Payroll Software or Payroll Service: Three Questions to Ask Yourself When Deciding

Remember the days of using a calculator and a typewriter to process payroll? Thankfully, those days are gone, and there are much simpler tools to make the process more efficient. Today, there are tools available to help ensure timely tax payments, accurate and complete payrolls, and to make sure employees are paid on time. These days, most businesses use one of two methods to process payroll: in-house payroll software, or a payroll service. As a business, you must choose the method of payroll processing that works best for you. Start out by asking yourself these simple questions.

What staff is available to manage the process?

No matter which processing method you use, you will need staff to manage the associated tasks. Many in the business world tend to believe that a payroll service takes less staff time, since it handles the tax payments and processing. While this may be true, be sure to account for all of the time your staff must spend collecting and entering time data for employees (if applicable), updating employee earning and deduction changes, running payroll reports, and generally making sure that data is accurate and timely. When using a payroll software program, it is a good idea to have at least one employee who is familiar with your payroll processes, and your payroll software. He/she should be able to set up employee information, enter time in the appropriate manner, process payroll, run reports, maintain tax filing schedules and be able to file them using your system.

Who manages what?

It is important to consider your current staff and their expertise, when you are deciding on payroll processing. For instance, if you don’t have a skilled HR person, you may lean toward a payroll service, since some of them offer HR services. If you have a person who is skilled in using in-house payroll software already, you might find it easier to stay with that. Consider who you have on staff and their expertise, and then whatever system you choose will come along with a much smoother transition.

Where is my data safest?

There is a major different in the location of your payroll data when comparing a payroll service to in-house software. With a service, your data is typically stored in a remote location and accessed via the internet. Of course, most services use strong encryption to provide security for your data. For payroll software, your data is stored on your own server, so the information is not available via the internet. However, you still need to be sure there is a good internal security system, since payroll data is sensitive, and you don’t want unauthorized employee’s to log in and view or edit sensitive data.