In the past, processing payroll was a time-intensive process. Calculating hours worked, rates of pay, accounting for taxes and writing checks are just the basic tasks in order to accurately pay employees for their work. Fortunately, payroll software streamlines the process from start to finish, enabling HR managers of any skill level to complete payroll with just a few simple clicks. However, with so many products on the market, it can be difficult to determine which solution is the best fit for you. For many companies, online payroll software is an excellent option that provides the extra benefits of scalability and mobile capabilities.

If you’re not sure if a cloud-based solution is the best fit for your business, feel free to take your time reading through all of the information in this article to help gain a better understanding of what a cloud-based payroll system is and what it can do. If you’ve already determined that an online product is what you’re looking for, then go ahead and skip ahead to see some of our top picks!

On-Premise vs. Online Solutions

There are a lot of reasons why you might choose to implement an online payroll solution. However, cloud-based products aren’t always the best option for every business. It’s important to understand the difference between on-premise and online systems so that you can ensure that a web-based product is right for your specific business needs.

On-Premise

On-Premise solutions are, as you’d expect, systems that are housed on internal servers. Businesses who implement these types of products purchase a license or a copy of the software to use the system. This cost is typically a bit more expensive upfront than a cloud-based solution; however, it is typically a one-time fee with licenses that can be renewed annually. It’s important to note that the cost of these solutions can include additional expenses external from the system itself. Because the product is housed internally, it is not uncommon for businesses to find themselves facing additional costs for servers, integrations and IT staff to maintain the products operating capabilities.

Online

Unlike on-premise products, cloud payroll software is accessed directly through the internet. Cloud-based systems, as the name suggests, are housed on your vendor’s servers and accessed online. Rather than a one time fee, choosing a web-based system often requires businesses to opt-into a monthly subscription plan. Choosing to use a cloud-based solution relieves some of the burden of system management, requiring the vendor to maintain the application and all of its functionality.

Considerations

While some businesses may find they need to comply with special regulations for their industry that require them to implement an on-premise system, online payroll software is an excellent option for the majority of businesses. It offers greater flexibility and eliminates the need to hire additional IT support to maintain in-house servers. However, no solution is perfect, so be aware of both the strengths and weaknesses of an cloud payroll solution to determine if it is truly the best software for your business.

Benefits

One of the biggest benefits of cloud-based solutions is flexibility and increased opportunity for collaboration. Online solutions are accessed directly through the internet, giving you the ability to process payroll from anywhere at any time — just so long as you have an internet connection. The ability to access the system from anywhere also increases your ability to be collaborative with other members of your team. Team members can complete individual tasks and provide input directly through the system, even when they aren’t sitting at their desk, ensuring that all payroll tasks are easily completed on time. This way, your employees always receive their paychecks without any issues.

And while on-premise solutions may require manual updates as your software needs change, many cloud-based solutions scale with your business as it grows. Additionally, because the solution is housed externally, your business doesn’t need to rely on advanced computers to utilize the system. Cloud-based solutions can function on both a high-end laptop and a mobile device, meaning you won’t need to spend additional funds to ensure your solution works at the highest level.

Pitfalls

Though cloud-solutions are an increasingly popular solution, they are not a perfect product. As with any product, future cloud payroll software users should consider potential downsides to the solution before implementing it. Specifically, users should consider what their security needs are and be aware of whether or not an online vendor is able to meet those needs. By implementing a web-based solution, you’re placing the burden of security on the vendor. Fortunately, many online vendors take security very seriously. However, some industries require special security and privacy considerations, so be aware of what level of security you need, and be sure that the vendor you select can provide that.

While the ability to utilize the solution from any location is an undeniable benefit, it also presents the possibility that the solution will not be accessible. Implementing a web-based product means that you need reliable access to the internet to use the platform. The potential loss of internet connection would leave you without access to the system, potentially delaying payroll processing. Choosing an online payroll software requires that you have excellent internet connectivity in order to use the product.

Questions to Ask Yourself

When you begin searching for a payroll vendor, it’s important that you’re aware of what type of buyer you are. This requires you to consider a variety of factors that may influence your software selection process. You need to be aware of everything — from your price range to available implementation resources. Below, we’ve listed a few questions you might want to ask yourself to ensure nothing is forgotten when you begin shopping for cloud payroll software.

• What is your price range?
• How many people do you need to process payroll for?
• Do you need basic payroll software or a full HR suite?
• How much support do you need to implement a new solution?
• What are the core tasks you need the system to complete?
• How many people need to access the system?
• Do you have special requirements that require customization to the system?

Needs Analysis

When you begin the search for a payroll product, it’s important that you’re aware of what your specific needs are. Though every business typically want the same core features, such as payroll management, your business might prioritize certain features and functionalities over others. Knowing which features are most important for your business guides your search and streamline the process of comparing software vendors.

Begin by looking at what challenges you currently face when it comes time to process payroll. Then you can assess what type of features will help to alleviate some of these pain points and determine which functionalities you don’t want to compromise on. You might even discover that you need more than what a payroll solution can offer and choose to implement a full HRIS instead. Regardless, you’ll want to be prepared with a shopping list of what features you need. We’ve listed a few of our top features below, but if you’d like more guidance on what features to prioritize for your business, then consider utilizing our requirements template.

• Payroll Management and Processing: This is the core feature of any payroll solution. This feature assists in calculating pay rates, process payroll each period and even facilitate payments through methods such as direct deposit.
• Compensation Administration: Managing compensation involves far more than just a regular paycheck. This function supports users in managing all aspects of how you pay your employees, including things like bonuses and pay raises.
• Tax Services: One of the most complicated aspects of processing payroll is accounting for taxes, which is why a robust tax services feature helps ease the pains of calculating taxes and ensure compliance with the most current regulations.
• Workforce Management: This feature centralizes a variety of tools that can streamline payroll processing. This feature provides employees with self-service functions and providing additional tools to managers such as time and attendance management.

Select the Right Software with the Free Lean Selection Book

The Best Online Payroll Software

Now that you have a clear picture of what cloud payroll software is and what to look for, it’s time to begin narrowing down which vendors are at the top of the industry. However, with so many vendors in the market, it can be hard to know where to start, much less sift through the marketing terms to determine which vendors actually offer valuable solutions. That’s why we’ve combed through the various online payroll vendors to determine what some of the leading solutions are, based on research from our team of analysts. You’ll find a rundown of our top five cloud payroll systems below.

Patriot Payroll

Patriot Payroll is a customizable solution that can scale to meet the needs of businesses of all sizes. The system guides users through a three-step process to run payroll. With Patriot’s approach, managers can enter the number of hours an employee works, approve final totals and process paychecks.

Managers can input data for each pay period to process payroll

The system’s employee portal allows employees to view their information at any time via their own secure login. This feature also allows employees to clock-in and clock-out for shifts, view specific information about individual pay periods, edit their personal information, reference employee policies and manage their tax withholdings.

Managers can also add tips to the weekly payroll, which will then be itemized on pay stubs, enabling the solution to withhold taxes and include this information in year-end tax documents. Patriot Payroll also manages all payroll deductions and employer contributions during any given pay period. This includes deductions such as FICA Tax, wage garnishments, 401k contributions and more.

How We Choose Products

Our team of writers and analysts at SelectHub is committed to giving you the best recommendations based on our data. To make our list, products had to meet two criteria:

1. Closely match the topic
2. Earn a top-5 analyst score in our selection platform

Our analyst scores are based on an in-depth research process using primary and secondary sources. This includes SelectHub Analyst Briefings, direct communication with vendors, and reviewing materials such as user reviews, product brochures, specification sheets, case studies, user manuals, and technical documentation.

Our platform’s Scoring Engine processes the research and computes the analyst score. The score also factors in platform settings such as industry and company size.

Learn more about our research methodology and editorial standards

The Wrap Up

The right payroll solution can serve as an incredible tool for your HR department. From automatically calculating rates of pay to facilitating direct deposit, the right system can streamline the entire process from start to finish. Some systems can automate nearly every task, making payroll processing as simple as reviewing the pay period and approving the paychecks. Once you’ve narrowed down your own list of top vendors, ask vendors for a demo so you can ensure the solution will meet your needs — many vendors even offer free trials so that you can test drive the product before making a commitment. From there, all that’s left is to compare prices and make a final decision.

Which online payroll software is at the top of your list and why? Let us know by leaving a comment below!