Who doesn’t love to just get it right? As a business owner, you always want to choose the right person or tool for the job. That includes choosing the right payroll software for your business. This is one of the most important decisions for any company, regardless of size.
Why? Because proper payroll management ensures employees are compensated accurately and on time, directly impacting employee satisfaction and retention. Plus, payroll goes beyond paying employees; it includes compliance with tax regulations, benefits management, and detailed reporting.
As we discussed in our last blog post, good payroll software helps businesses reduce the administrative burden on HR and accounting teams. Automation minimizes errors, saves time, and ensures businesses comply with government regulations. An efficient payroll system supports day-to-day operations and lays the foundation for long-term business growth.
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Key Features to Look for in Payroll Software
When you want to choose the right outfit for a first interview or the right restaurant for a company dinner, there are important factors you’ll base your choice on: “Which outfit makes me feel confident and professional?” or “Which restaurant can accommodate the various dietary restrictions and preferences of all my employees?” Payroll software presents a similar choice. The right software will allow seamless operations and ensure scalability as your business grows.
Here are those key features:
1) Integration Capabilities
The first feature to prioritize is the software’s ability to integrate with other essential business tools. Think of it as “Do your friends mingle well with your other friends?” Whether it’s accounting software, HR platforms, or time-tracking systems, integration ensures payroll data flows across systems. No more manual data entry! Automated, integrated systems will benefit businesses requiring more complex data inputs, such as bonuses or overtime.
2) Customization Options
Payroll processes vary widely depending on the nature of your business, the size of your workforce, and local tax laws. The best payroll software should adapt to all these specific needs. “Flexibility” is the key idea here — flexible customization allows you to tailor pay schedules, employee benefit structures, and tax obligations. For example, companies with employees in multiple locations can customize the software to calculate region-specific taxes and benefits automatically.
3) Security Features
Imagine you’ve integrated, automated, and customized your company’s payroll software, and suddenly, your business falls victim to a cyberattack. Not. Good. Data security is paramount in payroll, as the software handles sensitive employee information, including tax identification numbers, salary details, and banking information. Your payroll software should include robust security measures like data encryption, two-factor authentication, and automatic system updates to prevent breaches. Compliance with local and international data protection laws is also very important, particularly for companies that manage global payroll.
Evaluating Costs vs. Benefits
We’ve emphasized enough by now the importance of choosing the right payroll software. Does that mean you should be paying way too much for it? NO! The right payroll software offers a balance of affordability and functionality. No need to break open that piggy bank, no need to say goodbye to one of your kidneys.
Here’s how to evaluate the cost-effectiveness of payroll software:
1) Understanding Total Cost of Ownership (TCO)
When calculating the total cost of ownership, it’s essential to look beyond the initial purchase price to understand what you’re paying for. You should also consider recurring fees such as subscription costs, service charges, and add-on features like tax filing or advanced analytics. Plus, you may incur software training, data migration, and customer support costs. By considering all these factors, you can better assess the financial investment required.
2) Return On Investment (ROI)
Return On Investment (ROI) measures how well an investment has performed. While there are upfront costs that come with payroll software, the long-term return on investment is often significant. Frankly, if you’re investing money into something that is supposed to improve your business, you’ll want to see results exceeding your expectations. Choosing the right payroll software and optimizing your processes (with our friends “Automation” and “Integration” — remember them?) reduces mistakes that would have otherwise cost your business a lot of money.
By balancing the total cost of ownership with the potential ROI, you can ensure you invest in a payroll solution that offers immediate and long-term benefits without sacrificing your savings (yay!).
Case Study: How PaymentEvolution Supported Xennial Innovations’ Growth
In October 2022, Sal Pece, CEO of Xennial Innovations, was in a tough situation. His AI-driven digital solutions company was thriving, serving major clients like IBM, BMO, and Bombardier, and Sal’s team had grown to 45 employees across Canada and the United States. But managing payroll manually was becoming a serious bottleneck.
Sal’s approach, which he called “good, old-fashioned entrepreneurial spirit,” mainly involved him sending e-Transfers — lots of them.
“Twice a month, I would take all the payroll numbers, log into my bank, and then send e-Transfers,” he explained. What should have been a straightforward process took up to three days to complete. Worse yet, e-Transfers had monthly limits, forcing him to juggle three different accounts just to ensure everyone got paid.
Sal knew he needed to switch to a dedicated payroll provider. But finding the right one wasn’t easy. One provider lacked an effective way to manage vacation time, while another didn’t offer a smooth process to onboard new employees. To complicate matters, he was switching payroll systems mid-year, making the transition even more daunting.
A Seamless Transition
Sal’s frustrations disappeared after one conversation with Alé Galvez, his account manager at PaymentEvolution.
“Alé was just super knowledgeable—nothing we had [to show her] seemed foreign to her,” he recalled. Alé guided Sal and his CFO through onboarding their employees, even in the middle of the year, and addressed specific payroll challenges like FRO (Family Responsibility Office) deductions.
“Amazing,” Sal said of the experience, noting that PaymentEvolution had resolved every issue they faced.
The PaymentEvolution Difference
Sal’s company quickly moved to a semi-monthly pay schedule, and payroll became intuitive, affordable, and much more efficient.
“Now I just click submit, and everything’s automatically taken care of,” Sal said. He no longer worries about forgetting critical tasks like remitting taxes. For Xennial Innovations, PaymentEvolution provided the reliability and simplicity they needed to focus on growth without the payroll headaches.
Questions to Ask Before Choosing a Payroll Software
Now that we’ve discussed the major aspects of choosing the right payroll software, let’s get into the nitty-gritty parts. Believe it or not, there are even more questions you should consider when making your choice. Yes, payroll is actually that important and you want to ask these questions to make sure your company’s payroll needs are met. Capiche?
1) Does it meet your business size and industry requirements?
Not all payroll software is one-size-fits-all. Different systems are designed to cater to businesses of varying sizes and industries. For example, a small business with fewer than 10 employees will have different payroll needs than a large corporation with a global workforce. It’s important to choose software that scales with your business and accommodates industry-specific requirements.
2) What level of customer support is available?
Payroll operates like clockwork; it’s very time-sensitive. (People need to be paid on time!) Therefore, any delays in resolving issues can affect employee satisfaction and compliance. Ask about the level of customer support offered, including availability, response time, and whether there are dedicated account managers. Some payroll software providers offer 24/7 support, while others may have limited hours.
3) Does the software receive regular updates?
We know that compliance with ever-changing tax laws and regulations is a major factor in payroll management. So, choose software that regularly updates to stay compliant with the latest tax requirements. Also ask if the software provider frequently releases new features or improvements to enhance functionality over time, because payroll software that grows with your business is the right one for you.
Making the Right Choice
Be real: we all really love it when we get it right, especially when it comes to making the right business choices.
Today you learned that choosing the right payroll software is a critical decision that can significantly impact your business’s efficiency, compliance, and growth. How do you figure out which software is the one? By focusing on key features like integration, customization and security, and carefully evaluating costs versus benefits. Plus, asking the right questions, such as assessing customer support and upgrade capabilities, ensures the software will grow with you, not against you.
Don’t settle for less when your business’s success is on the line — check out how we can help. Because you didn’t start a business to stress over payroll…but we did.
1. What is payroll software, and why do I need it for my business?
Payroll software automates the process of paying your employees, calculating taxes, managing deductions, and ensuring compliance with tax regulations. It’s essential for improving efficiency, reducing errors, and staying compliant with legal requirements, which ultimately saves time and reduces the risk of costly mistakes.
2. What features should I look for in payroll software?
Look for features such as integration with other tools (e.g., accounting or HR software), customization options (to fit your business size and tax needs), data security (encryption, two-factor authentication), and automatic updates to ensure compliance with changing regulations.
3. Can payroll software handle tax compliance for my business?
Yes, most payroll software automatically updates tax tables to ensure compliance with local, state, and federal tax laws. Some even handle tax filing and remittance, reducing your administrative burden.
4. How does payroll software integrate with other business tools?
Good payroll software integrates with systems like accounting platforms, time-tracking tools, and HR management systems. This reduces manual data entry and ensures that information flows seamlessly across departments, improving accuracy and efficiency.
5. What security measures should payroll software have?
Key security features to look for include data encryption, two-factor authentication, secure access controls, and automatic backups. Additionally, the software should comply with industry standards like GDPR or SOC 2 for data protection.
6. How do I determine the total cost of payroll software?
In addition to the initial purchase price, factor in subscription fees, additional costs for tax filing, advanced features, and customer support. Don’t forget to include costs for training, data migration, and software updates when calculating the total cost of ownership (TCO).
7. What is ROI in the context of payroll software?
Return on Investment (ROI) for payroll software refers to the long-term benefits, such as time savings, reduced payroll errors, and improved compliance, relative to the upfront and ongoing costs of the software. A high ROI means the software will provide significant value by automating manual processes and reducing costly errors.
8. Can payroll software handle remote employees or international payroll?
Yes, many payroll software solutions offer support for remote teams and international employees. Look for software that allows for multi-location payroll management and calculates taxes based on the local laws for each region.
9. How do I transition to a new payroll system without disrupting operations?
A smooth transition involves choosing payroll software that offers dedicated customer support, migration tools, and training. Start the switch at a time when payroll cycles allow for adjustments, and work closely with your new provider to ensure data is transferred accurately.
10. How frequently is payroll software updated?
Payroll software should be regularly updated to reflect changes in tax laws, regulatory compliance, and new features. It’s important to choose a provider that offers automatic updates to keep your business compliant without manual intervention.
12. Is payroll software scalable as my business grows?
Yes, the right payroll software can scale with your business. Look for solutions that can accommodate increased employee numbers, additional locations, and more complex payroll structures as your company expands.
13. Can payroll software be customized to fit my specific needs?
Yes, most payroll software offers customization options to fit your specific pay schedules, tax obligations, and benefit structures. You can tailor the software to meet your industry-specific or multi-location needs.
Additional Resources:
- Payroll Optimization Best Practices
- Hiring Your First Employee
- 7 Features to Look for When Choosing a Payroll Provider
- 12 Best Canadian Payroll Software for Small Businesses in 2024
