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Hiring & Payroll, Payroll, Tools

How to Choose Payroll Software for Small Businesses

Payroll Software for Small Businesses

You have employees that you need to pay, but you don’t like to run payroll. So, you decide that you want to find a fast and inexpensive way to do it. You determine that payroll software is the best fit for you. There are many payroll programs from which you can choose, and many require minimal time and have a low cost. But, how do you choose the right payroll software for your business?

There are two main things that you need to consider when choosing payroll software for small business: your needs and the cost.

Consider Your Payroll Needs

The software features you need will depend on your skills and available time.

First, think about your payroll knowledge. If you do not know much about payroll or payroll tax liabilities, you might want to look for a software program that will walk you through each step of the process.

You might want to consider using a payroll software for small businesses that handles payroll taxes for you. While this option costs slightly more, you will not need to worry about what forms to use or when to send payments. By letting the software provider handle taxes, you will save time and reduce frustration.

Next, think about your needs. What features are you unable to live without? For example, if your employees receive commissions, your payroll software must have a way to account for the commissions. Or, if you need a way to track the hours employees worked, the software needs to have time and attendance features.

Features you might need include:

  • Time and attendance tracking
  • Human resources form storage
  • Overtime calculations
  • Tip income management
  • Employee self-service access
  • Benefit deductions

The software should also be compatible with the way you pay your employees. Whether you pay your employees using checks, direct deposit or some other method, the software should work with the payment method that you already have in place.

Consider the Costs of Payroll Solutions

You already spend a lot of money to run your business. You have to purchase inventory, pay rent and utilities and compensate employees. While some expenses help your business generate a profit, payroll processing costs only cause your business to spend money.

You should carefully consider costs when choosing small business payroll software. You do not want to overspend on a task that automatically causes your profit to shrink.

Many things influence software costs. When you are shopping for payroll services, determine what things you need to efficiently and accurately run payroll. Figuring out what you need will prevent you from overspending on nonessential items.

Here are some things that will impact the cost:


Some programs have tons of cool features, but do you need those features? Many of the features will probably go unused. Software loaded with features will cost more, too. Stick to your most basic needs. You will save money by selecting software with fewer features. \

Extra Add-ons

Some payroll programs do not come with every feature included; you might need to purchase add-on programs to get access to the features you need. Buying add-ons allows you to pay only for what you really need. But, you need to remember the cost of the add-ons when adding up the total expense of buying payroll software.

Pricing Structure

There are two main ways that payroll service providers charge for their software. Some providers will charge you based on the number of employees you paid. This is beneficial if you want to pay your employees frequently. Other providers will charge you based on the number of payrolls you run. With this option, the cost to run frequent payrolls could add up.


How often do you think you will need to call customer support? While this is difficult to know with certainty, you might want to consider your knowledge of payroll and technology.

Sometimes, contacting customer support is free. But some payroll software providers will charge you each time you need help. If you think you will frequently contact customer support, you should look for free customer support. Even if you think that you will not need to contact the company, free customer support services are beneficial just in case.


Before you purchase payroll software, you should find out if the software provider requires you to sign a contract. If you do need to sign a contract, ask about any related fees, such as a fee for breaking the contract early.


Some payroll providers offer to enter your payroll history in the software for an additional cost. Make sure to double-check whether you will be charged before you give them the go-ahead.

You Get What You Pay For: Don’t Be Too Frugal

You do not want to pay too much, but you also do not want to be stingy when paying for payroll programs for small business that could potentially free up hours of your time. You need to pay for software that provides features tailored to your individual needs.

If you choose a less expensive software simply to save a few dollars, you might lose the features, support or functionality that caused you to consider payroll software in the first place. Evaluate your options by examining payroll software based on the features that you need the most. Most importantly, select the payroll provider that offers what you’re looking for – even if they aren’t the cheapest option.


Kaylee Riley is a content writer for Patriot Software, Inc. At Patriot, she translates tricky payroll and accounting topics into the language of the small business owner.