Online payroll services and software range in functionality. Below are some of the most valuable features and tools these programs offer.
Payroll Processing
Full-service payroll services calculate worker pay based on the entered wage rates and hours worked while deducting employee benefits contributions and payroll taxes. Some systems have an auto-pay option for salaried workers, so you only need to approve their payroll each pay period and not worry about reentering their hours worked or other data. Depending on the payroll service, your vendor may allow unlimited payroll runs and one or more pay schedules.
Payroll software supports hourly and salaried workers, part- and full-time employees, vendor payments and 1099 contractors, including consultants and freelancers. Some solutions may let you select individual pay rates (even during the same shift), calculate tip credits, assign bonuses and reimburse expenses.
Payroll Tax
One big plus of using an online payroll service is that it handles your business’s payroll tax responsibilities. Based on each paycheck, the software can withhold the required employee taxes. The payroll company then fills out and files your business’s quarterly payroll tax reports and pays the appropriate local, state and federal agencies.
At the end of the year, the service generates W-2 and 1099 tax forms for your workers. Many payroll vendors even offer an error-free guarantee. If the company makes a mistake on your taxes, they’ll correct the oversight and pay any fines or interest incurred.
Automation
Payroll software is increasingly employing new artificial intelligence (AI) technology. AI automates routine payroll tasks such as data entry, time tracking and calculations. This reduces the chances of human errors and ensures accuracy in payroll processing. Some platforms even let you set up automatic payroll processing.
New-Hire Reporting
When hiring a new employee, you must report that information to the state. Online payroll services can complete the required forms for your business and send them to the proper state agencies.
Employee Payment Options
Online payroll services offer multiple ways to pay your employees. The most common methods are direct deposit and paper checks. With direct deposit, an employee provides their bank account information, and the payroll software automatically deposits the paycheck into their account on payday. With paper checks, you can print them yourself or some payroll providers offer check-stuffing services where they print the checks, put them in envelopes and deliver them to your office.
Payroll cards are another alternative to direct deposit — paycheck funds go onto an employee debit card instead of into a bank account. Also, a handful of payroll services provide on-demand wages. In these cases, workers can request payment in advance of a scheduled pay cycle.
Payroll Reports
Online payroll software typically boasts various reporting tools that give businesses insight into their organization and employees. Common payroll reports include payroll registers, contribution reports and payroll tax reports. Advanced data visualization features can break down workforce costs and benchmark compensation rates.
Third-Party Integrations
Many online payroll software platforms integrate with programs businesses already use. These include accounting software, time and attendance systems, and HR software. These integrations allow the programs to connect seamlessly. Data is automatically shared and transferred between them, saving you the time you’d otherwise spend entering the same information in multiple places.
Employee Self-Service
The best online payroll services give each employee a login to access the software. Their employee portal lets them review pay stubs, access their year-end tax forms and check their time-off balances. Depending on your payroll program, workers may be able to enroll in benefits plans and request shift coverage from co-workers via this portal.
PTO Management
Many payroll platforms have features to manage your employees’ paid time off. This may mean simply tracking PTO accruals or enabling employees to request time off and managers to approve or deny it.
HR Features and Tools
Some payroll companies include HR services in their packages. Customizable offer letters and onboarding tools, like e-signatures, are popular features. Plans may also provide employee handbook wizards, document templates and HR resource libraries.
Customer Service
Online payroll companies typically offer support during weekday business hours, although a few have 24-hour assistance or emergency weekend hours. Some assign you a dedicated support specialist, eliminating the need to go through a call center. While email, phone and live chat are the most common support methods, certain vendors provide customer service through text messaging or Slack. In addition, most online payroll services have extensive resources on their company website, such as how-to guides, FAQs and videos.
Mobile Access
Many payroll providers offer mobile apps. (Source: ADP)
Some payroll services provide mobile access to their software. Options may include mobile-friendly websites that open on smartphone browsers or dedicated iOS and Android apps. These apps let HR leaders run payroll remotely and allow staff to view digital pay stubs and annual tax forms. Others have time-tracking tools with scheduling or PTO management capabilities.
Benefits Administration
Many payroll companies allow businesses to manage employee benefits through their payroll software. Benefits administration services may include health and dental insurance, retirement plans, pre-tax savings accounts and workers’ compensation. Also, several payroll service providers can work with your current benefits broker.