How to Select Payroll Software for Your Small Business

How to Select Payroll Software for Your Small Business

Are you pulling out your hair over payroll? Doing your own payroll, even for just one employee, has many pitfalls for the small business owner. There’s a lot to know, and keeping up with many federal, state, and local payroll tax regulations is a pain. In addition, you have deadlines to meet, for payments and reports to all these agencies.

It’s no wonder many small businesses turn to payroll services for these tasks. But which payroll service is the best?

Before we look at the process of selecting a payroll service, consider this warning:

Payroll is your business responsibility. Having a payroll service doesn’t relieve you (the business owner) from the responsibility for paying employees, withholding, reporting, and paying federal and state tax agencies. No matter who you hire, your business is ultimately at fault if something isn’t done or isn’t done correctly.

What Are Payroll Services?

There are two kinds of payroll services: online services and (for lack of a better term) personal services. The online services may be apps or online-based. The personal services are a business owned by an individual who may do payroll online or who may be local.

The evaluation process works the same way for both types of payroll services. But this article will focus on online services. Below are some features you should take into consideration.

How Much Does an Online Payroll Service Cost? 

The first thing business owners ask when looking for a payroll service is: “How much does it cost?” While cost is important, other factors are just as important.

Consider the cost of the service now and into the future. If you have a very small business with only one or two employees, you may want to limit your cost by using a scalable service in which the cost is minimal for only a few employees and which increases as you add employees and services.

For most of the payroll services I looked at, the cost is per month, so you can change at any time. Most based the cost on the number of employees. Some offer a PAYE processing option for paying contractors, vendors, or freelancers.

Costs come in two levels for some of the services: a basic service that just calculates and delivers wages, with PAYE service, and a full-service option that also does the depositing and paying of payroll taxes and tax filings, including statutory obligations like NSSF and NHIF.

What Should a Full-Service Payroll Service Include?

A full-service payroll service should include the following:

  1. Setup, training, and dashboard: The system should be easy to set up. You should have a dashboard to guide you through processes and to allow you to check on activities like filings and paycheck deposits. Training should be simple, with good videos to help you work through the various processes. What level of payroll knowledge do they assume you have? Most business owners have little knowledge, so your service should provide detailed basic knowledge of payroll terms, paychecks, and filings.
  2. File and deposit payroll related taxes: This is probably the most important service. Having someone file and pay these taxes is a big responsibility. A full-service system should file all relevant payroll tax and employment tax documents for you. They should make payments on your behalf with the appropriate federal, state, and local regulatory agencies.

Other Important Questions to Ask

Support and service: This one is really important. Things happen and payrolls must be run at specific times. You need to know that your service is available and helpful.

  • The highest level of service: a phone call. What hours does the help desk have? 
  • The second-highest level: a chat. What are their hours? 
  • The third level: an email. How quickly does your payroll service respond to emails? 

During the trial period or the first 30 days, make sure you make contact several times to evaluate the support provided.

Updates: Payroll tax regulations and tax rates are always changing. As you evaluate systems, ask how they update their software and how they communicate these updates to you. 

Security: How secure is their system? Is it in the cloud (probably)? How often do they back up? 

Get in touch today so we can discuss your business’ payroll processing needs.


About the Author
Engsoft Valley Solutions supplies and installs business infrastructure-related solutions such as Time attendance and Access control Biometrics, payroll, HRMS software, telephony, asset tagging, CCTV, and Sacco software.
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