You decide you want to make your payroll management process more straightforward and buy payroll software that eases your business needs — handles your payroll worries efficiently, reduces the manual work of your employees, and saves time. You can accomplish all of this only if you choose the right payroll software for your business needs.
That is why we are here to guide you – step-by-step – to choose the payroll software that makes your life easier.
How To Choose Payroll Software?
Define your payroll needs for business
How often do you scroll through Google to determine whether product ‘X’ is suitable for you or not? Well, that’s the same before selecting the payroll software. Understand what your exact requirements are?
To find this out, ask yourself a few questions to determine the right payroll software for you:
- How many full-time and contractual employees does your business support?
- How large is your business?
- What is your budget for payroll software?
- How often would you use payroll software?
- Who will execute the payroll, and do they have the experience to use payroll software?
- Would you be printing out payroll slips?
By asking these questions, you will find out your business needs regarding the features, costs, ease of use, durability, and size of the payroll software.
When you answer these questions, you will understand your needs better. This will help you identify and eliminate the payroll software that does not suit your business needs.
Determine your business analysis requirements
Make sure you choose the software that can manage your reporting requirements. This reporting news includes payroll summary, deductions, payment, tax summary, tax liability, and W-2 summary reports.
Compliance with payroll legislation
Make sure your payroll software complies with federal, local, and state legislations. This will help save your business from legal penalties and financial losses.
Research and examine the payroll features you want
Once you have laid the foundation of what type of payroll you need to select, understand your payroll software features.
Some of these features include self-service terminals, tax filings, integrations, etc. By knowing the characteristics of payroll software, you will find out the payroll software best suited to your business needs.
Determine your payroll budget
First, analyse the size of your company, your business requirements, and the features that you desire to have in your payroll system. Once this is done, you can decide your budget and shortlist the payroll software that meets your budget.
To determine your budget, let’s break down the pricing into smaller sections:
This is the flat fee that the payroll software subscription charges you.
Make sure there are no hidden costs before buying the subscription. Check if any additional tax charges are applied along with the subscription.
Know on what basis you want to be charged for the payroll software. There are two ways in which the payroll software charges the base fee — how often do you use the payroll or the number of employees you’re performing payroll for.
You have to decide if you will be setting up the payroll software by yourself or require a helping hand from the payroll service team. If you take help from the service centre, you will be charged an additional setup cost.
Read the reviews
Social reviews are an excellent way to assess any product. So go through the customer reviews and analyse a payroll software before making a decision.
Select the payroll software
Once you have gone through all these stages, look back and review your budget, the free trial, the features, your business requirements, and the customer reviews. With this, you can analyse the pros and cons of the software and then select the right one for your business needs.
Use Free Trials
The best part about payroll software is that you can opt for a free trial. Before deciding on any payroll software, you can take a 7 to 14 days trial offered by the respective companies.
On completion of the trial period, you can decide if the software meets your business needs. If that’s the one you would want to go for, you can do it and buy the payroll package; otherwise, you can opt for a different software.
What features payroll software should have?
- Tax Filing
- Direct Deposit
- Employee Self-Service Portal
- Mobile Access
- Employment Options
- Payroll Reports
- New Hire Reporting
How to implement Payroll?
Find your employer identification number
Set up your employer identification number (EIN) using the IRS. If you are new to the business, you can apply for EIN online from the IRS website. The goal of this identification number is to help the IRS identify your business.
Collect employee tax information
Collect all the tax information from your employees. This means every employee in your company should fill W-4 & I-9. For contractual and freelance employees, collect the 1099s.
In this payroll form, employees need to fill in all the important details about their work status, tax collection, and deductions. When the employees fill out all these details, only then can you process the payroll for them.
Choose a Payroll Schedule
Decide how you want to pay your employees. There are four different types of payroll schedules you can choose from:
Calculate Gross Pay
Gross pay is the number of hours an employee has worked in a given pay period multiplied by the hourly rate.
Let’s understand how to calculate gross pay with an example:
Your employee, Ritu has worked for 95 hours in a monthly pay period. She is paid $15 per hour. Your pay period for a month is 90 hours. Let’s calculate this now:
- 90 hours * $15 per hour = $1350
Ritu has overworked for 5 hours. So let’s calculate her overtime pay.
- 5 hours * $ 15 per hour = $75
By adding the pay period and the overtime pay, you get the gross pay.
- $1350 + $75 = $1425
So, the gross pay for Ritu is $1425.
Determine the deductions and allowances
Allowances are the money that is taken out of your paycheck during the year. Deductions are the taxes that the employee allows to get deducted from their monthly salaries. For this, the employee fills the 1040EZ form.
Calculate net pay and pay for your employees
Net pay is the total payment that the employees get after all the deductions.
To calculate the net pay of your employees, subtract the deductions from the gross pay. Here’s the formula to make it clear for you-
Net Pay = Gross Pay – Deductions
Read Also: 7 Snapchat Tricks You Need to Know
Here’s what you need to know-
- Understand your business needs and what goal do you want to accomplish with the payroll system.
- Know the features that you need in the payroll software — tax filing, direct deposit, payroll reports, employment options, and more. The key is to understand what features you want and focus on the software that will fulfil your requirements.