Payroll Software guide

Whether you’ve got 1 or 100 employees, accurate payroll admin has always been an essential part of your business. And now you must digitally submit your PAYE information using HMRC’s Real-Time Information (RTI) scheme, every time you make a payroll payment.

Good payroll software is designed to automate payroll tasks that will usually cost you time. You just need to figure out what ‘good payroll software’ is for your business. And that’s a bit trickier than it first appears.

There’s a lot of choice out there. So it’s a good idea to get your non-negotiables and nice-to-haves defined before you start looking.

Here’s a checklist of the most common elements you need to consider when you’re choosing your payroll software.

What are the Payroll Software options?

There are 3 main options when it comes to using payroll software:

• Use HMRC’s basic free PAYE software tool. This has limitations and is only recommended for businesses with fewer than 10 employees.
• Get separate commercial payroll software.
• Add a payroll segment into your existing accountancy software. Or, if you’re starting out, make sure your new accountancy software package includes payroll options.

What Payroll Software features are available?

Different payroll packages come with varying combinations of features, including:

• HMRC compliance: RTI integration.
• Different salary options; full time/part time, weekly/monthly payment.
• Variable allowances (for different employees).
• Attendance and leave.
• Maternity pay, statutory sick pay, paternity leave etc.
• Flexibility to handle bonuses, commission, overtime.
• One-off deductions.
• Auto send payslips and tax forms to employees.
• Real-time calculation: You know what every employee is being paid and how they’re being paid right now.
• BACS integration: Most people are paid using the BACS system, so this one’s a no-brainer.
• Auto enrolment: You must enrol all employees on a pension scheme and make the corresponding payroll deductions, so auto enrolment capability is an essential for your payroll software.
• Tax: PAYE and national insurance contributions are part of payroll, so it just makes sense to have all this controlled in one payroll software system.

The first thing you need to do is sit with this list and work out your non-negotiables. Most businesses, regardless of size, consider this to be: RTI, tax, BACS and auto enrolment integrations. Everything else depends on the details of your company.

There’s no point paying for lots of features that you’ll never need. For example, if you have 3 full-time employees that are paid monthly, you don’t need the option to pay commission or bonuses. It’s crucial that you get the right payroll software for your needs.

Important considerations

So there are a few more important elements to consider before you sign up to your payroll software.

Payroll Software price

HMRC does have a list of free payroll software that it ‘recognises’. And many companies will offer a month’s free trial. Usually commercial payroll software is packaged in tiers, based on the number of employees you have. You need to know if this is a one-off, annual licence payment, or a recurring monthly fee.

Some pricing structures are more transparent than others, with a clear list of what features are included and for what price.

Others have optional add-ons to include particular features to your basic package. Depending on what you need, these hidden costs can really add up and make a more expensive package better value for money.

Payroll Software scalability

You want to know that your payroll software can support your business’s growth over time. Avoiding the need to migrate to a new software system in 5 years when you’ve outgrown their maximum employee numbers.

This may seem like a future problem, but it’s important to consider where you’re going and make sure that your payroll software has the capacity to scale up with you.

Some payroll software is specifically customisable to your business requirements. If you’re think this might be something you’ll need, make sure it’s an option at the start.

Payroll Software accessibility

You need to know about multi-user and multiple device accessibility. Is there an extra cost to have more than one user of the account? Can you set up different levels of access – for employees to look at their history and for managers to administer payroll?

To get the full benefit of remote management tools, you need assurance that you can log into your account across multiple devices without any loss of functionality.

Of course, true accessibility is built on exceptional security. Most commercial payroll data has cloud-based storage, which makes it more secure. But you need to know that it’s all GDPR compliant and there’s multi-level security authentication for all users.

It’s also a good idea to check how you get updates to the software and how frequently bugs are rectified.

Payroll Software support structure

Payroll software providers have varying levels of support available to their customers. You need to check that the one you choose matches level of skill and confidence with new tech and the way you prefer to take in information.

Most payroll companies provide one, or a combination of support via:

• Email.
• Chat.
• Phone.
• Online information hubs of information, including FAQs, usually text based with some video.

Think about what’s best for you, especially in a situation where you need to fix a problem urgently, and put it on your non-negotiable list.

Choosing your Payroll Software

HMRC doesn’t recommend any particular payroll or other accountancy software. But it does publish a list of software that it ‘recognises’. This means that the software on this list can be used to send your payroll information to HMRC’s systems.

Given your employee RTI requirements, its absolutely essential that any payroll software you use is fully compatible.

Other than your legal requirements, the rest of your decision should be based on what’s the best payroll software for your business’s needs. Matching the available packages to get the best value.

A bit of time invested into this decision now will save you hours of payroll admin time into the future. The best payroll software makes managing everything about your employees quicker and easier. Just get your list of requirements ready before you start the search.