How to choose the best payroll software for small business

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Payroll involves more than writing and handing out paychecks. Calculating taxes and keeping up with changes to tax laws and industry regulations is time-consuming. A SCORE survey found that more than half of small business owners spent at least three hours per month on payroll administration, while 11% spent more than 10 hours per month on basic payroll tasks.

Payroll software for small business is a cost-effective solution if your company isn’t ready to hire a full-time bookkeeper. Software can streamline payroll runs and free up valuable hours, so you can focus on other crucial tasks such as strategic planning. Errors, omissions, and non-compliance are also less likely, saving you valuable time and money.

What to look for when choosing payroll software for small business

Although pricing is likely a significant consideration when choosing a payroll system, it’s best to start with a platform’s benefits and features. When deciding on your payroll setup, choose a payroll software solution that can handle your current company’s requirements, and can scale up to evolve with your business as it grows. Some commonly sought after payroll software features include:

  • Automated payroll computation: Avoid miscalculations that would lead to costly penalties by choosing payroll processing software that automatically computes taxes and withholding.
  • Cloud-based storage: Payroll data that’s stored offsite is safer from theft and unauthorized access, and can be accessed from anywhere when you work with a payroll software provider with cloud-based storage capability.
  • Compliance for your specific industry: Each industry is subject to payroll compliance. Regulations can vary locally and federally, making it difficult to keep up to date. Payroll software for small business that automatically tracks changes to industry regulations takes the guesswork out of compliance. 
  • Custom analysis and report capability: The ability to track tax payments, withholding, and payroll gives a small business owner the opportunity to accurately assess independent contractor and employee expenses.
  • Direct deposit or electronic fund transfer capability: Paying employees electronically with a click of a button can save your company time and money by eliminating the paper check process.
  • Location-specific tax computation and management: Automating payroll for employees in other states or countries and staying current with federal and state tax laws can support a company’s expansion into new national or international markets.
  • Mobile app availability: For startup and small business owners on the go, having access to a mobile app makes running payroll simpler.
  • Multiple businesses and employee tracking: Startups that envision expanding their business scope should look for software than can evolve from small business payroll software to one that can handle the complex needs of multiple companies with a growing staff.  
  • Time and attendance tracking: Startups can benefit from payroll software that integrates employee time tracking. Doing so could eliminate time computation errors and streamline the payroll process by using one system to track time and run payroll.
  • W-2 and 1099 capabilities: Businesses may need a combination of independent contractors and employees to carry out the company’s tasks. Having a single payroll processor to handle different types of computations and filings can save time and money.
  • A library of tax forms and templates for self-service filing: The best payroll software for small business can automate calculations and submit payroll filings on time. But there may be occasions when a company needs to manually fill out and submit a tax form, such as when it’s necessary to correct a previous error or omission. Having a catalog of blank tax forms simplifies the process.

The top 5 payroll software providers for small business

There is a variety of software as a service (SaaS) payroll software providers available. The following options are some of the most popular because they’re designed to meet the payroll needs of a small business progressing from launch to expansion.

1. Trinet

TriNet offers a comprehensive HR solution with payroll as well as benefits, risk & compliance, HR consulting and a technology platform. Its full-service offering is high-touch and consultative.

An all-in-one approach has its advantages, especially as things like PTO, expenses, benefits, 401(k) and time and attendance are closely linked to payroll. Unifying payroll, HR and benefits simplifies things and delivers a better experience for leaders and employees.

2. Rippling

Use Rippling Payroll in conjunction with the company’s IT services, human resources platform, and benefits management system. Rippling will handle all your onboarding, tax computations, and filings automatically.  

Rippling Payroll is designed for startups and small to medium businesses with an international presence—you can pay employees and contractors in the U.S. or overseas, thanks to the platform’s I-9, W2, W4, and 1099 integrations. The software syncs with Quickbooks, NetSuite, T-Sheets, Sage, and more than 500 other apps.

3. Gusto

Gusto is a cloud-hosted payroll software platform that combines bookkeeping and HR aspects, such as pay runs, employee benefits, and compliance in one place. It’s ideal for startups looking for a complete HR solution—time data can be tracked and synced with payroll software to perform payroll computations automatically.

The user interface is well-designed, and the automation and reporting features are easy to understand. Gusto continuously updates to meet ACA, ERISA, and HIPAA standards to ensure your company complies with the required year-end tax reporting, form completions, and payments.

Payroll can be customized to meet the needs of full-time and independent contractors by automating tax calculations, payments, and submissions of local, state, and federal payroll tax filings. No long-term contract is required, and you’ll receive a free 30-day trial. Gusto works with Homebase, Hubstaff, QuickBooks, Receipt Bank, and Xero. 

4. Patriot Payroll

Patriot Software’s full-featured yet straightforward payroll software for small business helps startups accurately run payroll and stay compliant. The platform has a user-friendly layout that doesn’t require a big learning curve. 

The software is simple enough for a new business and can expand to meet the needs of a larger company with nationwide employees. Free customer support and payroll setup are included, so your company is off to a good start.

Multiple employee payment options from cash to direct deposits are available. The software can keep track of payments accurately, regardless of the payment method.

A free employee portal is available where staff can view their tax reports and pay stubs.

The Full-Service Plan automates year-end filings, as well as local, state, and federal tax filings and deposits. Patriot integrates with Plaid and QuickBooks.

5. Quickbooks

QuickBooks Payroll is widely known as one of the top online payroll software for small business and large business alike. Use it as a standalone payroll service or combine it with Quickbooks Pro to add accounting software features and the ability to file and pay your taxes directly from the online platform. 

Regardless of how many Quickbooks services you add, you’ll benefit from automatic payroll tax updates and regulation-change monitoring to ensure compliance and avoid costly penalties.

Quickbooks benefits smaller businesses with quick turnarounds. The payroll software solution is one of the few that offers a same-day or 24-hour direct deposit feature. The 24-hour feature is free and allows you to submit payroll by 5pm to pay your employees the next day. 

The same-day payroll feature is free with the Premium and Elite Plans. You’ll also get 1099 contractor forms and services with Quickbooks Payroll, so you can pay all staff and independent contractors from the same portal.

Quickbooks works with all Intuit products such as manufacturing and accounting software, plus native apps for iOS and Android.  

6. Zenefits

Zenefits offers online payroll software for small business and an HR administration platform for small to medium businesses. It has features that startups will appreciate, such as business intelligence, hiring and onboarding, employee directory, insurance benefits, and mobile access. The interface is scalable—Zenefits has open API capabilities to extend its software features or combine them with your company’s existing ecosystem.

You’ll find all your company’s HR functions in a single, organized online dashboard. You can review employee activity such as earnings, taxes, and deductions before they automatically get processed at payroll. Zenefits manages employee insurance and benefits online and offers alternatives as they become available in the system.

Zenefits works with payroll providers such as Gusto, Intuit, OnPay, and Paychex. It also integrates with G Suite, Slack, Salesforce, Quickbooks, Xero, and 401(k) platforms such as Guideline and CoPilot. 

Which payroll software for small business is right for you?

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Finding the best payroll software takes some time and research. The payroll options detailed in this article offer a variety of features and solutions to support small business and various payroll management needs. 

Compare these four providers to learn more about which features may provide you with the most value, and don’t forget to consider how each provider could fulfill your business needs as your company expands.

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