9 Best Payroll Management Software for Small Businesses

Managing payroll is one of the most dreaded tasks for growing businesses. 

That's because most first-time business owners are not proficient in basic payroll calculations, payroll taxes, and management.

Interestingly, 30% of payroll professionals say payroll takes at least four long days. During the­se four days, 30% of the time goe­s into manual data entry of payroll details. Plus, another 20% of that time­ is utilised to rectify errors. 

This is where intuitive payroll management software can save you time and reduce errors. In this article, we'll list the top payroll management software for small business owners.

So, let's explore the benefits of choosing the best payroll software, which makes payroll a stress-free process! 

Key Takeaways

• Learn what payroll management software is.
• Understand the importance of using the best payroll software.
• Evaluate the core features and pricing structure of the 9 best payroll software.
• Get a comprehensive guide to selecting the right running payroll software for your business.
• Learn how an HR payroll provider works for salaried employees.

What is a Payroll Management Software?

Payroll management software is an online tool that organisations use to streamline paying employees through automation.

It handles various aspects of payroll administration, including calculating wages, deducting taxes and other tax withholdings due, performing other basic payroll functions such as payroll operations, generating paychecks or direct deposits, and maintaining accurate employee compensation records.

More importantly, it helps businesses of all sizes manage their payroll processes more efficiently and accurately, reducing the likelihood of errors and compliance issues. It typically offers features such as employee self-service portals, tax calculation and tax filing, capabilities, time tracking integration, and customisable reporting options.

Importance of Payroll Management Software

As a small business owner you’re bound to run into obstacles along the way. However, there’s one challenge that almost every business owner faces: having to deal with payroll.

But that's where the payroll system swoops in to save the day. 

Here are all the reasons why it is a must-have for your small business: 

1. Simplifies the Process and Saves Time

In business, time is currency. 

A payroll system can relieve you of the tedious task of sorting through endless spreadsheets and calculations, the first step in the payroll process. This helps you save time that can be better allocated for other business tasks.

Everything is automated, including the tax deduction and wage calculation, facilitating the seamless execution of your payroll procedure. 

2. Reduces Errors

Let's face it: we're all human, and humans make mistakes.

But when it comes to payroll, errors can be costly—not just for your wallet but also for your employees' trust. It’s been reported that after encountering only two paycheck problems, nearly half of them will seek new employment opportunities.

You don't want that to happen to you! 

And that is why a good payroll software system can reduce the likelihood of errors and ensure everyone is paid correctly and on schedule.

3. Ensures Legal Compliance

Compliance with tax laws and regulations is essential for any business, especially in Canada's ever-evolving regulatory landscape.

Fortunately, payroll software takes the guesswork out of compliance, ensuring that your payroll processes align with the latest Canadian tax laws and regulations. This ensures your business operates within legal boundaries, safeguarding you from penalties and fines.

4. Streamlines Record-Keeping

The days of rifling through filing cabinets for paper payroll records are long gone. Payroll software revolutionises record-keeping by centralising all pertinent information in a secure digital environment.

This means no more hunting for elusive pay stubs or scrambling to locate employee data when needed. With payroll software, you can effortlessly organise and access records such as pay stubs, tax forms, and employee details with just a few clicks.

Moreover, modern payroll software often includes advanced features like document storage, audit trails, and customisable reporting options. These functionalities enhance organisation, facilitate compliance with record-keeping regulations, and provide valuable insights into your payroll data.

9 Best Payroll Management Software for Small Businesses of 2024

After researching, we compiled a list of the 9 best payroll software, showcasing their winning features and pricing details.

1. The Top Choice: Knit People

Knit People is a payroll software designed specifically for startups. It offers customisable payroll features and HR tools to meet the unique needs of growing businesses.

Features

• Direct deposit: Streamline your payroll process by depositing funds directly into your employees' bank accounts.
• Payroll calculations: Automatically compute payroll components such as salaries, hourly wages, commissions, bonuses, and taxes.
• WCB/EHT remittances: Automate the calculation and remittance process for the Workplace Safety and Insurance Board (WCB) and Employer Health Tax (EHT).
• Payroll tax payments: Ensure timely submission of tax payments with automated payroll tax remittances.
• Online pay stubs: Issue pay stubs to employees instantly and automatically upon running payroll. 
• Year-end T4s: Generate and file T4 statements effortlessly at the end of each fiscal year with just a few clicks away. 
• Multiple pay rates: Easily calculate employee hourly wages, even with multiple pay rates, simplifying payroll management.
• Record of employment: Automate the creation of Records of Employment (ROE) and file them conveniently online to save time.
• Canadian compliance: Stay informed and compliant with Canadian tax filings, T4 preparation, and evolving employment laws and regulations.

Pricing

Knit People offers three pricing plans:

• Lite - for $6 per employee per month. 
• Complete - for $8 per employee per month. 
• Concierge - Contact Sales for a custom quote and plan. 
• Knit People also offers a free trial to test the features before making the final decision.

Best for

Startups seeking a customisable payroll solution with robust HR features and compliance monitoring.

2. Patriot Software

Patriot Software is an online payroll service provider focused on helping small businesses manage payroll efficiently. It offers free payroll setup, 2-day direct deposits, and USA-based customer support.

Features

• On-the-fly pay rate changes: Make changes without cancelling payroll or leaving the page.
• Free employee portal: Give your team access to their pay stubs, pay history, time-off balances, and electronic W-2s. 
• Pay overtime, sick time, and more: Easily add bonuses, commissions, tips, vacation and holiday pay, and more. 
• Unlimited users with permissions: Add as many users as you need and control who sees what. 
• Time-off accruals: Automate your PTO policy with customisable accrual rules. Hours add up seamlessly based on your settings.
• Tracking reported tips: Ensure accurate tax withholding for reported tips. 

Pricing

Starting at $4 per employee per month, plus payroll software costs a $17 base monthly fee run payroll alone. Full-Service Payroll costs around $37/month + $4 per employee. Patriot Software also offers a 30-day free trial.

Best for

Small businesses looking for an affordable payroll solution with a free setup and fast direct deposit processing.

3. QuickBooks

QuickBooks Online is a popular accounting software offering robust payroll features for small businesses. It's known for its user-friendly interface and seamless integration with other QuickBooks products.

Features

• Contractor payment management: Easily manage payments to contractors and freelancers.
• Built-in expense reports: Generate detailed expense reports for better financial tracking.
• Automated tax calculations: Automatically calculate payroll taxes and deductions.
• Integration with QuickBooks: Sync payroll data with other QuickBooks products for streamlined accounting.
• Mobile app: Manage payroll on the go with the QuickBooks mobile app.

Pricing

The pricing starts at $18 per month for the Simple Start plan. There are two other plans: Essential, which costs  $27 per month, and the Plus plan, which costs $38 per month. 

Best for

Small businesses seeking a payroll solution with seamless integration with other QuickBooks products and built-in expense reporting.

4. Eddy

Eddy is a full-service payroll provider with software designed for budding businesses. It offers comprehensive payroll services, HR features payroll reports, and compliance tools to help small businesses manage their workforce effectively.

Features

• Automated payroll processing: Streamline payroll processing with automated features.
• Customisable reports: Get insights into your payroll data with customisable reports.
• Compliance audits: Ensure compliance with state and federal employment laws.
• Paid time-off tracking: Track employee time off and manage vacation accruals.
• Integration with other HR software: Seamlessly integrate with other HR tools for enhanced functionality.
• Mobile access: Manage your payroll on the go with Eddy's mobile app. 

Pricing

Eddy offers custom pricing based on business needs. Contact Eddy Sales for a personalised quote and plan.

Best for

Local businesses seeking a comprehensive payroll solution with robust payroll specialist HR features and compliance tools.

5. Gusto

Gusto is a user-friendly payroll software known for its customisable reminders and notifications. It's designed to make payroll management easy for small businesses.

Features

• Automated payroll, taxes, and filings: Gusto handles all your payroll needs, from processing salaries to calculating and filing taxes. 
• W-2s and 1099s: Generate and file W-2 and 1099 forms effortlessly at the end of the year. 
• Child-support garnishments: Easily deduct child-support payments from employee wages, and Gusto can even handle sending payments to the state on your behalf in most states.
• Payroll on AutoPilot®: Set your payroll to run automatically so you never miss a pay period. 
• New hire reporting: Gusto reports new hires to the appropriate state agencies.
• Minimum wage adjustment: Easily adjust minimum wage calculations for tipped employees with Gusto's tip credits feature.

Pricing

Starting at $40 per month, plus $6 per employee for Simple Plan. There are two more plans: a Plus plan that costs around $60 per month and a Premium plan with custom pricing. 

Best for

Small businesses seeking a user-friendly payroll solution with customisable reminders and notifications.

6. Ceridian Dayforce

Ceridian Dayforce is a user-friendly payroll software focusing on a user-friendly payroll dashboard. It's designed to simplify payroll management for small businesses.

Features

• Time and attendance: Employees can easily track hours worked, time off, and schedules. 
• Benefits administration: Simplifies benefits administration by managing open enrollment, life events, carrier connections, and ACA compliance. 
• HR: Maintains employee records, organisational reporting structures, and compliance management.
• Talent management: Includes talent management features such as recruitment, onboarding, performance management, goals alignment, etc.

Pricing

Ceridian Dayforce offers plans based on a company’s needs, starting at $22 per employee per month. Contact Ceridian Dayforce for a personalised quote.

Best for

Small businesses seeking a payroll solution with a user-friendly interface and robust compliance monitoring.

7. PrimePay

PrimePay is a comprehensive payroll software solution for small businesses, helping them manage employee payroll, tax compliance, and benefits administration.

Features

• Employee payroll management: Process payroll for employees with ease.
• Tax compliance tools: Ensure accurate and timely tax filings with built-in compliance tools.
• Advanced reporting: This function generates detailed reports on payroll analysis, labour costs, ACA compliance, and other key metrics.
• Time and attendance tracking: Track employee hours and manage schedules efficiently.
• API and integrations: Integrates bi-directionally with leading HCM platforms like BambooHR and Workday.
• Mobile app: You can manage the payroll easily with the PrimePay mobile app.

Pricing

Primepay offers various pricing plans and packages. You can contact PrimePay Sales for a personalised quote.

Best for

Small businesses seeking a comprehensive online payroll software solution with professional services built-in tax compliance tools processing payroll and benefits administration.

8. OnPay

OnPay is a full-service payroll software designed for entrepreneurs and startups. It offers various payroll services, HR functions, and benefits management features to help small businesses grow.

Features

• Industry-specific payroll Services: Tailored payroll solutions for specific industries.
• Free employee handbook and HR templates: Access to essential HR resources.
• Automated onboarding: Streamline the onboarding process for new employees.
• Employee self-service portal: Empower employees to access their pay stubs and update their information.
• Integration with insurance providers: Seamless integration with health, dental, and vision insurance providers.
• 401k integration: Automatically support employer matching and profit-sharing options.

Pricing

The Basic plan starts at $40 per month for 1 employee. The first month is free, but must pay to continue your subscription. 

Best for

Entrepreneurs and startups seeking a full-service payroll solution with robust HR features and benefits administration.

9. Paycor

Paycor is a comprehensive human capital management solution designed to streamline payroll processes for small businesses. It offers powerful analytics and payroll features to help you manage employee onboarding, performance reviews, time and attendance, and benefits management.

Features

• Employee onboarding: Streamline the onboarding process for new hires.
• Performance reviews: Conduct performance evaluations and track employee progress.
• Time and attendance: Track employee hours and manage schedules efficiently.
• Compliance feedback: Stay compliant with state and federal employment laws.
• Multiple payment options: Choose from direct deposit, pay cards, or pay on-demand.
• Mobile app: Access payroll features on the go with the mobile app.

Pricing

Paycor's pricing plan starts at $99. You can also avail the free trial to test the software. 

Best for 

Small businesses looking for a comprehensive payroll solution with powerful analytics and flexible payment options.

How to Choose the Right Payroll Software?

Now that you've evaluated the features and pricing structure of the top payroll software, here's a comprehensive guide to selecting the right one for your business.

Remember, each software has its pros and cons. So, we'd advise you to consider the following factors when deciding.

1. Assess Your Business Needs

Begin by conducting a thorough assessment of your business requirements. Consider factors such as the size of your workforce, your payroll processing frequency, and any specific HR functionalities you require.

Determine whether you need basic payroll processing capabilities or more advanced features like employee self-service portals and time-tracking integration. By understanding your unique needs, you can narrow your options and focus on software solutions that align with your business objectives.

2. Set Your Budget

Establishing a clear budget is essential when selecting payroll software. Consider the upfront costs, ongoing subscription fees, and additional expenses such as setup fees or customisation costs.

Determine how much you can spend on monthly payroll software while ensuring the chosen solution meets your business requirements. Be mindful of hidden costs and opt for a solution that offers transparent pricing and scalable pricing plans to accommodate future growth.

3. Research and Review

Before making a decision, research and thoroughly review available payroll software options. Explore online reviews and ratings from other small business owners to gain insights into user experiences and satisfaction levels.

You can also seek recommendations from peers, industry experts, or business advisors with payroll software experience. Additionally, take advantage of free trials or demos software providers offer to test usability and functionality firsthand.

4. Evaluate Key Features

It's important to look for payroll management software that can handle all the basics, such as processing paychecks, calculating payroll taxes, and generating payroll reports.

Identify the key features and functionalities that are essential for your business operations. Consider whether you need features such as direct deposit, tax filing assistance, automatic deductions, or customisable reporting options.

Assess each accounting software solution based on its ability to meet your specific requirements and streamline your payroll processes effectively. Look for software providers with specialised services that offer comprehensive feature sets and customisable solutions tailored to your business needs.

5. Consider Scalability

As your business grows and evolves, your payroll software needs may change. That is why it is essential to choose a software solution that offers scalability and flexibility to accommodate future expansion.

Ideally, you should select a software provider that offers scalable pricing plans and customisable features that can grow with your business. Ensure that the chosen solution can easily adapt to changes in your workforce size, business operations, and industry requirements without compromising performance or functionality.

6. Review Customer Support

Reliable customer support is necessary when selecting payroll software. Assess the quality and responsiveness of customer support services offered by each software provider.

Look for providers that offer various support channels such as phone, email, and live chat, and ensure that prompt assistance is available in case of technical issues or queries. Consider reading customer reviews or contacting customer support representatives to evaluate their level of expertise and willingness to assist customers.

7. Assess Integration Capabilities

Integration capabilities are essential for seamless data flow and streamlined workflows. Determine whether the payroll software integrates seamlessly with your current business tools and systems, such as accounting software, time-tracking tools, or HR management systems.

Check compatibility with existing software applications to avoid data silos and ensure efficient data sharing across different platforms. Choose a software solution that offers robust integration capabilities and supports interoperability with your existing software ecosystem.

8. Evaluate Security Measures

Data security is paramount when handling sensitive employee information and financial data. Prioritise payroll software solutions that prioritise data security and privacy and comply with industry standards and regulations.

Look for features such as encryption, data backup, role-based access controls, and regular security updates to protect against potential security threats and breaches. Ensure that the chosen solution provides robust security measures to safeguard your data and mitigate risks effectively.

9. Consider User-Friendliness

You need to invest in easy-to-use payroll software. After all, you've got enough without dealing with complicated payroll software costs alone, right?

Look for a system with an intuitive interface and a simple navigation system for a worry-free payroll process. 

User-friendliness is important for ensuring smooth adoption and usability across your organisation. Choose payroll software with an intuitive and user-friendly interface that is easy to navigate and understand.

Consider the needs of all users, including non-technical staff, and opt for software solutions that offer comprehensive training and support resources to help users get up to speed quickly. Prioritise software providers that prioritise user experience and provide ongoing updates and improvements to enhance usability and functionality.

How Do HR Payroll Systems Work?

Wondering how HR payroll systems work when you select the best payroll software. 

Let's break it down into simple terms:

Gathering Employee Information

HR payroll systems start by gathering all the important information about your employees. This includes their names, addresses, Social Security numbers, tax withholding, health insurance preferences, and bank account details for direct deposit.

Tracking Time and Attendance

Next, these systems track when your employees clock in and out and any time off they take. Some systems have fancy features like geolocation tracking or biometric scanners to ensure accuracy.

Calculating Pay

Once all the employee info is collected and their time is tracked, it's time to do some calculations! 

HR payroll systems use all that data to calculate each employee's net pay amount. This includes regular hours, overtime, bonuses, and any deductions for taxes or benefits pay employees have.

Processing Payments

The most anticipated part, i.e., getting paid! 

HR payroll systems handle all the important details of getting money into your employees' bank accounts. This can be done through various means, including direct deposit and paper checks, depending on the payroll budget and what works best to pay employees and for your business.

Handling Taxes

Taxes can become troublesome sometimes. The good news is that HR payroll systems ensure all the right taxes are withheld from your employees' paychecks and sent to the appropriate government agencies. 

This includes federal income tax, state and provincial income tax, Social Security tax, and Medicare tax. 

Generating Reports

Last but not least, HR payroll systems generate all sorts of important reports to help you keep track of your payroll expenses. These reports can give insights into labour costs, health insurance, tax liabilities, employee earnings, etc.

Plus, they're super helpful come tax time when you must file various tax forms.

Conclusion

We hope that with the help of this article, you can now choose the best payroll software for your business.

Remember, it's important to consider your needs and budget before choosing a payroll software provider. Check reviews, look for key features, and consider scalability and support options before making the final decision. 

And if you want to make the choice easy, start with a free trial for Knit People today. It is the best solution for budding businesses, whether you are looking for a simple solution to streamline your payroll process or a comprehensive payroll system with advanced HR features.