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When starting or running a small business, it’s common to run into questions about what parts of your business require the support of additional software or services, and what you can realistically handle on your own. Why invest in payroll software, for instance, when you only have a handful of hourly employees, or when you mostly work with contractors ad hoc?
Not only can late or inaccurate payments result in legal consequences, fines, and penalties, they also can do lasting damage to your workers’ trust in you.
But on your mission to be scrappy or frugal, it’s pretty easy to oversimplify the payroll process, which can grow increasingly complex and hard to manage as your business scales.
And payroll is one area where your business needs to be on its A-game.
Why? To start, the stakes are high when it comes to payroll mistakes: Not only can late or inaccurate payments result in legal consequences, fines, and penalties, they also can do lasting damage to your workers’ trust in you.
Plus, managing DIY payroll can take up a lot of your time and resources, especially as you bring on new employees.
This is where your payroll software comes into play. Whether you already have a solution in place, or you’re just now beginning to vet potential payroll options, make sure you’re covered with six important payroll features:
1. Simple, Efficient Payroll Processing
For a payroll solution to truly prove its value, it must have reliable, on-time payroll processing that’s easy to use.
But that’s just asking the bare minimum of your payroll software. The best payroll solutions should go beyond the basics and manage other aspects of your employees’ financial records — think salaries, wages, bonuses, deductions, and so on — with an easy-to-navigate interface for both employers and employees to use.
When evaluating your payroll processing, it helps to examine three areas:
Accurate payments to salaried, hourly, and contractor workers
Does your payroll software manage payments to contractors and vendors in addition to handling hourly wages, salaries, and other compensation for your employees?
Automatic benefits deductions and tax withholdings
Does your payroll solution calculate earnings along with benefits deductions and tax withholdings? Furthermore, does it show your employees these financial breakdowns in a clear, digestible way?
When assessing payroll software, it’s also worth determining if it provides multiple pay options, such as splitting direct deposit across multiple bank accounts. This feature, along with things like pay day emails and easy-to-understand breakdowns, can help personalize your employee’s pay experience, without adding any burden to your HR resources.
Get the full guide on how PEOs work for small businesses.
2. Employer Payroll Tax Compliance
To maintain compliance with federal and state employment laws, you will likely need some help from your payroll software. Navigating these government regulations isn’t easy; in fact, for the 2018 fiscal year the IRS assessed 4.9 million civil penalties related to employment taxes — from issues concerning accuracy, delinquency, failure to pay, and more — all of which amounted to more than $29.3 billion in penalties.
It goes without saying that the potential risk of these tax fines or penalties is extremely important for small businesses. Therefore, your payroll software should accurately calculate, withhold, and pay federal, state, and local payroll taxes. Additionally, ensure your software can file quarterly reports and generate year-end forms like W-2s and 1099s. This can help give you a peace of mind.
Related article: Tax Tips Every Business Owner Should Know
3. Robust Payroll Reports
A key component for efficiently running and growing your business is having the right level of visibility into your payments.
Your payroll software should offer detailed payroll reports across several business areas so you can gain a deeper look into how your business operates.
While more basic payroll tools simply run payroll and possibly file taxes, they don’t give you all the data insights about your payments and operational efficiency as they could.
Ensure that your payroll software offers detailed payroll reports across several business areas so you can gain a deeper look into how your business operates. You should be able to easily view payroll across departments, see taxes and benefit deductions, and look at both granular employee-level payment details as well as company-level overviews.
4. 24/7 Customer Support
Even when equipped with the best payroll tools out there, nothing beats having real human support to back you up. Better yet, when your support is available around the clock, it takes the stress off of resolving potential issues when your time and energy could be focused on running and growing your business.
Evaluate the customer support offered by your payroll options. Do they offer the right communication channels — over phone, email, Slack? What are the hours you can reach them? Can you reach them at any time, or do you need to readjust your schedule to get their support? What are other people saying about the customer support?
Every company is different, so the support you need might not be the same as another’s. Look for a payroll service that will give you the round-the-clock, personalized support you require from your customer success team.
Related article: Why we launched a 24/7 customer support Team in NYC
5. Employee Self-Service Portal
When it comes to HR administration, how much time or effort is your payroll solution saving you? Is your tool easily usable by employees or does it cause more questions / add to your administrative workload?
If employees still field most of their payroll-related requests to HR, then your payroll software isn’t delivering on everything it should be. Look for a solution that provides easy access to your employees.
Employees should be able to log in and have access to everything they need — digital pay stubs, benefits breakdowns, year-end tax forms — as well as have the ability to update personal information, like bank account information and withholdings, and navigate through their pay stubs without hassle.
Check out these 7 principles for helping employees deal with financial stress.
Team Up with a PEO for Payroll Support
For many small businesses, the subject of payroll can be tricky — but it’s not impossible. By teaming up with a Professional Employer Organization (PEO) for payroll and payroll tax compliance, small businesses get the support they need to run their business confidently every step of the way.
Ready to choose a PEO? Read our blog about the five questions you should be asking.