Find the Best Online Payroll Software

What Is Online Payroll Software?

A cloud-based solution called online payroll software aids organizations in managing employee payroll and related duties. It automates tasks associated with payroll, such as determining employee salaries, deducting taxes, producing pay stubs, and transferring money into employee accounts.

Online payroll software can be integrated with other HR management systems and is often accessed through a web-based application or mobile app. It lets companies track time and attendance, manage employee data, and automate tax filings.

By using online payroll software, businesses can increase accuracy, decrease errors, save time, and streamline payroll procedures. In-depth analytics and reports are also provided by the program to aid with regulatory compliance and personnel decision-making for firms.

How Does Online Payroll Software Work?

Online payroll software often automates payroll processes, including tax filing and employee salary calculation. 

A payroll system can be easily configured by entering important data such as employee information, benefits, pay rates, and tax details. This enables you to create a centralized database in your online payroll system.

Moreover, you can also record employees’ working hours and leaves, and calculate their pay based on the work done. With the right online payroll software, you can stay compliant with the tax and regulations imposed by the government.

Lastly, with this software, payroll taxes can be filed automatically, and payments can be made directly to federal entities. This helps in saving time and improves overall productivity.

Importance Of Using Online Payroll Systems

Online payroll systems offer several benefits over traditional ones, making them a popular choice for businesses of all sizes. Here are some reasons why businesses should consider using an online payroll system.

1. Increase in Revenue

   Online payroll systems can help businesses increase revenue by reducing payroll errors and ensuring the timely payment of employees. By automating the payroll process, businesses can avoid costly mistakes such as paying employees extra amounts or missing tax deadlines, which can result in fines and penalties.

2. Easy Management and Accuracy

   Online payroll systems make it easy to manage employee payroll information, including tax withholdings, benefit deductions, and paid time off.

   They also provide real-time access to payroll data, allowing businesses to monitor employee pay and expenses. This increased accuracy can help businesses avoid costly mistakes and ensure compliance with tax laws and regulations

3. Increased Safety and Security

   Online payroll systems offer increased safety and security for employee data, using advanced encryption methods to protect sensitive information. This can reduce the risk of data breaches and protect businesses from potential legal payroll tax liabilities.

4. Eco-friendliness

   Online payroll systems are eco-friendly, eliminating the need for paper-based systems such as printed checks and paper pay stubs. This can help businesses reduce their carbon footprint and promote sustainability.

5. Cost-effectiveness

   Online payroll programs are cost-effective, eliminating the need for manual processes and reducing the risk of errors. This can help businesses save money on administrative costs, reduce the need for additional staff, and avoid costly fines and penalties.

6. Time-saving

   Online payroll systems save time for businesses by automating the payroll process, freeing staff time to focus on other tasks. This can help businesses increase productivity and efficiency, allowing them to focus on growing their business.

What Type of Buyer Are You?

It's crucial to consider the buying style when picking online payroll software. Small firms with less than 50 people, mid-sized businesses with between 50 and 1000 employees, and major corporations with more than 1000 employees all have various needs.

Payroll software features and capacities may vary according to the type of buyer.

1. Basic Payroll Needs

   For small firms with straightforward payroll requirements, basic payroll software is suitable. This software frequently has functions like withholding taxes, creating pay stubs, and calculating employee hours.

   Payroll software that is more basic is less expensive than more complex software. It is a good option for companies that don't need sophisticated services like benefits administration or time and attendance tracking.

2. Payroll and Accounting Software

   Payroll and accounting software is designed for businesses that need to manage payroll and track financial transactions. This type of software typically includes advanced features such as budgeting, forecasting, and tax planning tools.

   Payroll and accounting software is a good choice for businesses that need to manage both payroll and financial operations and want to integrate these processes into a single system.

3. Complete HR Suites

   Complete HR suites are designed for mid-sized and large businesses that need a comprehensive HR management system.

   This software integrates various HR functions, including payroll, benefits administration, time and attendance tracking, recruiting, and performance management.

   Complete HR suites typically have the most advanced features and functionality, such as customized reporting and analytics, compliance monitoring, and employee self-service portals. Complete HR suites are a good choice for businesses that want to manage all aspects of HR in a single system.

Benefits of Online Payroll System

Online payroll system is developed to streamline companies' entire payroll process. From employee management to salary processing, it can help in every task. Below are the main benefits of an online payroll system.

1. Increased Accuracy

   Online payroll systems aid firms in increasing accuracy and reducing payroll errors. Automatic payroll, tax, and benefit computations can reduce or even eliminate the potential for human error, and the system can notify users of any errors or problems.

2. Improved Compliance

   Online payroll systems ensure that tax and payroll laws are followed. Businesses can avoid fines and penalties for non-compliance by using the system, which will automatically compute taxes, make deductions, and file payroll taxes on time.

3. Automatic Updates

   The most recent tax and payroll rules are immediately updated in online payroll systems, ensuring that firms adhere to the law. These automatic upgrades can reduce businesses' workloads, guaranteeing they stay current with regulatory changes.

4. Accessibility

   Online payroll systems provide businesses with access to their payroll data from anywhere with an internet connection. This accessibility can help businesses manage their payroll processes remotely, such as when employees work remotely or on business trips.

5. Scalability

   Online payroll systems can scale with businesses as they grow. The system can handle more employees and transactions without sacrificing performance, allowing businesses to expand without investing additional resources.

6. Greater Employee Satisfaction

   Online payroll systems offer self-service portals for employees, allowing them to access their payroll information easily and quickly. This can improve employee satisfaction and reduce the workload for HR departments.

7. Automatically Creates an Audit Trail

   Online payroll systems automatically create an audit trail, making tracking changes and maintaining compliance easier. This audit trail can help businesses to identify potential errors or issues quickly and reduce the risk of fraud or mismanagement.

8. Easily Customisable

   Online payroll solutions can be customized to suit the specific needs of a business, allowing them to tailor their payroll processes and systems. This customization can improve efficiency and reduce administrative costs.

9. Cost-Effective Solution

   Online payroll systems are cost-effective compared to traditional ones, as they reduce the need for manual processes, data entry, and paper-based systems. This cost-saving can benefit businesses of all sizes.

10. Ongoing Customer Support and Training

    Online payroll systems offer users ongoing customer support and training, ensuring they can utilize the system effectively. This support can help businesses to maximize the benefits of their online payroll system and avoid potential issues or errors.

Common Features Of Online Payroll Software

Online payroll software has become essential for businesses of all sizes to manage their payroll processing and employee management needs. 

These software systems have various features designed to streamline payroll operations, increase accuracy, and improve compliance with government regulations. Some of the common features of online payroll software include:

1. Compensation Management

   Online payroll software frequently includes a function called compensation management that enables employers to control employee compensation and benefits. Regular and overtime pay calculations and processing, handling employee deductions, including taxes and benefits, and year-end reporting and tax filings are all included in this function.

2. Payroll Processing

   Online payroll software's core functionality is payroll processing, which enables organizations to control employee pay and payroll records. All employee payroll processing, sending paychecks and producing reports outlining payroll expenses are all included in this service.

3.  Time and Attendance

   Time and attendance tracking is a critical feature of online payroll software, allowing businesses to manage employee schedules, track time worked, and manage employee absences. This feature includes tracking employee time and attendance, monitoring employee schedules, and generating reports detailing employee time and attendance records.

4. Tax Filing

   Tax filing is a crucial feature of online payroll software, allowing businesses to calculate and file payroll taxes accurately and on time. This feature includes managing employee tax withholdings, calculating payroll taxes, and generating tax reports.

5. Accounting Integration

   Integration with accounting software is a common feature of online payroll software, allowing businesses to manage their financial records and payroll data in one place. This feature includes integrating payroll data with accounting software, automatically transferring payroll data to accounting records, and generating financial reports.

6. Reporting

   Reporting is a critical feature of online payroll software, allowing businesses to generate reports detailing payroll expenses, employee pay, and other critical payroll data. This feature includes generating standard and custom payroll reports, exporting reports to various file formats, and viewing and analyzing data from different angles.

7. Security

   Security is a crucial feature of online payroll software, ensuring the safety and confidentiality of payroll data. This feature includes using encryption technology to protect sensitive data, restricting access to payroll data to authorized personnel, and providing access controls to protect against data breaches.

Top 5 Online Payroll Software

Choosing the right online payroll software can be critical for businesses to ensure smooth payroll processing, accurate record-keeping, and compliance with government regulations. 

Many online payroll software options are available, each with unique features and benefits. This section will overview the top five online payroll software solutions.

1. Gusto

Gusto is a cloud-based payroll and HR software for small and medium-sized businesses. It offers a range of features, including employee onboarding, payroll processing, benefits administration, and compliance management. Gusto also provides tools for time tracking, vacation tracking, and reporting, making it easier for businesses to manage their workforce. 

With its user-friendly interface and automation features, Gusto streamlines HR and payroll processes, saving businesses time and reducing errors. The software integrates with popular accounting software and offers mobile apps for on-the-go access.

Features

• Payroll processing
• Benefits administration
• Compliance and compensation management
• Time tracking
• Workflow management
• Employee onboarding
• Reporting
• Mobile app

Pros

• Intuitive, natively online platform
• Seamlessly integrated with QuickBooks Online
• Provide complete and file tax/compliance documents
• Payroll processing
• HR Management

Cons

• Customer Service
• No International Support
• Multiple withdrawals for payroll, employee, and employer taxes

Pricing

• Core plan: $39/month + $6/month per person
• Complete plan: $39/month + $12/month per person 
• Concierge plan: $149/month + $12/month per person

2. Quickbooks

QuickBooks is a popular payroll provider developed and marketed by Intuit. It is designed to help small and medium-sized businesses manage their financial operations more efficiently. QuickBooks offers a range of features, including invoicing, expense tracking, bank reconciliation, payroll management, inventory tracking, and financial reporting.

The software is available in desktop, online, and mobile versions, allowing users to work from anywhere. QuickBooks is known for its user-friendly interface and integration with other third-party applications. It is a popular choice for businesses looking to streamline their accounting processes and run payroll processes.

Features

• Invoicing
• Expense tracking
• Payroll management
• Inventory management
• Financial reporting
• Time tracking
• Integration with third-party applications
• Mobile access

Pros

• User-friendly interface
• Integration with other applications
• Customizable
• Comprehensive reporting
• Time-saving features

Cons

• Limited scalability
• Limited industry-specific features
• Limited customization in some areas
• Expensive
• Customer support

Pricing

• Simple Start: $25 per month 
• Essentials: $50 per month 
• Plus: $80 per month 
• Advanced: $180 per month 

3. Paychex Flex

Paychex Flex, a human resource management program, offers various payroll and HR services. The program includes tools for managing benefits, hiring, performance review, and applicant tracking, in addition to time and attendance management.

It also offers a mobile app so users can view employee information and carry out other HR-related tasks while on the go. Paychex Flex is designed to be expandable for companies of all sizes and offers flexible pricing and support choices.

Features

• Payroll processing
• Employee self-service
• Time and Attendance
• Benefits administration
• Hr compliance
• Mobile app
• Analytics and Reporting
• Integration

Pros 

• Comprehensive solution
• User-friendly interface
• Customizable
• Mobile app
• Integration

Cons 

• Cost is very high
• Customer service is unreachable at times
• Limited customization options
• Lack of international support

Pricing

• On Request

4. OnPay

OnPay is a cloud-based payroll and HR management software for small to mid-sized businesses. The platform offers a range of features and tools, including full-service payroll processing, benefits administration, HR compliance, and employee self-service.

OnPay is customizable, affordable, and integrates with other HR and accounting software. It provides businesses with a comprehensive solution to streamline payroll and HR processes while ensuring compliance with federal and state employment laws.

Features

• Activity dashboard and tracking
• Audit management
• Benefits management
• Collaboration tools
• Compliance management
• Document management
• Employee management
• Payroll management
• Task management
• Tax compliance

Pros

• User-friendly
• Affordable pricing
• Customizable plans
• Excellent customer support
• Comprehensive features
• Mobile app

Cons

• Limited integrations
• Limited reports
• Limited international support
• Limited features for large businesses

Pricing

• Free trial for 1 month
• Base Fee: $40 per month

5. Workful

Small firms can use the cloud-based payroll services and HR software called Workful. Payroll processing, time and attendance monitoring, HR compliance, benefits management, and employee self-service are just a few of the functions available on the platform.

Workful is reasonably priced, simple to use, and adaptable to the requirements of small enterprises. To assist businesses in adhering to federal and state employment rules, the platform also gives them access to HR tools, including job descriptions and employee handbooks.

Features

• Compensation management
• Data import/export
• Document management
• Employee management
• Payroll reporting and management
• Policy management
• Real-time updates
• Reporting & statistics
• Tax compliance
• Timesheet management
• Vacation/leave tracking
• W-2 preparation

Pros

• User-friendly
• Affordable pricing
• Customizable plans
• Comprehensive features
• HR resources

Cons

• Limited features for large businesses
• Limited benefits options
• Technical issues

Pricing

• $35 per month

How To Set Up An Online Payroll System?

An online payroll system can help you streamline your payroll process and save time and money. Here are some steps to follow to set up an online payroll system:

Step 1 - Research and select one that meets your business needs. Look for software that offers direct deposit alternatives, automatic tax calculations, and employee self-service capabilities.

Step 2 - Collect necessary employee information, such as full name, Social Security number, bank account details, and tax withholding forms.

Step 3 - Establish accounts on the payroll software for your company and your employees. Don't forget to enter the personnel data you've obtained into the system.

Step 4 - Decide how often your employees will be paid, such as weekly, bi-weekly, or monthly.

Step 5 - Input employee hours worked, pay rates, and any deductions or bonuses into the payroll software.

Step 6 - Check the payroll data for accuracy and make any necessary adjustments before approving the payroll.

Step 7 - Process payroll by either sending out direct deposit payments or printing checks.

Step 8 - Pay and file taxes accurately and on time using the payroll software.

Step 9 - Employees can access their pay stubs and other payroll information through the software’s self-service portal.

Step 10 - Keep accurate records of all payroll transactions and related documents.

Challenges Of Online Payroll Software

Online payroll software is an excellent tool for businesses to manage their payroll process more efficiently. However, it can also present several challenges, including :

1. Administrative Issues

   Online payroll software requires administrative personnel who can operate it efficiently. A lack of skilled personnel can result in errors and inefficiencies in the payroll process. Moreover, administrative issues can also arise due to complex payroll calculations, changing tax laws, and compliance requirements.

2. Organizational Challenges

   Organizations often have complex payroll structures that require different pay rates, overtime rules, and benefit plans for different employee categories. Managing such structures can be challenging for online payroll providers, which may result in incorrect pay calculations and compliance issues.

3. Incompatible Software

   Many organizations have existing payroll, HR, or accounting software and tools. Integrating these tools with online payroll software can be difficult due to software incompatibility issues. In such cases, organizations may need to upgrade or purchase new software, which can be costly and time-consuming.

4. Tracking Employee Absence

   Online payroll software needs to track employee absences accurately, such as vacation time, sick leave, and personal days. However, tracking employee absences can be challenging for online payroll software, particularly for unanticipated or long-term absences.

5. Compliance Risks

   Online payroll software must comply with various payroll, tax, and benefits regulations. Non-compliance can result in penalties and fines and damage the organization's reputation. Additionally, compliance requirements can frequently change, making it challenging for online payroll software to keep up with the latest regulations.

Current Trends In Online Payroll Software

The trends are shaping the future of online payroll software, making it more efficient, accurate, and user-friendly.

Businesses should consider these trends when selecting online payroll software to ensure they get the most up-to-date features and functionality. Below are some important trends in online payroll software:

• Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are increasingly integrated into online payroll software to streamline processes and improve accuracy. These technologies can automate data entry, detect errors, and suggest ways to optimize payroll processes.

• Mobile Accessibility

With the increasing use of mobile devices, online payroll software is being developed with mobile accessibility in mind. This trend allows employees to access their payroll information and change their details from their mobile devices, making it more convenient and flexible.

• Cloud-based payroll solution for larger enterprises

Online payroll software is moving towards web-based payroll software, which can handle more data and provide more scalability. This trend is particularly useful for larger enterprises with complex payroll structures.

• Integrations with other systems

Online payroll software is integrated with other systems such as HR, accounting, and time and attendance tracking. This trend ensures that data is consistent across systems and eliminates the need for manual data entry, saving time and reducing errors.

• Increased focus on employee experience

Online payroll software is now being designed with an increased focus on the employee experience. This trend includes self-service portals, personalized interfaces, and user-friendly dashboards, making it easier for employees to access payroll information and manage employee benefits.

Conclusion

Online payroll software has become crucial for businesses to manage their payroll operations effectively. Many advantages include enhanced compliance, precise computations, and time-saving automation. Businesses should know the administrative issues, organizational difficulties, and compliance hazards associated with employing online payroll software.