8 Key Payroll Software Features + 3 Bonus
Payroll is evolving just like any other business service. Did you know that 39% of American workers are open to using Bitcoin and other cryptocurrencies for their future transactions?
In this article, I’ll go through core and advanced payroll software features to help you find the best payroll software.
What Is Payroll Software?
Payroll software are applications that assist with managing employee payments, organizing taxes, and ensuring your company is in compliance with financial regulations.
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For the most part, a good payroll software system should include 8 key features in order to be deemed beneficial for business use:
- Processing and management: at its base foundation, payroll software processes and manages payments, paying employees in their preferred method at the right time.
- Direct deposit: a payroll management system should include a direct deposit feature where the employee can opt to have their earnings directly deposited into their bank account.
- Tax filing services: a feature that files business taxes and T4's based on employees' income and amounts inputted in the payroll database.
- Time tracking integration: for hourly employees, you will need software that offers a time tracking module.
- Compensation administration: this feature adjusts payment to compensate for non-traditional methods of pay. This can include worker’s compensation, employee benefits, bonuses and tax breaks.
- Employee self service: payment details are provided at the employees’ fingertips via a payroll platform usually requiring a login id.
- Reporting: provides insights in the form of reports that can be useful to improving HR department operations such as updating HR software or determining a new payroll solution.
- Compliance management: ensures your payroll service software complies with the law and governmental regulations.
Overview Of The Best Payroll Software Features:
1. Processing and management
This payroll feature is the nuts and bolts of payroll processing. Like any system, payroll software requires information from HR such as an employee ID number, employee tax information, a schedule of payment, deductions, and gross/net pay. Once this information is inputted, the payroll system can process each employee's payment in terms of their individual requirements. This feature ensures that the employee’s pay is calculated correctly via their individualized method of payment.
2. Direct deposit
One of the main purposes of investing in payroll software is to benefit from direct deposit. Direct deposit eliminates the risk of cheque fraud, plus optimizes time/money by electronically transferring funds instead of printing and distributing cheques. In addition, direct deposit allows for paperless transfers, protecting the environment.
3. Tax Filing Services
Filing payroll taxes can be an arduous process, that's why it’s much easier to let a software system do the work for you. Most payroll software has tax filing features built-in or offers tax services as an add-on. Tax features allow you to manage your business account, calculate employees’ T4’s and keep track of deductions as you go. Simply input payroll tax information, create necessary forms, and send them to an agency.
4. Time Tracking Integration
If your employees punch in and out, the software should record their hours automatically, without the need to input hours manually. This is especially beneficial when paired with employee self-service so that employees have an immediate report of their hours.
5. Compensation Administration
The compensation administration feature deals with deductions and non-traditional payment methods. These adjustments can include worker's benefits, bonuses, overtime, and vacation pay. Payroll software is able to manage this without disrupting the processes already in place. Your software should also be aligned with time attendance devices, that is, clock-in times should be recorded and the software should adjust accordingly for lateness and overtime.
6. Employee Self Service
This feature allows for total transparency so that payment and tax information can be seen by the employee. This gives employees agency in how they get paid (you could offer on-demand pay, for example) but also ensures diplomacy and open communication in workplace settings. It also relieves pressure from HR departments that would normally deal with questions and concerns regarding employee payment.
7. Reporting
All good payroll software systems will provide reporting features. Reports are essential in order to analyze and improve your business. Some key information that reports would provide are a payment summary for each employee, payments and deductions, tax information, and a general breakdown of costs and revenue.
From these reports, you will be able to plan future budgets and operations so that you can save on hidden costs and improve your overall payroll process. Some software may even offer a console that reports payroll data for stakeholders.
8. Compliance Management
How do you know your business is in compliance with government regulations? Luckily, payroll software systems have a feature that assesses your system, analyzes it alongside regulations, and makes sure your business is in line with the law.
3 Additional Payroll Software Features:
Here are some bonus payroll software features you may find useful:
Multiple Currencies
Some software systems may offer the option to pay in different types of currencies. If you’re running an international business and dealing with freelance or remote workers, this feature will most likely become useful to you.
Cloud Payroll Storage
Storing payroll info on a cloud system is optimal because you don’t have to deal with the maintenance of servers or late-night calls with IT. However, depending on the nature of your business, you may prefer to store your payroll data on a computer drive to ensure more security. Most small businesses opt for cloud storage as it’s easily compatible with payroll software and operating systems.
Customization
The payroll software you choose may give you the option to be customized to your unique business needs. Upgrades or additions can often be added to the software in order to accommodate unique timings, currencies, or tax settings.
Types Of Payroll Software:
There are 4 different types of payroll software, each with its own benefits and considerations.
HR Integrated Payroll
An integrated HR and Payroll software system combines payroll services with other HR and business programs such as workforce management software. By combining multiple services in one application, data can flow smoother and you don’t need to manage a suite of software apps.
However, something to bear in mind is that, as payroll might not be a core feature of the software, it lacks functionality or isn’t kept as up to date as a specialized payroll software solution might.
Pure Payroll Software
This type of payroll software is a standalone, specialized application and provides a base of payroll-only features.
These payroll systems cost less to set up and usually have a lower monthly service fee. The potential downside, however, is that you may need to spend extra time inputting necessary data and manually linking HR and payroll accounts.
Mobile Payroll Software App Extensions
Mobile payroll options are available that can help organize payment systems effectively and, most of the time, for free.
SurePayRoll, an app designed for running payroll "wherever your day takes you”, is available for Apple and Android devices. There is also an employee version that allows employees to access their pay information online.
The downfall of mobile payroll systems is that they can rely on mobile connections which may be less reliable than a network connected to an on-site system.
Accounting Integrated Payroll
Payroll services can be linked with accounting features, forming an integrated service.
This type of software is customizable for self-service businesses requiring the filing of tax forms and other tax-based services. Integrating accounting services with payroll can put your data at risk, causing a higher chance of cyber security breaches.
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Wrapping Up
Investing in a good online payroll software system is no longer optional, it’s essential for a healthy, growing business.
If you think payroll software will benefit you, and are ready to start prospecting vendors, check out these articles:
- Best Payroll Software
- Best Payroll Software for Small Businesses
- Best Canadian Payroll Software for CAD Businesses
Small business owner? Here is an article that outlines the ins and outs of managing payroll within a small business: how to manage payroll for small business or, if you'd rather outsource, check out the best payroll companies.
Another useful read for those procuring any form of HR software: how to make a business case for HR software.