP’s and Paychex’ of the world. Gusto offers standard HR and payroll functionality packaged in a sleek and modern user interface.
They can also provide outsourced HR services for companies that have lean HR teams. The biggest concern with Gusto would be it’s lack of scalability after about 50-75 employees.
They don’t currently offer an ATS, performance tools or robust timekeeping tools, so many companies outgrow Gusto early in their growth. Additionally, Gusto’s support has struggled to keep up with resolution SLA’s since the pandemic began
If you’re looking for the most advanced technology in the HR space, Rippling is a really interesting choice. Rippling can integrate with just about any of your existing tools, while drastically simplifying your onboarding, payroll and ben admin experience.
A few drawbacks with Rippling are their limited functionality (limited timekeeping and no performance or learning) and the uncertainty around the platform’s scalability. Finally, Rippling’s founding team’s track record with Zenefits is another thing to keep in mind.
Paycom is a true single database solution, which isn’t always common in the payroll software space. They offer a modern-feeling platform that can make end users comfortable on their own, while still being robust enough to support most HR needs.
Paycom offers a full suite of online payroll services including time tracking, direct deposit, automated tax filing, benefits administration and integrations with accounting software
The platform can be implemented quickly and they have a strong product roadmap for the future of their platform. The biggest drawbacks with Paycom are that their integration capabilities are fairly basic and, although Paycom provides direct support, it is not always the most experienced.
Additionally, their pricing is higher than most of their peers and also less predictable due to their billing model
Paycor offers a full suite of HR tools that can help manage the entire employee lifecycle from hire to retire. Like many HCM companies, Paycor began as a payroll tool, but unlike many of their peers, they also have strong capabilities in performance and recruiting too, due to their acquisitions.
Paycor also offers a full suite of online payroll services including time tracking, direct deposit, automated tax filing, benefits administration and integrations with accounting software
Their Applicant Tracking System is one of the strongest ATS natively available in a payroll software solution. Some challenges with Paycor are that their system isn’t fully unified which can lead to an inconsistent user experience and delays in real-time data for reporting.
Additionally, Paycor has traditionally been more of a small business solution so the product is a bit lean in some areas (such as compensation), but they are hoping to move up-market by acquiring 3rd party tools and making an investment in customer success.
Paylocity is a strong platform for mid-sized companies. They have become known for their strong Core HR offering, but have continued to build new functionality to layer on top of the core. Paylocity also continues to make strategic investments to become more global, more integration friendly and more user friendly.
Paylocity offers all of the standard functionality you would expect to be included in a payroll software solution including time tracking, automated tax filing, direct deposit, benefits administration and integrations with accounting software and health insurance providers
The biggest drawbacks with Paylocity are: (1) support, as their implementations have gotten very poor reviews of late and (2) admin experience, which can be choppy for users, especially when Paylocity opts to use 3rd parties for benefits and time.
ADP is a household name, and many buyers find it to be a safe choice when shopping for payroll software. ADP often does well with core HR (payroll, ben admin, and time & attendance), and they are one of the few companies that can fully outsource the entire payroll process and benefits administration process.
ADP offers a wide range of payroll software solutions including APD Run which is built for small business owners.
ADP makes paying employees easy with their full suite of online payroll services: including direct deposit, pay stubs access, time tracking, automated tax filing, benefits administration and integrations with accounting software and and health insurance providers
ADP, unfortunately, is known to have below average customer support. Also, due to the structure of the system, users find they don’t have a great deal of control over how processes are set-up and how integrations work. This can lead users to being forced to adopt ADP’s processes and workflows.
Ceridian’s platform is arguably one of the most powerful payroll solutions on the market. Their technology has been built on a single database and offers the most real-time data and highest accuracy in the space when processing payroll. They also offer a very comprehensive global payroll offering.
For end users, Ceridian’s platform is straightforward and intuitive but not the most sleek and modern interface. In particular, the talent management module does not always deliver a new age user experience. Finally, one challenge with Ceridian is that their implementations can be slower and more costly than some of their peers
UKG has a long track record of delivering smart automations to complex, global companies. They offer a robust, highly capable and reliable HCM platform that can scale with any organization's growth. Despite being a full featured system, UKG’s user interface is still accessible and intuitive for admins and employees alike.
A few drawbacks with UKG are that the system’s back-end isn’t as modern as their peers and some of their modules are provided by 3rd parties. Additionally, while the merger with Kronos is going smooth, there are additional questions to be asked during evaluations to get comfortable with those changes
Considerations When Buying An Employee Payroll Management System
You’re finally ready to make the move from your current payroll process and replace it with an online payroll processing platform? You’ve got a lot of factors to consider, which can make the whole process overwhelming.
In this guide, we'll walk through each step of selecting and implementing new payroll system so that you can be sure to get exactly what your business needs!
Blog: How to Negotiate an HRIS Agreement
Assess your current Payroll process
Before you start shopping for new payroll software, take some time to consider your current processes. The first step in selecting a new system is understanding what your current processes are and how they're working. This will help you decide where the pain points are, what can be improved, and whether or not a new system would be worth it.
The following questions can help you assess your existing processes:
- What are your current payroll processes? Are there any gaps that need filling?
- How does your company hire employees? Do managers handle recruitment themselves or does HR take over once candidates have been found? Is there any part of this process that's handled inefficiently or inconsistently across departments—for example, if certain types of hires go through three rounds of interviews while others only require one? If so, then it may be worth investing in software that streamlines this part of the hiring process by automating certain steps (like setting up interview times) or sending out emails automatically when an offer has been made.
Identify stakeholders and get buy-in.
Identify and get buy-in from stakeholders.
Stakeholders are people who will be affected by the new software you’re considering. They can include employees, managers, executives, and other team members. Getting buy-in from your stakeholders is crucial for adoption and success of a new payroll software solution. You should identify who these stakeholders are early on in the process so that they can help guide the decision making process as well as provide feedback on what they want out of their next payroll software solution. Ask your stakeholders how involved they would like to be in the selection process and what concerns or fears they have about switching over to a new system so that you can best win them over before signing on the dotted line!
Consider your long-term HR goals.
Before you begin your search for new payroll software, take stock of where your team is at and what it's looking to achieve. Knowing what problems you're trying to solve can help determine which type of software is best for your business. Some common goals include:
- Talent acquisition
- Talent management (including talent retention)
- Culture development or process excellence
Learn the Payroll Software Cost and Deployment Method
It's important to understand the full range of pricing options that are available. You should compare the different proposals you see and explore the various payment terms—annual, monthly, quarterly—to see which work best for your business.
For example, if you have a large HR department with many users, it may be worth paying more upfront in order to save money on monthly or quarterly fees later down the line. Or perhaps there are no additional costs associated with using HCM software and so any price point is reasonable because it will not affect your overall budget.
Once you've identified the systems that align most closely with your business needs, then it's time to consider implementation methods and timelines:
Gather requirements from all stakeholders.
Before you begin your search, it's critical to gather requirements from all stakeholders. This includes the HR team who will be the power users of the system and doing most of the reporting and process building; employees who will use the system on a daily basis for timekeeping, payroll processing and other talent initiatives; managers who will use the system to conduct performance reviews; IT who will help integrate the system and ensure it is secure; finance who will make budget for the system.
The information shared during this step should include:
- What data needs to be collected? How often does it need to be collected? How are people currently inputting this data into current systems such as spreadsheets or word documents? Who uses what types of reports (HR, managers)? What types of reports do they want/need from this new software? What KPIs are tracked by each stakeholder group (finance)?
- What tools or features would make their jobs easier (example: delegating tasks).
Shopping for an HRIS? Use OutSail's free HR Software tools to enhance your evaluations!
Rank vendor shortlist based on initial feature fit, and narrow to top three vendors.
Now that you know what key functionality each option has to offer, it’s time to rank the vendors based on your initial feature fit.
The most important thing here is to make sure you have a good idea of what you want before you start ranking software vendors. If you don’t know what features will be most important for your company or what kind of implementation approach makes sense for your business, then selecting a new payroll software vendor will be much more difficult than it needs to be.
When narrowing down the list from 15+ vendors down to 3-5 top contenders, look at which options are missing key functionality (e.g., if there isn't an integrated automated onboarding tool included in the plan) and which ones look like they're designed for smaller companies than yours (i.e., not many features or overly complicated).
Request demonstrations and/or free trials of shortlisted vendors’ software.
- Request demonstrations and/or free trials of shortlisted vendors’ software.
- Meet with the salespeople to learn more about their system.
- Ask for a demo account or free trial to play around with the system.
- Ensure that all key stakeholders get their questions answered.
- Request formal pricing proposals and contract term
With the right payroll software, you can run your business more smoothly and manage taxes easily. If you’re looking for the best payroll software of 2022, we hope this article has helped you make an informed decision!
Want more info on these HRIS systems? Talk to an advisor with firsthand experience