For most small businesses, managing their payroll is an expensive, time-consuming burden. A survey conducted by the National Small Business Association found that 42% of small businesses spend between $101 and $500 each month for payroll services, and 22% pay more than $500 per month to process their payroll. In addition, 26% of small business owners who handle payroll processing themselves spend between 3-5 hours each month working on their payroll, and 20% invest more than 6 hours per month on the task.
It doesn’t have to be this way. The advent of cloud-based payroll services and other low-cost payroll software provides small business owners with many of the automated payroll features that large organizations have long benefitted from. In addition to ensuring the business complies with all state and federal tax requirements, small business payroll software saves business owners hours of bookkeeping time each month.
Finding the best payroll solution for your business requires matching the functions your operation requires with the abilities of the payroll software at a price your company can afford. Here are the features to look for when choosing the optimal payroll service for your business’s needs.
Core Features of Small Business Payroll Software
Most payroll solutions designed for small businesses are comprised of separate modules that combine to create a package that’s customized to the business’s specific requirements. Among the modules are those for time tracking, tax filing, and benefits administration.
- The compensation module calculates employee wages automatically and prepares paychecks based on the pay rates the company has assigned to each worker and the hours each employee has worked; some systems track employee hours automatically and others require that the hours be entered manually. The system should support various pay types and frequencies, bonuses, withholdings, and garnishments.
- The time and attendance module collects information on when employees clock in and out. Some businesses require tracking of time off, multi-level user access, and multiple roles per employee.
- The tax filing module automates the process of calculating, filing, and paying local, state, and federal taxes. This includes Social Security, Medicare, unemployment, and disability insurance. Note that some payroll software calculates the company’s tax bills and prepares the tax documents but requires that documents be filed manually.
- The insurance and benefits module allows the business to enroll employees in insurance plans and track other worker benefits, including each employee’s accrual of paid time off. Health insurance, educational assistance, and retirement plans may also need to be tracked by some businesses.
Other payroll features that most small businesses will consider mandatory include support for direct deposits of employee paychecks, compliance management to ensure the company doesn’t run afoul of government regulations, and employee self-service so workers can access their pay stubs, W-2 forms, and accrued time off without any help from managers.
Payroll Reporting Features that Integrate with Other Operations
A key time-saving feature of payroll software for many small businesses is the ability to link payroll figures to the company’s general ledger and other accounting and human resources programs. Reports generated by the payroll software gives the business a comprehensive overview of its total budget, tax burden, employee compensation, and management overhead. From this data companies can identify trends and patterns indicating how efficiently it is allocating its payroll and other resources. This includes the cost of paying employees overtime versus adding staff, how to adjust schedules to save the business money, and which benefits can be provided more efficiently.
Other types of reports generated by payroll software that help boost a small business’s bottom line include summaries of quarterly costs, taxes remitted each year, and historical data on employee participation in 401K plans. Some companies will also require support for 1099-MISC forms for contract workers, backup withholding for payments made to non-employees, and the ability to access payroll information remotely on computers, tablets, and smartphones via a dashboard interface.
Payroll Software Innovations that Help Boost Small Businesses
Many small businesses will be well served by a payroll solution that sticks to the basics:
- Accurately calculate employees’ gross pay and net pay.
- Support payment by printed check or direct deposit.
- Prepare and print year-end tax forms and other required reports.
- Ensure compliance with all tax obligations and state employment regulations.
- Automatically deduct unemployment, worker’s compensation, disability, and other payments required by state and federal law.
However, many small business payroll software offerings distinguish themselves by including unique capabilities that have the potential to streamline business processes and contribute to the company’s bottom line.
- Handle new-hire onboarding and reporting (including “self on-boarding” that allows employees to enter their personal information into the system directly).
- The ability to create and manage tuition and health savings plans.
- Reports exported as PDFs for sharing or CSV files for import to finance and business-management apps.
- Automatic payroll processing and timely reminders of important compliance deadlines.
- Location awareness to ensure accurate tax calculations for a widely dispersed workforce.
- Secure storage via automatic encryption of sensitive payroll files, and secure deletion of old files.
Choosing the Software That Works for You
The future of small business payroll software is cloud-based and mobile. A survey by market research firm Deloitte found that 39% of small businesses currently use a cloud-based payroll solution, and another 21% are considering migrating their payroll operations to a cloud service. In addition to replacing a one-time fee with a pay-as-you-go model, cloud-based payroll services reduce the amount of time managers spend on administrative tasks.
Cloud-based payroll solutions are more flexible than their on-premises counterparts, and they facilitate collaboration by being much easier to access. Today’s mobile workforce is able to easily connect with their payroll information remotely via a range of devices.
Small business owners often have more work to do than time available to do it. The ability to meet their payroll obligations accurately, completely, securely, efficiently, and affordably frees up more time for managers to spend doing what they do best: growing their business.
Learn more about how the talech POS system helps small and midsize businesses optimize their payroll and other business processes to improve the experience for their customers. We work with you to determine the best ways to meet the needs of your customers and employees so your business can thrive. We take the time to learn your business so we can balance your specific needs with your budget and comfort level in a custom POS system implementation. The result is a valued investment that will pay for itself in short order. Reach out to us today to sign up for a free demo and learn more about how talech can be your valued partner in the POS world.