Payroll Software

Payroll touches every part of your business—cash flow, compliance, morale, and trust. The right payroll software makes paying people accurate, timely, and stress-free. This guide walks through features to look for, pricing considerations, integrations, security, and a step-by-step implementation checklist.

What Payroll Software Should Do (Core Features)

Automated Payroll Runs

Support for hourly, salaried, and contractor payments with automatic tax calculations and net pay.

Tax Filing & Remittance

Quarterly/annual filings, W-2/1099 generation, state/local tax handling, and error notices.

Time & Attendance

Built-in timesheets or integrations; PTO accrual rules; overtime and breaks compliance.

Benefits & Deductions

Pre/post-tax deductions, 401(k)/retirement, HSA/FSA, garnishments, and fringe benefits.

Multi-State & Multi-Entity

Handle employees in multiple states, subsidiaries, or EINs without manual spreadsheets.

Self-Service Portals

Employees view pay stubs, update banking, W-4s, and download tax forms without HR tickets.

How to Evaluate Vendors

Accuracy first: Ask for details on their tax engine, update cadence, and penalty-protection policies.
Coverage: Confirm support for your states/countries, pay frequencies, and worker types (W-2, 1099, global).
Integrations: Native connectors for your accounting (e.g., QuickBooks, Xero), HRIS, time tracking, and benefits.
Scalability: Can it handle headcount growth, multiple locations, or union rules without add-on chaos?
Support: Live chat/phone SLAs, dedicated payroll specialists, peak-period coverage (quarter-end/year-end).
Auditability: Full change logs, downloadable registers, and error reconciliation tools.

Pricing: What to Expect

Component	Typical Model	Notes
Base Platform	$20–$60 per month	Sometimes tiered by features (tax filing, multi-state).
Per Employee	$4–$12 per employee/month	Often includes pay stubs, portals, basic support.
Per Run Fees	$0–$5 per payroll	Some waive per-run fees; others charge for off-cycle runs.
Year-End Forms	$0.50–$3 per form	W-2/1099 printing & e-filing; check bulk discounts.
Add-ons	Varies	Time tracking, benefits admin, contractor pay, global payroll.

Tip: Model total cost at your peak headcount and include off-cycle runs (bonuses, corrections) and year-end forms—these surprise costs add up.

Compliance & Risk Controls

Tax updates: Verify automatic updates for federal, state, and local rules.
Classification: Guardrails for W-2 vs 1099; maintain signed agreements and audit trails.
Overtime & breaks: State rules differ; ensure rules engines match your locations.
Record retention: Keep payroll records and timesheets per regulatory timelines.
Direct deposit rules: Handle bank holidays, reversals (NACHA), and prenotes if required.

Security & Data Protection

Role-based access, SSO/MFA, IP allowlisting for admins.
Encryption in transit and at rest; SOC 2 reports; data residency options if needed.
Comprehensive audit logs and exportable reports for finance and external auditors.

Integrations to Prioritize

Accounting

Map GL accounts, classes, and job codes; auto-post payroll journal entries.

Time Tracking

Approve hours once; avoid re-keying. Sync PTO, overtime, and projects.