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Choosing a payroll system – What factors should you consider to help you make the right choice?

December 29, 2017

Using payroll software can save businesses time and money so if you have made the decision to use software to run your business’s payroll function we can help you narrow down the many services available. It’s important to know what to look out for as choosing a payroll system can be easier than you think if you pay attention to key factors.

You don’t need to be a payroll expert to use payroll software, but you will need to purchase a system which integrates with your business needs.

Here are our top factors to help you best choose a payroll service to suit your organisation’s requirements.

1. Cloud or desktop?

There are two types of software to choose from before you compare payroll services: online and desktop software. What you choose depends on the type of business you have, your lifestyle, and your personal preference.

Cloud payroll software (online) gives you access to payroll anytime and anywhere. You will simply need internet access to run payroll, which is beneficial if you are constantly on the go. Online software will give you access to your payroll records from more than one device.

Log in to a computer at your business or your mobile device at home. Your payroll information is protected if your computer crashes, since it is stored in the cloud. With online software, you pay a continual subscription price. You might pay for each payroll period or per month.

For desktop software, you will download the software programme onto your computer. You can only run payroll on the computer that has the software. You do not need internet access to run payroll with this option. With desktop software, you will most likely pay an initial flat rate. And you might also need to pay future fees for software upgrades. You will also be at risk of data loss should your computer crash.

2. How much will it cost?

Businesses want services that are affordable and get the job done, the cost is a priority factor when deciding on a payroll system. Look out for hidden fees that might be overlooked during your initial payroll services cost comparison.

You might select a provider and later find that there are extra fees you did not know about because of your provider’s payroll services pricing model. Make sure you read the small print to best understand exactly what features are included in the price quoted.

Cost usually increases when you need more features, as the complexity of reporting and functionality increases you might need to purchase full-service payroll. Cost typically increases as you hire more employees as well. Make sure you know what is included in your payroll software. If you plan to hire more employees in the future, ask about the approximate cost per additional worker.

3. Features

Though cost is important when choosing a payroll system, you also want it to perform the tasks you need. Since businesses are all different, the best payroll system for your company should integrate with your business’s unique needs.

Here are some features you should consider when choosing a payroll system.

Payment type: Do you pay your employees via bank transfer, pay cheques or payroll cards? You want your payroll system to accommodate how you pay your employees. If you give your employees pay cheques make sure your software supports it.

Some software lets you print pay cheques when you run payroll.
Pay frequency: How often do you pay your employees? Weekly, fortnightly or monthly?

If you pay your employees weekly, you might not want a payroll system that costs you each time you run payroll as you will be paying more to run payroll if you have short pay periods. Instead, you would want a payroll system that lets you pay a flat amount, regardless of pay frequency.

Tax and deductions: Filing taxes takes time and can be confusing. If you want to run payroll without needing to worry about handling taxes, NI contributions and pension deductions, choose a full service plan which deposits and files these deductions. You will not want to worry and stress about mistakes or late payments.

Supplemental wages: If your employees earn bonuses, commissions, or tips, you need a payroll provider that accommodates supplemental wages. Let’s say you own a restaurant. Your employees receive tips and report their earnings to you. Supplemental wages are recorded and taxed differently than normal wages.

Some payroll providers handle recording and remitting taxes on supplemental wages for you.

Time and attendance: Time and attendance lets you easily track the hours your employees work. Have your employees enter their hours online, or enter them yourself. Attendance management might be an extra feature integrating with payroll.

Your employees enter their hours, and you run payroll based on their time and attendance tracking. You save time by letting your employees enter their own hours. That way, all you need to do is verify their hours are correct and run the payroll.

4. Support

How much support do you think you and your team will require? A payroll system providing strong support could help you feel more comfortable with running your own payroll.

Fortunately, many payroll systems offer customer support in some form. And some payroll providers will set up and implement your payroll system for you. If support is important to you, compare levels of support available when choosing a payroll system.

Some payroll systems offer online support, support over the phone, or both and some may assign you your own dedicated consultant. Depending on your personal preference, you might factor the kind of support you will receive into your payroll system comparison.

5. How easy is it to use?

Getting a payroll system that makes sense and is easy to use is important when choosing the right system for your business needs. Some payroll systems are tricky and require background knowledge in order to run them. Some have a familiar Microsoft interface to ease navigation as most users recognise Microsoft functionality.

Make sure you are confident with how easy it will be to use the payroll system before you buy it. Purchasing a payroll system with a small learning curve saves you time and money. You don’t want to buy something requiring significant learning time as it is at risk of not being used or requires you to spend money on resources to learn how to use it. If possible, try out the payroll system before you buy it.

6. Free trial

Some payroll systems come with a free trial so you can get the hang of running your own payroll. A free trial helps you know exactly what you are purchasing. Check to see if the payroll system you are considering offers a free trial. It lets you learn the system with a hands-on approach and temporarily run your payroll at no cost to you.

7. Security

What happens if someone can gain access to all your employee data and personal information? Security is a vital factor in choosing a payroll system. Ensure you understand how this sensitive data is kept secure, does the payroll system have high-security encryption? You must be able to trust the information is kept safe.

8. Contract

Before choosing a payroll system, see how long you will be tied in for. If you do enter into a contract with your payroll provider, first make sure the software meets all your needs. You might have to pay an exit fee to leave before the end of the contract. The contract forces you to stick with that payroll system, which can be a pain if you later discover hidden fees or you need to purchase extra features.

You might prefer a payroll system without a contract so you can get out at any time with no fees. There are pros and cons to each option, so consider your business’s particular needs.

Select the best value for your money. If you need payroll to have certain features, make sure those are included in the service. Your business can also benefit from factors like helpful support, a free trial, no contract, and security.

Choosing a payroll system does not have to be difficult. But it does involve comparing payroll providers. The most important point is to choose the right payroll system for your payroll functions needs and business requirements.

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