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5 Small Business Payroll Software Weaknesses to Avoid


Ben Goldstein


Using payroll software has a lot of benefits. It can potentially save you both time and money, and it can help reduce stress levels by bringing more organization to that aspect of your business.

When it comes to choosing payroll software, you have many options, and it can be difficult to know which software will work best for you. To help you find the right payroll software provider for your business, here are five payroll software weaknesses to avoid.

Weakness one: The software isn’t in the cloud.

Payroll software that is not stored online (aka the cloud) could potentially gobble up more of your already strained time.

If you use a software that is not in the cloud, it is most likely stored on your computer. If your computer crashes, you could lose your payroll records and spend a lot of time and money to recover your information. Time is not always available when you are running a business and trying to meet IRS requirements.

Related article: 3 Ways Disorganization Could Be Wreaking Havoc On Your Bottom Line

You might have to regularly check for new updates and downloads if you do not use cloud-based payroll software. Checking for updates is yet another task for you to add to your busy schedule. If you miss an update, you might use the wrong rates for paying payroll taxes. This can be costly since payroll tax errors can lead to penalties.

If you don’t already use the cloud for your business, it is time to start.

With cloud-based payroll software, your information is safe and secure. If your computer crashes, all your payroll information should save to the cloud automatically. You can log back into your account and continue payroll where you left off.

Cloud-based payroll software should also routinely update. This means you do not have to worry about checking for downloads or paying the wrong rates. And this kind of software has another perk: You can use it from anywhere with an Internet connection. The cloud makes your business more mobile. You can run payroll at your business, at your home, or at a work site.

Weakness two: The software company requires you to sign a lengthy contract.

Have you ever been stuck in a relationship where you felt like you couldn’t leave? Signing a contract for payroll software is like that. It locks you into a commitment with the software provider that you might not want.

If you break the software contract, you likely will have to pay fees. That is an added expense you do not need. Luckily, there are payroll software packages that do not require a contract. You can pay month-to-month as you use the software.

Using payroll software that does not require a contract is a smart move for your business. If your payroll program is no longer working for you, you can easily switch your software.

Weakness three: The software doesn’t offer employee self-service.

Your employees probably ask you frequent questions about their pay and benefits. As the employer, you have to take precious time to explain payroll and benefits to employees.

Using payroll software with employee self-service can solve this problem.

Employee self-service allows employees to have their own login to part of the payroll software. Employees have limited access, so they can only see their personal payroll information. Things employees could potentially access with employee self-service include pay stubs, withholding allowances, benefits packages, time-off balances, and employee handbooks.

Employees can meet some of their needs on their own when your payroll software features employee self-service. Employees will not have to ask you as many questions because they can view payroll information on their own.

Employees might also be able to make changes to their payroll information, such as adjusting their withholding allowances or home address. There are fewer time-eating tasks for you to do when employees can make simple payroll changes.

Weakness four: You have to pay for features you’ll never use.

Payroll software often comes with shiny features to entice you to buy. But do you actually need all those features?

When you buy a fully-loaded software, you could be overpaying. You should not have to pay for features that you won’t use. While extra software features are enticing, you might be able to save money by purchasing a smaller software package. When you shop for payroll software, you should know your payroll needs.

Some payroll software providers offer plans that have different features, and you can choose the plan that best fits your needs and budget. Some payroll software providers might offer add-on features, like timekeeping. Software providers that offer flexible plans allow you to pay only for what you really need.

Weakness five: The software doesn’t meet your basic needs.

You do not want to pay for features that you will not use. But, you also do not want to buy a software that does not meet your basic payroll needs when it comes time to run payroll. Your payroll process will be inefficient and time-consuming if the software does not meet your needs.

Payroll software should have all the features you need, such as wage types, tax withholding, timekeeping, and recordkeeping. Before you start searching for software, you should figure out what you need the software to do. Then use your list of must-have features to help you choose the best software for your business.

When figuring out your basic payroll software needs, consider your industry. The software must meet the needs of your industry. For example, you will likely want software that can handle tip income if you operate a restaurant.

The payroll software you choose should be able to change with you as your business changes. If your business is booming, then you might be able to expand your business and hire more employees. The software should be able to accommodate the new employees and any other payroll changes that might result from additions to your team.

Your next step

Finding the best payroll software for your business does not have to be difficult. Now that you are aware of five software weaknesses, you are better able to select the right payroll software for your business.

Look for software that is in the cloud, does not require a contract, offers employee self-service, does not require you to overpay, but also meets your basic needs. Once you find payroll software that meets your needs, it should be easy to set it up.


Mike Kappel is the CEO of Patriot Software, Inc., a creator of online accounting and payroll software for American small business owners. Being a serial entrepreneur, Mike understands small businesses. He has made it his mission to provide fellow entrepreneurs with the affordable tools they need to save their time and money for what matters most. Connect with Mike on Twitter at @MikeKappel.