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How to Choose the Right Payroll Management System

How to Choose the Right Payroll Management System

Are you looking for a great payroll system for your small business?

Payroll can easily be one of the most strenuous aspects of running your business.

You want to make sure you always pay your employees on time. You want to make sure you always have sufficient funds in your bank account. Keeping in touch with payroll tax laws is another nightmare!

But with a payroll management system service, you can have all these tasks managed for you.

So how do you find the right payroll management system for your business?

Here are the criteria that you should know about:

It Offers Reimbursements and Additional Payments

You want to choose a payroll management system that lets you make additional payments.

These include payroll tips and other fees that supplement your employee’s wages.

These payroll services will let you add columns to pay these additional fees. You can leave a note for your employees so they can keep track of additional fees and why they were paid.

You can also look into PayActiv TimelyTips and Mileage to accommodate payroll tips and mileage reimbursement.

Crucial Features

Next, let’s look at some of the crucial features that you should expect from all payroll management systems.

Here’s what you should expect:

  • Direct Deposit: This feature will connect your payroll service to your employee’s bank accounts. This expedites transfers between bank accounts
  • Tax Compliance: The service should let you calculate payroll taxes, sales taxes, and withhold taxes from wages
  • Salary Options: This lets you handle different payment types such as a monthly salary, hourly wage, fixed wage, etc.

Make sure your payroll service has at least all 3 of these crucial features. If even one is missing, move on and find another option.

Advanced Features

Now let’s look at the advanced features that you want in your payroll management system.

Always opt for the payroll service that has more features, even if you feel it’s out of your price range. In the long run, you might depend on these advanced features.

Here are the advanced features you should expect:

  • HR Workflow: The service should help create invoices, pay stubs, and track working hours
  • Works on the Cloud: It’s easiest to work with a payroll service that works on the cloud. When you’re away from your work computer, you can check your payroll information through your internet connection. This makes your payroll services much more convenient!
  • Geo-Compliance: Make sure you find a payroll service that works for your geographic area. This means it can follow the payroll laws and taxes of your jurisdiction without you having to do any research
  • Tax Classification: It should work with W2 and 1099 workers


You want to choose a payroll management system that makes payroll more efficient. 

For example, how simple is it to onboard and terminate employees? If you hire an employee, you should be able to add them within minutes. The same goes for if you need to remove them from the payroll system.

You shouldn’t have to wait a few days to verify your employee bank accounts. This will postpone them from receiving their wages on time.

Employees should also have access to the payroll management system. They should be able to download PDFs of pay stubs and W2s when needed.

There should also be automation features. This way you can plan your payroll schedule in advance.

After you do it, your payments will get sent on time without you having to do any additional work.


You want to choose a payroll management system that has tiered pricing. This means that there are different packages with different features. You can choose the tier that works best for your business.

This also means that the payroll management system is always working to improve its service. As such, you can upgrade your payroll package as you scale your business.

Make sure there are no hidden fees for the payroll service. The only fee you should pay is the subscription fee for your package.

Take your time to research different pricing options among payroll services. You don’t want to opt for the cheapest service as this will offer the fewest features. Conversely, the most expensive payroll service might be overpriced.

It’s best to choose a payroll management system that doesn’t exceed 10% of your monthly expenses.


Make sure you also research the payroll service’s reputation online. This will tell you how other small businesses assess their features.

You should check product review sites to read reviews for the payroll service. You want to choose one that has overwhelmingly positive reviews.

If there are negative reviews, make sure you read them. These critiques might point out red flags in the payroll service.

You also want to see if the payroll service has reviews and testimonials on its website. The best payroll services will not hesitate to share customer feedback on their website.

Ask your fellow entrepreneurs about which payroll services they like the best. If you’ve dealt with a payroll service for your previous jobs, contact your former employers to ask them for their feedback.

Customer Service

It’s imperative that you choose a payroll service that has great customer service. If the features are great but the customer service is poor, you’ll get frustrated with the payroll service.

The payroll service should offer many ways to contact customer service. There should be an email address, phone number, and live chat option. There should also be a helpdesk and FAQ page.

After you’ve created your shortlist of payroll services, contact a support agent from each of them. Ask them about the payroll service and how it can help your small business.

Use this session to assess the quality of customer service. If you find that they know the product and are willing to help, you should consider the payroll service.

If they’re in a rush to “hang up” and sell you the product, you should move onto another choice.

Choose Your Payroll Management System

Now you can choose the right payroll management system for your small business. 

Make sure you first check that they have all the crucial features we outlined. Next, you want to make sure they have as many advanced features as possible.

You want a payroll service that’s efficient and has excellent customer service. If it has a great reputation and is reasonably priced, you should consider it for your business.

You can find more great business tips on our website!