10 Things to Consider When Choosing Payroll Software
10 Things to Consider
When Choosing
Payroll Software
www.PatriotSoftware.com
10 Things to Consider When Choosing Payroll Software
Overview
Running payroll is more than writing checks. You have to stay updated with current laws and approaching
deadlines. If you have the time and knowledge, you might be able to run payroll yourself. But if you’re like many
small business owners, you’re busy. You probably also specialize in your business’s industry, not payroll.
When it comes to running payroll, know what you are capable of doing. You can then use a payroll software to
fill in the gaps and meet your needs.
Contents
Here are the 10 things to consider when choosing payroll software. Scroll through this document or click on a
link to learn more.
1. Types of Software
2. Your Payroll Knowledge 3. Needed Features
4. Software Cost
5. The Typical Customer
6. Paying Employees
7. Filing Tax Deposits
8. Software Updates
9. Customer Service
10. Software Security
Related Articles
10 Things to Consider When Choosing Payroll Software
1. Types of Software
There are two kinds of payroll software you can use: online or desktop software.
You access an online software through an Internet browser. The software stores all your information in the
cloud, not on your computer. You do need an Internet connection to use online software. You can use online
software on any computer, and often on mobile devices, so you can run payroll on the go. The software provider
should automatically update the software. If your computer crashes, you will not lose your payroll information.
Desktop software is either downloaded or installed on your computer. The software stores your information on
your computer. Your computer’s available space limits how much information you can store. You typically do
not need an Internet connection to use payroll software on your desktop. You will only be able to access your
information on the computer that has the software installed. You will have to regularly check for and install
software updates. If you buy a new computer, you will have to repurchase and reinstall the software. You might
also lose your payroll information.
Questions to ask yourself
• What computer will I use?
• Will I have regular Internet access?
• How much memory does my computer have?
• How old is my computer?
• Will I need to use the software on multiple computers?
• Will I want to use the software on a phone or tablet?
2. Your Payroll Knowledge
How much payroll experience do you have? If you have a lot, a software with less payroll help might work for
you. But if you have limited or nonexistent payroll experience, you might want a software that is all inclusive and
provides help with each step of the payroll process.
Your payroll knowledge can affect how well you understand the software. When comparing software packages,
consider how user-friendly each software is. Is the layout simple and easy to navigate? If you have little payroll
experience, look for a software that gives you step-by-step help. Sometimes software companies offer help
resources while you are inside the software.
Questions to ask yourself
• Do I have previous payroll experience?
• How much time do I want to invest in learning the software?
10 Things to Consider When Choosing Payroll Software
3. Needed Features
The features you need your payroll software to have will depend on your available time and skills. If you have
little time or few skills to run payroll, you might need a software that is all inclusive. If you have more time, you
might be able to do some tasks yourself, such as depositing payroll taxes.
When figuring out what features the software should have, prioritize your needs. What must the software have?
Then, decide what features you would like to have, but can do without. This will help you decide which software
package will work best for you.
Payroll software could include these features:
• time-off tracking
• human resources (HR) form storage
• employer tax contribution calculations and deposits
• payroll tax filing and deposits
• employee benefits calculations and withholdings
• Form W-2 printing
• wage and overtime calculations
• bonus, commission, and tip management
• various ways to pay employees, such as printed checks or direct deposit
• mobile device capabilities
• employee access
Questions to ask yourself
• What features are must-haves?
• What features do I want, but can live without?
• Are there any features I would like in the future when my business grows?
• How much time do I have to run payroll?
• What is my skill level?
10 Things to Consider When Choosing Payroll Software
4. Software Cost
Payroll software varies in cost. Some of the cost depends on the features the software provides. The more
features the software has, the more expensive it will likely be. You might pay more than you have to if you buy a
software package that has more features than you will ever use.
When shopping for payroll software, consider how the software company will charge you. Some software
companies will charge you for every paycheck run. Others will charge you for each employee on the payroll.
Some payroll software has a monthly fee with different package sizes.
You should also find out if there are extra or hidden fees. These fees could apply to setup, use of customer
service, and cloud storage.
Find out if the software company requires you to sign a contract. If it does, how long does the contract last?
Often, the software company will charge you a fee if you break the contract.
Before you commit to a payroll software, you want to know if it will work for you. Find out if the software
company offers a free trial or demo.
Questions to ask yourself
• How much am I willing to spend on payroll software?
• Will I be paying for features that I won’t use?
• Will adding more features in the future affect what I pay?
• Am I willing to commit to a contract?
• How often might I use the features that have extra fees?
5. The Typical Customer
There are payroll softwares that are specifically designed for small businesses. You want a payroll software that
meets your needs. And, the software company should understand your needs.
Find out if the software company designed its software with small businesses in mind. Also, pay attention to the
industries the software works with best. Payroll software designed for restaurant workers might not work well
for real estate workers.
Consider asking the software company what its typical customer looks like. If the average customer is similar to
you, the software might be a good fit.
While the software might work for you now, it might not always. As your business grows, your payroll needs
might change. Find out if the payroll software you choose can grow with you.
Questions to ask yourself
• Does my industry require special payroll standards?
• How fast do I expect my business to grow?
10 Things to Consider When Choosing Payroll Software
6. Paying Employees
The payroll software you choose should work with how you pay your employees.
First, consider your pay frequency. Do you pay your employees weekly, biweekly, semimonthly, monthly,
quarterly, or yearly? The payroll software you choose should support the pay frequency you choose. Be
aware that some software companies will charge you for every paycheck you process. The software could get
expensive if you run payroll frequently.
You should also consider the method you use to pay your employees. If you pay your employees by check, will
you hand write them? Will you print the checks? Does the software company offer options for direct deposit or
pay cards? You may also want to consider offering several payment options to your employees. For example, if
an employee does not have a bank account, direct deposit will not work.
Questions to ask yourself
• How do I pay my employees?
• Do I want to offer various payment options to my employees?
• How often do I pay my employees?
• Does my state have any pay frequency requirements?
• Are certain payment methods prohibited in my state?
10 Things to Consider When Choosing Payroll Software
7. Filing Tax Deposits
Payroll taxes are a part of running payroll. You need to regularly fill out forms and make deposits. When
choosing a payroll software, think about how much time you want to invest in payroll taxes.
Payroll taxes include:
• federal income tax
• state income tax
• local income tax
• federal unemployment tax
• state unemployment tax
• Medicare tax
• Social Security tax
Some payroll software packages will calculate, file, and remit payroll taxes for you. Others will calculate the tax,
but you have to file and remit the taxes.
Questions to ask yourself
• How much time would it take me to file tax deposits?
• Do I have the knowledge to file tax deposits?
• Does the cost of taxes filed by the software outweigh the cost of potential penalties?
8. Software Updates
Payroll software requires frequent updates. Laws and tax rates constantly change.
If you buy a desktop software, you will have to regularly check for and download updates. With an online
software, the updates should be automatic.
You want to make sure you always follow the newest rates and laws. Ask the software company how soon it will
update the software after any laws or rates change. Also, find out if you will have to do anything to receive the
update.
Questions to ask yourself
• Will I take the time to find and download updates?
• Will I keep myself up to date on current payroll news, laws, and rates?
• Will software with automatic updates benefit me?
10 Things to Consider When Choosing Payroll Software
9. Customer Service
Customer service is important to consider when purchasing payroll software. Customer service representatives
should be there for you if you have any questions.
The software company’s customer service representatives should be available when you need them. Find out
what times you can reach them. Also, find out what time zone the representatives are in. If they are in a different
time zone, this can affect their availability in your time zone.
You might want to consider the methods you can use to reach customer service. Are the representatives only
available by phone? Or, can you reach them by email or online chat?
Customer support representatives should be knowledgeable about the software. Some companies might
outsource their customer service. If a company does, how familiar are the representatives with the software?
Will there be a language barrier? You might want to find out if the representatives have payroll experience or
certifications. Also, can the representatives answer your questions, or are they simply pushing a sale?
If you do need to contact customer support, you want help quickly. Find out how long it usually takes to talk to
someone or get a resolution to a problem. Ask the software company if there are extra fees for using customer
service.
There are often online reviews of a company’s customer service team.
Questions to ask yourself
• How often might I use customer service?
• What might I want from customer service (e.g., setup help, payroll answers, software help)?
• How am I most comfortable contacting customer support?
• Will customer support representatives be available at the times I might need them?
10 Things to Consider When Choosing Payroll Software
10. Software Security
Keeping employee information safe is important. Payroll software stores your employees’ names, addresses, and
Social Security numbers.
Ask the software company what they do to protect your employees’ information. Find out if the software
company has had any security breaches.
Online software companies should use encryption to protect personal information and passwords. The company
should be bonded and insured in case information is stolen. Also, ask about the data center where the software
company stores your information. Find out what kind of security is at the data center, and who has access to the
location.
If you use a desktop software, you should make sure your computer is secure. Since your computer will store the
payroll information, you should have your own security protections in place—such as a firewall, passwords, and
security software. You should also have a way to back up your data, such as online storage or an external hard
drive.
Find out how much of your account information a customer service representative can see. They should not be
able to see personal information, such as your passwords or employee Social Security numbers.
Questions to ask yourself
• Is my personal and/or work computer secure?
• Do I have my own system to back up data?
Related Articles
Want to learn more about accounting software and your options? Here are some links to articles with more
information.
• Payroll Software Solutions Designed to Help Your Small Business
• 5 Points to Consider When You Move to Cloud Payroll Software
• Making Sense of Business Payroll Options
• Paperless Payroll Program: Pros and Cons
• 5 Reasons to Plug in With Cloud Payroll [Infographic]
10 Things to Consider When Choosing Payroll Software
About Patriot Software
This resource is provided by Patriot Software, Inc.
We provide fast, simple, and affordable accounting and payroll software for American small businesses. We
also offer 1099 software, a payroll tax filing service for payroll customers, and add-ons for HR and time &
attendance.
For more information, visit www.PatriotSoftware.com or call 877-968-7147.
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