Payroll Software – What is the Cost? 2023 Pricing Guide

In a business, managing payroll is a task filled with so much hassle. From complex additions to different direct deposits, deductions, and income tax filings, payroll demands the need to be accurate and error-free. This is where cloud-based automated payroll software comes in.

Our businesses run successfully because of the employees. They work hard both for the company and the clients to bring tangible returns. The least we can do for them is provide them with accurate salaries on time. However, before buying payroll software, companies need to know the pricing to make a decision.

This blog will take you through the basics and the pricing of payroll management software so you can make an informed decision.

What is Payroll Software?

Payroll software is a solution used by the HRs of companies to manage their payroll process smoothly. The software tracks all the payments and maintains all payment records. Every payroll software in the market varies in price and features and can be used by any type or size of business, be it a small business or a large company.

An effective payroll management software will help you monitor and manage time and attendance, tax information, pay structures, and more. It reduces costly errors and helps companies reduce time spent on administrative tasks like reviewing timecards, printing checks, and more. By using this software, you can also simplify tax filing and manage compliance with local, state, and federal regulations.

Common features of payroll software?

Different payroll management software has different features. So how do you choose the best for your company?

Just sit and analyze the things you require in the software you buy. However, below are the most common features of payroll software one should consider before buying.

• Payroll Processing

The payroll processing feature automatically calculates the gross salary of all employees based on their working hours. It also includes any deductions for taxes, insurance, or retirement contributions. It also considers bonuses, raises, and overtime pay. In short, payroll software considers all the elements and calculates the employee’s salary accurately and on time.

• Tax Management

With the tax manaement feature in payroll software, companies can calculate local, state, federal, social security, and medicare taxes and deduct them from the employee’s paycheck automatically. This feature keeps on getting updated as and when the tax codes change.

• Time and Attendance

Employee hours can be recorded for time and attendance using either software or a manual time clock. Then, hours can be utilized to determine salary. This feature also logs sick and vacation days. While some payroll systems already include time and attendance functionality, others might need to be integrated with an additional module.

• Benefits Management

Payroll and salary administration are just the beginning of managing compensation, which also considers unconventional payment methods. The compensation management feature takes care of worker compensation, bonuses, and adjustments for changes in the minimum wage, cost of living, etc. This feature adds a layer to your overall payroll management strategy by monitoring any unconventional payment methods.

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• Reporting

The reporting functionality in the payroll software includes templates and custom reports for metrics such as gross to net payable, compensation analysis, tax and deduction analysis, and more. That means on just a single dashboard you can have a complete view of your employee’s payroll reports for any month you want.

• Employee Self-service

The employee self-service feature allows the employees to view the payroll, time and attendance, benefits, and other information through a web browser or a mobile application. 

• Direct Deposit

One of the best features of payroll software is that the payroll is directly transferred into the bank account. The annual costs for supplies and processing are greatly reduced by the software. It can also deal with any salary-related fraud that may be going on. The money is quickly sent from the business account to the employee account.

• High Level of Security

The best feature of payroll software apps is that each task is completed with a high level of expertise. The payroll software’s functions are kept up to date by applying the most recent updates. Additionally, the cost of human error is not passed on to the system. The likelihood of human error is decreased with the aid of automated payroll software. The tax forms are also pre-filled with the worker’s payroll information. Even if you outsource the operations, the impartial third-party app can keep the records up to date every hour. Software for payroll management includes direct labor distribution paperwork, leave status, and quarterly audit reports. Regular payroll reports, wage file reports, and track reconciliation reports are also available.

As a result, payroll software features provide visibility and understanding of the crucial processes of producing payroll reports.

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Payroll: Keep it In-House or Outsource?

Payroll is not just about cutting employees’ checks, it’s a lot more than that. There are taxes to withhold, deductions to be made, and wage garnishments; and for independent contractors, the process becomes even more difficult.

Larger companies may have the resources to hire an in-house payroll administrator, but what about small businesses or entrepreneurs who have just entered the business industry? Small companies have payroll duties on the accounting department, human resource department, or even business owners.

With so many duties on one person errors are more likely to occur. Businesses may take a decision to outsource the payroll function entirely to a third-party service provider, especially if the company is small and does not want to handle the complex employment laws and tax codes on its own.

However, outsourcing the payroll functionality has its own challenges like the outsourced service may cost you more than the payroll software, mistakes can happen with the employee’s paychecks, and even the employees may not be sure of the security of their information.

In response, payroll software providers have launched hybrid systems that mix HR payroll software with payroll outsourcing. This choice typically means that businesses manage payroll internally throughout the year, except when the accountant reviews and files taxes.

Companies who desire control over payroll data but not the hassles of managing the complete payroll process may find this option useful.

Payroll Software vs. Payroll Module

Payroll functionality is often included as a module in accounting software or HRMS software, or ERP solutions.

Payroll modules generally have fewer features as compared to the dedicated payroll software, but better integration with the other business processes. The companies that already have a comprehensive accounting, HRMS, or ERP solution; buying a dedicated HR payroll software may incur extra costs.

In any case, if a company wants advanced payroll functions, it may need to consider a specialized payroll solution.

Payroll Pricing Models

Payroll Software price generally depends on the number of employees and variety of features. However, the most common payroll pricing models are discussed below:

1. Per month per employee monthly subscription plan

In a SaaS pricing model, a company pays a monthly fee to the software provider for accessing the software through the cloud. The most common pricing model for the payroll software is per month per employee subscription plan.

Plans for monthly subscriptions frequently have multiple tiers, each with a different set of features and services. More technical help, HR guidance, and a professional accountant to evaluate and file taxes may be offered in the priciest plans.

Due to the low monthly charge and scalable per-employee, per-month fee, this option is preferred by businesses of all sizes. Additionally, businesses can be flexible in the features they want to implement.

2. Per month subscription plan

A monthly subscription plan that includes an unlimited number of employees is offered by several providers. However, the functionality and support of these systems are most constrained.

Small businesses without significant payroll requirements are the ideal clients for per-month subscription programs. Larger businesses will probably require more in-depth capabilities like tax filing and the capacity to modify employee checks.

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3. Perpetual license fee

The ability to purchase a perpetual license for a payroll module is frequently available to businesses that deploy ERP, HRMS, or accounting solutions on-premise. This one-time cost is typically substantially greater than the cost of a monthly subscription and excludes upgrades.

However, businesses have additional options to tailor the program with a perpetual license. Additionally, there is stronger integration between the payroll module and the modules for accounting, HR, and time and attendance.

Additional Costs to Consider

Do you think just buying a subscription plan for payroll software would be enough? No!! There are additional costs that come along. Below are a few things that businesses should consider:

1. Implementation Cost

Implementation includes adding the employee information and business tax data, and also integrating it with other solutions like accounting, HRMS, time, and attendance. Some payroll software providers include the implementation cost with their most expensive subscription plan while others charge separately.

2. Support

Limited support for the payroll software is generally added to the basic subscription plans. Priority support and access to a dedicated payroll resource, however, are generally offered with a high tier of features.

3. Maintenance

Payroll software requires continuous maintenance, including upgrades, patches, and updates. This is particularly important in the case of tax codes that keep on changing from year to year. For companies having a perpetual license, obtaining software updates requires additional charges.

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Conclusion

Payroll is a very basic function of any business yet there are so many complications involved. Now that you have a basic idea of payroll software, its features, and its pricing models; it would be easy for you to make an informed decision.

If you are planning to buy payroll software for small businesses or for a large company, check out UBS. UBS offers a complete package of business management tools from HRMS Software to Time tracking, payroll, and more. Get in touch to know more.