What is payroll software?

Managing payroll is a tremendous job requiring extreme accuracy and compliance. Payroll software helps streamline the process and helps ensure that your employees and contractors get paid accurately and on time and that your company is compliant for tax filing purposes.

According to the American Payroll Association, getting paid on time and accurately is a huge selling point for your employees and will help you retain the best talent. While the IRS finds that using payroll software is a sound business decision because it ensures that your business meets filing deadlines and deposit requirements.

Who uses payroll software?

• HR Managers
• Accountants
• Payroll Managers

What does payroll software do?

• To pay employees on time and create trust with employees and company leaders.
• To manage payroll and taxes.
• To save time, ensure accurate pay, and meet tax compliance.

Benefits of using payroll software

Choosing the best payroll software will provide streamlined payroll that is accurate for your employees, compliant for tax purposes, and will save you time for other projects. Depending on your company size, the type of employees you have, and what your specific needs are will help you determine what payroll software will work best for your business.

All payroll software on our list offers several payment methods, including direct deposit, employee self-service portals, and unlimited monthly payroll runs. Beyond that, they all offer some level of payroll tax filing and integrate with various accounting and HR software, but knowing what each offers is the key to narrowing down your selection process.

How much does payroll software cost?

Payroll software pricing carries a monthly fee, followed by a per-employee fee per month. The exception is Gusto which waives the monthly fee, only charging $6 per person, but this plan is for companies paying only independent contractors. If regular employees are included, it is a $40 monthly fee and $6 per employee per month. Patriot offers a modest monthly fee at $17 per month and $4 per employee per month. The highest on our list is an $80 a month fee and $12 per employee per month on Gusto’s Premium plan. Others cost around $40 per month and $6 per employee.

Who should use payroll software, and what are the different types?

Payroll software is growing in popularity because, for most businesses, it’s just a smart move. They keep your payroll accurate and keep you paying the correct taxes while keeping employees happy with accurate paychecks and your staff happy by saving them a ton of time.

There are many good payroll services on the market, but some might fit your company better depending on the size of your company and what type of employees you’re paying.

The following are types of businesses that would benefit from payroll software:

• Small businesses: Small businesses need payroll software too. Often the budget is smaller, so a program like OnPay with one flat monthly fee and one fee per employee is ideal. The program is robust and provides a full payroll service that small companies might not have the staffing to support in-house. Other companies have sneaky fees that can add up on small businesses.
• Mid-size businesses: While mid-size businesses might have a bigger budget than small businesses, they have bigger needs. A company like Namely that offers two payroll software options – one you do some of the legwork yourself, and the other is fully managed in combination with HR support is ideal in these situations so that the HR team can pick and choose what support they need while freeing up some of their time for other HR areas of need.
• Large businesses: Large and enterprise companies need full-service payroll software that integrates well with others and offers additional things like recruiting, onboarding, and HR support. The ability of a company like ADP to scale and grow with a large company while serving global markets is ideal for large businesses.
• Businesses that only pay independent contractors: These days, there are more independent contractors than ever, and some companies need payroll software to just pay independent contractors. If this is your company, Gusto is ideal for you as they waive the monthly fee and just charge you one fee per employee a month, saving you monthly while still offering the same service that full-time employee payroll would require.
• Businesses new to payroll software: Finally, more and more companies realize they need payroll software. A service that handles the complete setup for you, is easy to learn, and offers lots of customer support is best in this scenario. Patriot does all of this and is best for new payroll managers to navigate. Plus, it’s cheaper than other options.

Payroll Software FAQ

What is the best software for payroll?

There are many good payroll software vendors on the market today, and the best one is the one that meets your company’s unique needs. For example, if you only pay independent contractors, Gusto has a good payment and plan option, while ADP offers plans that scale best to large businesses.

What software is used for payroll?

Cloud-based software is used for payroll software. This software allows you to access your payroll anywhere you have internet access. It also allows you to integrate your payroll information with other programs you use, such as popular accounting and HR software.

What is the cheapest payroll software to use?

Payroll software runs the gamut of prices, but the cheapest payroll software we reviewed is Patriot. It costs just $17 per month and $4 per employee. For that price, you get a well-rounded software that is easy to set up and use.

How we chose the best payroll software

We curated a list of 85 payroll software services on the market and identified 15 popular vendors with significant online search volume to narrow our focus. From there, we chose five vendors that stood out for features offered, brand reputation, pricing transparency, and customer service.

We collect information from vendors and verify it through:

• Customer and expert reviews
• Vendor and parent company websites

We scored companies on a scale of 1 (poor) to 5 (excellent) across the following criteria, each worth 25% of our total score:

• Variety of features: We looked for services that offered direct deposit pay, employee self-service, unlimited payrolls, and integration with programs like accounting and HR software. A company scores higher when it offers all these features because it means payroll is easier to manage and maintain accuracy and compliance.
• Pricing transparency: We not only compare actual pricing for each payroll software service but also assess how readily available this information is. Companies that are straightforward and list their monthly and user fee, as well as offer a free trial period, scored higher in this section than companies that require you to request a price quote.
• Customer support: We looked for companies that offered multiple ways to access customer support, including a resource library, live chats, email, and a dedicated customer service line. Services that included all these features scored highest in this section.
• Brand reputation: We studied what customers said about each company. Reviews and ratings from trustworthy third-party review sites were compiled into a percentage rating to get a sense of each vendor’s brand reputation.