Best Online Payroll Software in 2023

Modern-day problems need modern-day solutions. So to grow your business to many folds, stop shuffling between the cells of the excel sheet and enjoy a stress-free month that ends with the online payroll software that rests you from error-prone manual calculations. The following article unfolds into a definitive guide on how to do it.

What is an Online Payroll Software?

Online payroll software is a boon for HR departments and employees/ contractors/ freelancers working remotely. The software handles all the payroll-related services like salaries, compensations, bonuses, payroll taxes, etc. In addition, it allows employees to work from home or anywhere remotely and access the same information otherwise.

Managing all the records of the employees manually, collecting exact data from them, keeping track of any possible deductions and taxes, and paying salaries on time can be very exhausting. And payroll mistakes can be costly. For example, the Internal Revenue Service (IRS) found penalties for payroll mistakes worth more than 4.9 million US Dollars in 2019. So switching to good payroll software seems necessary rather than a luxury.

Talking about online payroll software, here are some of its main features: 

• Payroll Processing and Management
• Direct Deposit
• Tax Filing Services
• Compensation Administration
• Oracle Compensation
• Employee Self-Service
• Reporting

How Does Payroll Software Work?

To explain in brief, the payroll software calculates the employees' working hours and gross wages so the employer can download the file and pay them on time. As a result, it reduces a lot of work that otherwise would be done manually.

Why Should One Use Online Payroll Software?

There are many reasons for employers to switch to payroll software, as it offers a wide range of facilities and eases the process of making employee payments. Some of its pros are listed down below.

1. Increase in revenue

   A business can only dwell and grow if its employee base is happy. And what else can make them more comfortable than paying them right on time without any hassle? Also, the system provides the employees with a self-service option to easily track their records and payroll information at any time, anywhere. In addition, the employees download the payslips and can even apply for their retirement funds. 

2. Easy management and accuracy

   The payroll software has the contact credentials of all the employees and the record of their working hours (including overtime, if any) through which their pay is calculated. And the system, hence, makes accurate and timely payments. This would otherwise be done manually, which is a catch-22 and would take a lot of effort and time because managing the accounts is not a cakewalk. Moreover, several challenges stand in the way, such as tax-related errors, miscalculations of payrolls, missed deadlines, etc. This is where the online payroll software comes into play and does the job effortlessly and more accurately.

3. Increased Safety and security

   There’s a risk that the data can be stolen in the locally stored data, and the disc may also crash. Therefore maintaining the confidentiality of the data is a tough task. However, the payroll software resolves this issue, where the confidentiality of the employee’s data is well taken care of and is monitored by the experts to avoid any malicious activity. Also, the data is properly encrypted so no third party can access it.

4. Eco-friendliness

   Managing the employees’ data manually uses a lot of paper, ultimately affecting the environment. Now, as we have an alternative for the same, paper usage can be cut down, and lots of trees can be saved. Furthermore, the environment is less affected by ink and cartridges' harmful effects.

   Also, according to a study by Microsoft, cloud-based payroll software can help reduce carbon dioxide emissions and save energy consumption by 93%.

5. Cost-effectiveness

   The return on investment makes the cloud-based payroll software a cost-effective alternative to traditional working methods. Compared to paperwork, you get timely and faster payroll processing, saving you a lot of time and money.

6. Time-saving

   The payroll system automatically processes the payment, makes the payroll calculations, estimates the tax, and manages other debts (if any), reducing the work to half or even less. You also get to schedule the payments you are going to make.

   Here is a comparison table between the time taken (a significant amount) for payroll functions with and without the payroll software.

   BASIS OF COMPARISON	WITH THE PAYROLL SOFTWARE	WITHOUT THE PAYROLL SOFTWARE
   Calculate salaries	20 seconds	60 seconds
   Complete paperwork	10 seconds	60 seconds
   Check tax law compliance	20 seconds	120 seconds
   Calculate timesheets	20 seconds	300 seconds
   Create payroll reports	20 seconds	120 seconds
   Total time	1 minute 30 seconds	11 minutes

   However, one drawback of the cloud-based payroll software is that you need a good-speed wifi connection to access your data, or you’ll lose access if your internet goes down or power cuts. But with such fast-growing technical advancement, the internet problem seems manageable.

What is the Best Online Payroll Software?

Some of the best payroll software for small businesses to help you understand the purpose.

1. Gusto

Gusto is the best choice for small and mid-sized companies as it provides you with four tiers and some additional HR (Human Resources features). In addition to that, it offers automated services suitable for any business, which makes it an all-rounder of payroll software.

Features

• Gusto debit card for employees  for easier access to their money on payday
• Paperless paychecks
• Unlimited bonus and off-cycle payrolls
• Hourly and salaried employees
• Easy cancellations
• Multiple pay rates
• Flexible payment schedules

2. Quickbooks 

Quickbooks Payroll is the easiest to set up of all the top payroll software as everything is automated in its system. Its tutorials are enough to get you in, so you need no technical support. And if you still face any difficulty, a google search would do the job for you.

Features

• Create paychecks
• Direct deposit for employees
• Direct deposit for 1099 contractors 
• Helps you file and pay taxes
• Workers comp payment service
• 24/7 access to the workforce their paycheck information

3. Paychex Flex

Paychex Flex lets you have a clear and sharp look at taxes, wages, turnover, etc., providing you with 160+ reports. In terms of reporting, Paychex Flex is all that’s needed in payroll software. Moreover, it has unlimited payroll runs to ensure the best experience.

Features

• Online Payroll with an intuitive UI
• Helps you file and pay taxes
• Track Time and Attendance
• Dedicated mobile app
• Avenues to welcome new hires
• Integrated system for HR software and payroll

4. On Pay

On Pay is perfect for small or growing businesses with no hidden fees. Something every small-scale business would love. The payroll is automated, but you’ll be needed to run and approve it every time.

Features

• Unlimited monthly pay runs
• Helps you file and pay taxes
• W-2 and 1099 workers
• Pay salary by direct deposit, debit card, or check
• Multiple pay rates and schedules
• Offer payroll in 50 states 
• Works on mobile as well

5. Workful

Workful is comparatively a recent software and is still no way behind in the race regarding customer services. However, it provides top customer support services and is affordable and easy to use.

Features

• Interactive and user-friendly UI
• Offers compliance management
• Multiple pay rates and schedules
• Offer payroll in 50 states 
• Track employee work performance and productivity

How to Set Up an Online Payroll System?

Now that you’ve decided to implement online payroll software, it may seem overwhelming, but it’s not. The payroll system is designed to make your work easy or to reduce your work and not add to it. So here’s what you need to do to set it up properly.

First, ensure you’ve all the pre-requisite material to set up the system. Apart from the general features needed for the payroll software, you may add additional features like reporting time, HR onboarding, employee attendance, and employee self-service as per your business’s requirements. Once this is done, you’ll find all you need in one place and don’t have to switch between the applications.

Second, have the receipts of the pay and copies of all the reported activities, including terminated employees, contractors, and existing employees’ data. Also, if the tax-related features were there before in your previous system, keep that in your new software for at least four years, if not more. And if possible, consider having all the records physically in a file for at least three years, if not more.

Now is the time to finally install the software in your system. Most payroll software is easy to install and work with. However, you may seek help from an IT professional to ensure the smooth working of the software.

You may add the profile of your employees through the in-built template, which helps you quickly add or delete new or existing staff members. Also, the software has a very easy-to-use UI.

Conclusion

The online payroll software gives accurate payroll calculation, automatically processes the payment, is easy to use and manage, and has the top-notch security possible. After providing enough reasons and the guidelines to use it, we hope you successfully bring automation into your payroll process.