Payroll software is an essential investment for any business, especially new startups. They help in simplifying otherwise complicated calculations and payment processes involved in payroll management by automating them.
Some other benefits of payroll software include:
- Convenience – Payroll software is extremely convenient as they take care of complex tasks of keeping track of payments while adjusting for variables like taxes, deductions, insurance, etc.
- Functionality – Different software can provide a plethora of features such as tax credit processing, electronic onboarding of new employees, direct deposits, etc.
- Accuracy – This software is accurate in their accounting and calculations and will always ensure correct distribution of payment, taking into account hours worked, sick leaves, and any other variable which can influence the payroll.
- Compliance – Payroll software is frequently updated in compliance with your area-specific tax laws and changes therein to ensure you don’t get penalized.
As salary distribution does not contribute to any sort of income or profit generation for a business, it is advisable to make it as efficient as possible.
Companies can invest in two types of payroll systems, depending on their size and whether they have any existing Human Resource Management Systems (HRMS), accounting software, or Enterprise Resource Planning (ERP) solutions. If you have any of these, then there’s a good chance you can invest in just a payroll module instead of whole payroll software and significantly streamline your salary payment process. A module can be easily integrated with these solutions but come with fewer features and a cheaper price tag. A robust payroll software, while adding significantly to the cost, is generally feature-packed and can provide a much more intensive functionality.
Now the main topic for this article: How much does payroll software cost and how can you maximize your profit?
To answer these questions, you need to understand the structures of subscription plans and fees that payroll software companies generally offer.
- Per month – Numerous payroll software providers offer this kind of plan. Here, you pay a monthly subscription fee for access to their software for unlimited usage. Different plans can include access to varying degrees of functions and features. Some of the more expensive plans can include features such as technical support, HR consulting, and accountant reviews.
- Per month + Per employee – Some payroll software providers offer you a plan where they charge you a monthly fee plus a fee for each employee added. These plans exist as the monthly fees are generally small and it is scalable on a monthly basis, allowing for diverse planning for budget.
- Pay frequency – A number of payroll software providers also charge you based on the frequency of your usage and they generally charge per user. This can allow you to use their software for a particularly busy period or during new tax regulations, and allow you to save money when you don’t need such services and save your costs. This also ensures that you are not invested in one type of software and can quickly change your software of choice.
- Bespoke – Many payroll software providers also provide custom plans which are designed and tailor-made for your specific needs, and they are priced accordingly. These plans are exclusive to your needs and you can customize them whenever you like.
- Perpetual license fee – Payroll software providers also offer a perpetual license to companies. These one-time payments are generally costlier than monthly subscriptions but they provide you with full features, full integration with your existing software, and are highly customizable. However, these don’t include future upgrades and updates.
While the above mentioned are generally the type of pricing structures you can expect in the market, there are several implicit costs as well which may not be mentioned upright by the software providers. These can include the following:
- Setup costs – While you’re paying for access and use of the software, you may also need to incur some setup costs. These costs can incur in case you are using such software for the first time or migrating from another. You can opt to set it up yourself but generally, it is more advisable to let a professional set it up for you so that everything goes correctly and smoothly and your investment doesn’t turn bad. Certain products can include these costs in their quoted price while some can charge an additional fee. Make sure you ask your vendor about setup.
- Support – Generally all payroll software comes with certain degrees of customer support included. Some of these can be highly robust and some can miss a few features. Even though it is rare that a payroll software provider will hide the additional cost for support, it is still wise to ask your vendor about this crucial feature as it can help you in sticky situations.
- Training – You can train certain employees from your HR or accountancy department to get trained with the software. Generally, payroll software providers offer live training sessions, as well as pre-recorded sessions, and their prices can vary anywhere between $39 to $799.
- Scalability – If you’re in the market for payroll software, there’s a good chance that you’re looking to expand your business in the foreseeable future. Therefore, it is important to keep in mind that certain software only allows a set number of employees to be enrolled into the system and while some claim to be able to enroll unlimited, they also mention that they’re geared towards smaller businesses. Be aware of your software’s limit as you don’t want to reach the limit too soon as migrating to newer software can be a time-consuming and costly process.
Payroll software can be as expensive or as cheap as need be. You can outsource your payroll needs to an external accountant or you can invest in software. These decisions would highly depend on your needs, your company size, and your budget. Therefore, keeping these things in mind, by doing a cost analysis of your business, you can decide the best solution for your needs.
Author bio- Aman Rawat has 3+ years of experience in the B2B marketing space. He is an inspired SaaS marketer, currently handling content strategy for Zimyo, an HR Technology firm. He also manages end-to-end communication and relationship building with B2B marketplaces.