10 things to help you choose the right payroll software

When choosing payroll software for your business, there are a number of things to bear in mind to ensure you find the right solution for your needs. Many of these will be standard considerations but there will be some that are unique to your company and the industry in which you operate.

So, where to start? Read on for 10 important factors that you need to consider and advice to help you make the right decisions.

1. Number of companies and users

If your business is doing payroll for a number of companies/clients, how many different companies will you need to process payroll for? It will be important to ensure that any software you purchase includes a licence for the required number of companies.

Likewise if you plan to manage payroll just for your company, and want to install the software on a server to allow multiple users to access it from a local or remote network, ensure you choose a payroll software package and licence that allows for this.

2. Number of employees

How many employees do you need to process payroll for this year? When working out this figure, include seasonality and any resulting staff.

Also include starters and leavers because if someone leaves, their details will need to remain on your payroll software for the year as they will need to be included in year-end reports.

Many payroll solutions will be priced and divided out by employee number bands, so it is important to have this figure in mind when researching potential suppliers.

3. Payroll frequencies and types

How often do you need to pay employees? Is it weekly, monthly or every two weeks? Also, does every employee get paid in the same manner or do you have some employees who are paid monthly and some who are paid weekly? It’s worth taking this into consideration.

In terms of the type of payroll, are employees paid an annual salary or by the hour, or have you a mixture of both? Ensure to check that any potential payroll solutions can cater for the payroll frequencies and type of payroll you need.

Also consider how employees’ holidays are calculated – do they get a set amount of days a year, a third of the working week or a percentage of hours worked? If tracking holidays is currently a manual task, check which payroll packages can help you to manage this.

4. Types of payslips to use

Will you be printing out payslips for employees? If it’s a yes, what stationery will you print them on (plain paper, standard payslips or customised payslips)? Work out how much will this cost you per week, month and year.

Other points to think about include whether you will choose security payslips or will need to purchase envelopes to place regular payslips in. And do you need to post payslips out to employees? Remember to factor in the costs of postage and envelopes.

Alternatively, would you prefer to email payslips to employees? If so, will the potential payroll solutions you are considering allow you to email them securely? Make sure you check this.

5. Level of analysis you require

Do you need to analyse your payroll costs across different departments in the business? Do you also need to assign payroll costs to different cost centres within the business?

If so, ensure that any payroll software you consider can handle the level of analysis you require and can produce reports based on this.

6. Complying with legislation

Aside from standard payroll law, are there any other pieces of legislation that the company you will be doing payroll for needs to comply with? If so, it is important to factor this in to ensure any software packages you consider will be legally compliant.

One example of legislation that may need to be catered for by a payroll package would be the Construction Workers Pension Scheme.

7. Integration between payroll software and other solutions

Is there an accounts package that you want to link your payroll software with? Do you need to import information to your payroll software from spreadsheets or from another piece of software? Do you need to integrate with a clock-in or biometric system?

These are all areas for consideration when choosing your payroll package. Check with suppliers to see what integration or import features are available.

8. What payroll packages have you used before?

Have you previously used any payroll packages in employment or on training courses? If so, how did you find them and would you consider using them again?

If so, using software you are familiar with will allow you to hit the ground running. If not, think about why so you can ensure your next package will do what you need it to.

9. Do you need to be mobile?

If you need to process payroll from various locations or would like to have access on the move from mobile devices, a cloud payroll software solution could be for you.

As well as giving you access from anywhere, cloud packages will likely have an option where you can pay on a monthly basis, allowing you to spread the cost of your software and avoid a large initial outlay.

10. Can you try before you buy?

If you are considering a variety of payroll packages, especially those you have not used before, trying it out before you buy can allow you to evaluate it against your requirements and will give you peace of mind that what you choose will work for you.

Many providers will offer a trial period, which will allow you to test out and use the software before committing to buying.

Editor’s note: This post was originally published in April 2013 and has been updated for accuracy and relevance.