Recommended for small-business owners who don’t want to spend much time or money on payroll.
Doing your own payroll is great in terms of saving money, but if you follow the adage that time is also money, DIY payroll puts you squarely in the red.
Of course, this isn’t a perfect world, which means all payroll options require time, money, and energy. Still, payroll software can save you so much more time that it isn’t really comparable to DIY payroll.
But let’s give it the old college try—compare this five-step list of how to do payroll with software to our eight-step list of how to do payroll by hand:
- Find and purchase payroll software.
- Enter your business and employee information.
- Have hourly employees record and submit their time cards.
- Use the software to calculate payroll and create records.
- Distribute paychecks.
Even with software, you’ll have to take some of the same extra steps you would with by-hand payroll, like requesting an Employer Identification Number (EIN). But you don’t have to create your own payroll journal, stress over accurate pay stubs, use a calculator or formula to make sure you’re deducting the right payroll taxes, or go out of your way to research this year’s tax rate, which . . . is kind of incredible.
But remember our introduction, where we talked about the pros of having the right number of options? Alas, this is where payroll software loses points.
There are hundreds of options for payroll software—some tailor-made for freelancers, some for businesses with under five employees, some for solo ventures, some for subcontractors . . . and all of them with their pros and cons to sort through.
That makes the first step, finding and purchasing the right payroll software for your business, the most time-consuming part of the process. Then you have to learn how to use it.
If you don’t have any idea where to start, we have a few favorites you can sort through. Before you go on the hunt, ask these key questions to trim up your options:
- How many employees do you have?
- How much do you want to spend?
- How much tax support do you want?
- How worried are you about legal compliance?
- How much customer support do you need?
- How much time can you spend getting used to the software?
- How many features do you need? Do you need just payroll, or do you need payroll, invoicing, billing, and more?
- Do you want payroll software that integrates with other management systems, like HR?
- Do you want a free trial?
There’s enough payroll software out there that one option, at least, should fit most of your checked boxes.