How do you select the best payroll software for small business? Well, first, do you really need or want to have actual payroll software, or would you be better off outsourcing your payroll processing to a payroll service? There are pros and cons to both approaches. Here are some of them.
Payroll Outsourcing Advantages:
- No need to buy or maintain software, or learn how to use it.
- Peace of mind – Usually filing and paying taxes is guaranteed on time and accurate by the service, so long as you provide the money when asked.
Payroll Outsourcing Drawbacks:
- Typically you have to pay the payroll service for taxes at the time of the pay date, when the taxes are not actually due to the taxing authority for several weeks or even months.
- Cost – these services usually charge a monthly fee plus an additional fee per employee, and sometimes other fees as well.
Payroll Software Advantages:
- Control – with your own in-house payroll, you have absolute control over the process. You can make last minute changes, add special reservations, or whatever else you might want, and you know exactly what happened, when and why.
- Cost – Usually the cost to buy and use billing processing software yourself in house is less overall than the monthly fees charged by the outsourcers, and the need to pay everything up front to the service can put a crimp in your cash flow for some businesses.
Payroll Software Drawbacks:
- You'll need to purchase the software, may need to be involved in setting it up or configuring it, and you or your staff will need to learn how to properly use it.
- Liability – you are solely responsible for making sure everything gets calculated correctly and filed on time. Typically the software makes this pretty easy, but it's still extremely in your hands.
There is no single “best” solution to handling payroll – different businesses have different needs, and the optimal solution for your business depends on your particular needs and requirements. If you're considering paying software, you should analyze your business' requirements and evaluate the software options on the market in terms of how they meet your particular requirements, then select the payroll software that's best for you.