Choosing payroll software: 10 things to consider

Deciding which payroll software to use can be baffling, especially for people without accounting experience.

However, these systems are designed to be used by businesses and individuals, not just accountants, and you might be surprised by how user-friendly they are.

Despite this, it is not a decision to rush into. Taking the time to get it right can save you time, money and a lot of frustration in the long run.

1.    What are your needs now?

At the very least your software will need to be able to report PAYE information online in real time.

When considering a package, look at the details, not just the price. Additional features such as the ability to produce HMRC approved statutory forms, audit trails and online help centres might be of real benefit to your business.

2.    What about the future?

As your business develops, you will need software that can grow with you. You should also keep an eye on how any changes to the law will affect your software needs.

One area that all businesses will need to be aware of is auto-enrolment. Making sure your software is compatible with running auto-enrolment should be high on the agenda, even if your staging date is some way off.

3.    Can you use free software?

Businesses with fewer than 10 employees may be able to use free payroll software. HMRC has tested and approved various software packages, including its own Basic PAYE Tools.

4.    How much will it cost?

Find out exactly what you will get for your money. Does it cost more to add additional staff or users? What’s the minimum term? What’s your position if you decide to cancel?

5.    Could online payroll software work for you?

There are 3 major benefits of cloud accounting:

  • multiple users can access and work on the same set of accounts
  • you don’t have to be in the office to access your accounts which is really useful for business owners who are always on the move
  • updates are usually free so upgrades are less expensive than buying hard copies of software.

6.    Is it compatible with your other systems?

Some of the more sophisticated systems can automate routine bookkeeping tasks such as invoicing or banking and credit control. However, you might already have these procedures in place and will be interested in whether new software will work with existing systems.

7.    Can you trial it?

Free trials can be a good way to get a feel for different types of software and make it easier to compare providers.

8.    What do your peers use?

While we wouldn’t recommend blindly following the crowd, knowing what works for similar businesses can help focus your search.

9.    Do you need training and support?

Getting to grips with a new system takes time even for the most experienced payroll expert. Consider how you will manage this and what help is available from your software provider.

10.    Can you share information securely with a third party such as your accountant?

Being able to access up-to-date versions your records really helps us do our job and gives you the flexibility to ask for help should you need it.

Get help with your payroll

Payroll can easily be separated from other accounting functions. Even if you chose to outsource your payroll, overall responsibility for getting it right lies with the employer.

Talk to us about managing your payroll.