Choosing Between Payroll Software And Payroll Service

Choosing Between Payroll Software And Payroll Service

Payroll is a process that takes time, energy and resources to do well. Deductions and earnings must be managed, as well as the number of hours worked, and this doesn’t include taxation, which can make the process even more complex. It is for this reason that a growing number of business owners are turning to digital and automated solutions in order to streamline the process, which saves money and time. Choosing the right payroll software can bring tremendous advantages to your organization.

Securing Data

Whether you choose to use payroll software or a service, you will need top of the line security. Payroll services will usually require data to be accessible through the internet, which means any security weaknesses can easily be exploited by unauthorized parties. Security is also important for payroll software, and many packages offer security at the menu level, which means that employees will be restricted to only being able to see certain screens, while access to others will be denied.

Selecting the Right Staff

Both payroll software and services will require staff to manage it. While payroll services are streamlined, someone must still be responsible for recording and submitting the number of hours worked and other relevant information. Payroll software will require more time to be spent handling payroll and producing tax files, pay checks and other functions which must be conducted in-house.

Special Considerations and Reports

One of the key reasons many business owners purchase payroll software is due to the versatility it offers for setup as well as reports. Businesses that have specific needs for payroll such as departmental reporting, may find payroll software to be a better solution than payroll services. This is because payroll software offers greater control over the payroll process, and while a payroll service lowers the burden payroll software is more cost effective.


The pricing for payroll services and software can vary, depending on the needs of your business. Payroll services will reduce your burden to a considerable degree, and will cost more as a result. It is important to make sure that the pricing information you receive from vendors covers all the functions that are needed. Some of the functions which are available for payroll services and software are considered add-ons which mean that implementing them will incur additional charges. Examples of this include filing taxes online and direct deposits. It is important to know exactly what you will pay for everything up front, so you don’t receive any unexpected expenses later.

Another thing to pay attention to is the cost for each worker. Payroll services will be less expensive for businesses that have few workers, but as the number of workers grows the costs for the payroll service will increase accordingly. Payroll software, on the other hand, usually has as fixed amount so when the number of workers increases the cost per worker will fall. The differences in cost can vary a great deal depending on the total size of the business. Business owners must carefully weigh the benefits and costs of payroll software versus services to determine which option is best for them.