If you feel your admin workload is heavier than it used to be, you may not be imagining it.
According to research and consulting firm Gartner, 83% of HR leaders say they're expected to do more now compared to three years ago. Today's software easily captures and analyzes business data, meaning there are more opportunities for optimization and improvement --- and, ultimately, more work to do. And because your startup is still in its early stages, you can expect your responsibilities to grow along with the business.
To meet these demands, startup founders must choose payroll software that can support their current and future needs. Keep reading this blog post to learn:
- Why choosing the right payroll software matters so much for startups
- What to look out for in your ideal payroll platform
- Five questions to ask when choosing a payroll platform for your startup
- The payroll platform created with startup founders in mind
Why choosing the right payroll software matters so much for startups
As the most significant expense for most companies, payroll --- and the software you use to manage it --- is essential to get right. Your payroll software doesn't just impact your HR or finance operations, after all. The effectiveness of this platform can affect your entire organization.
Accurate and timely payroll helps maintain employee confidence in your business. It results in error-free financial reporting, enabling you to make better decisions for your startup.
Your payroll software also catches any mistakes your team might make when inputting information into the system, so you can avoid corrupting your financial data and paying fines to the Internal Revenue Service (IRS).
Of course, the right payroll software also significantly reduces the time, money, and effort required to run a successful and thriving business. Here's how.
Consistent and accurate payroll runs
One of the quickest ways to lose the trust of your team is by making careless mistakes with their paychecks. When they spend day after day helping you build your startup from the ground up, it's your responsibility to keep them financially stable in return.
This is especially true in light of PayrollOrg's 2023 Getting Paid in America survey findings. The report reveals that 78% of workers would find it "very difficult" or "somewhat difficult" to meet their financial obligations if their next paycheck were delayed for a week.
Not prioritizing accurate and timely payroll can result in lower employee morale --- or workers leaving your startup for more consistent paychecks elsewhere.
Easier compliance with payroll tax regulations
As your startup grows, your payroll tax obligations and the regulations you'll need to follow will change along with it. You may also find yourself hiring different kinds of workers --- each with varying pay structures, tax calculations, and benefits --- too.
But with so many things on your plate (and without a huge HR team to assist you), you want to ensure these obligations are met, no matter what. After all, startups don't have the luxury of paying fines for easily fixable mistakes.
Avoid this and keep your funds available for more important initiatives by investing in a platform that simplifies how you manage payroll. The best payroll software ensures you comply with the regulations your startup is expected to meet. If you fall out of compliance, some platforms will even resolve these issues on your behalf.
When you choose a platform that automatically maintains your payroll tax requirements in every state you operate in, you can rest knowing your organization is covered, no matter what.
Time and cost savings
As a startup founder, payroll is just one of the many things needed to keep your business operational. Software that runs payroll automatically while making deductions and withholdings on your behalf can take this task off your to-do list.
The right payroll software can help you and your staff save hundreds of hours a year on administrative tasks, enabling you to do more work with less effort. Slack's 2023 State of Work report indicated that 77% of desk workers say automating routine tasks would "greatly improve" their productivity. Those who do use automation, meanwhile, saved about 3.6 hours each week.
Once software has taken over your team's routine payroll tasks, your core HR staff can focus their efforts on initiatives like recruitment or retention instead.
What to look out for in your ideal payroll platform
Not all payroll software is created equal. Because all startups are unique, some platforms will be a better fit for you than others. Although the exact criteria you'll seek out will depend on your company's needs, here are five things you should prioritize in your search for the right payroll platform.
Features
First and foremost, you should make sure that your chosen payroll platform has all of the features you absolutely cannot go without and, ideally, other features that would make your life easier if you had them. If you employ HR or finance staff, ask them what features they'd want to see in your payroll software too.
Depending on your startup's needs, you may also want to check if your software offers multiple wage rates, customizable automations, and add-on services like employee benefits administration.
Scalability
You probably don't intend for your startup to remain small forever. So, when you choose your payroll provider, it's important to pick the one you can take with you as you grow.
Most software-as-a-service (SaaS) providers offer multiple service tiers, with upgraded or additional features in each successive tier. Look for companies that provide the features you need now, with options to upgrade to higher plans that deliver the features and services you'll require as your startup grows.
For example, opening new locations may be part of your startup's five-year plan. If so, you should look for software that supports the features you need to run payroll seamlessly for each office.
Ease of use
The most powerful payroll platform with all the bells and whistles will not be helpful for your company if it's too complicated to use. Imagine how much time you'd lose each month if employees didn't know how to check their pay stubs or update their tax withholding information.
By choosing an intuitive and easy-to-use platform, your employees are much more likely to adopt the new system and benefit from its features.
Integrations
Integrations are an essential feature every founder should look for in their payroll software, especially if you already have a robust tech ecosystem. By choosing payroll software that integrates with your back office tech stack, you can streamline your operations, reduce errors, and stop manually entering data into different systems.
But if the software doesn't integrate with some of the tools you use, don't write it off just yet. Check to see if you can use a tool like Zapier to connect the two --- this may take an extra step to set up compared to software with native integrations, but it's still better than the alternative.
Customer support
When researching different payroll platforms, check what kind of support each company offers. If you have a preferred support method, confirm that it's available as well.
Say you're the type of person who expects to have direct access to a support representative. In that case, you may want to choose a platform with phone support or a dedicated representative during business hours. If you're the type who prefers DIY solutions, you may want to see your provider of choice offering a robust knowledge base to help you troubleshoot issues on your own.
You'll also want to check how responsive the support team is to any questions or issues you have. If you have any questions, reach out to them for assistance. Then, see how long it takes for them to respond to your query and assess whether you're satisfied with the response you receive.
Data security measures
Running payroll requires you to keep each employee's sensitive personal information on file. This is why it's crucial to choose software with the security features you need to keep your payroll data safe and secure.
In particular, look for tools that offer measures like:
- Data encryption
- Multi-factor authentication
- Role-based user access controls
- Regular security updates
If your industry requires software to meet additional standards, check for those in your payroll platform of choice as well.
Five questions to ask when choosing a payroll platform for your startup
In addition to the considerations outlined above, here are five other questions you should consider before deciding on your startup's payroll platform.
1. Does the software meet your startup's needs?
Does your payroll provider give you everything you need to meet your payroll and tax obligations? Does it make your life easier for you?
Suppose you know you don't have the expertise or capacity to file payroll taxes every month, for example. In that case, you may ask providers whether they automatically calculate, withhold, and pay payroll taxes on your behalf. Not only will this save time and effort on your end, it will help ensure you don't miss any deadlines or make costly mistakes.
Then, check to see if the software can grow with you as you scale your startup. Can it handle more complex payroll requirements, such as changes in your organizational structure or workforce size? If freelancers will make up a significant part of your workforce in the future, does the software have features to make managing a freelance team easier?
Ultimately, you don't want to switch providers in just a few years because your software doesn't have the features to support your growing business.
2. How often does the payroll provider update their tax compliance guidelines?
This is important to ensure your company's compliance with federal and state regulations, regardless of how often they change.
Ideally, your provider should update the guidelines every time a new law is passed in the relevant states. This will ensure that you stay compliant with the latest guidelines with minimal to no effort and that you won't be on the hook for any late fees or penalties.
Depending on the features the software offers, you may also find it helpful to ask how often the company updates its tax tables, whether it notifies you if you're out of compliance or fixes certain compliance issues automatically, and whether it flags potential issues for you to review.
3. Does the company have a good reputation?
You also want to ensure you're putting your startup's money in good hands. So, to that end, do some research on the company behind your chosen payroll software. Read reviews on sites like G2 and Capterra, and ask people in your network if they have experience using that payroll solution.
Don't forget to check on the longevity of the company too. The newest startup on the block may have all the latest features, but do your due diligence to ensure it'll still be around to cover your payroll needs in a few years.
4. What is the total expected cost for this software?
Many payroll software providers charge on a monthly basis, and most companies advertise that rate upfront. Still, there may be additional costs you may need to factor in for your total investment. This may change the total amount you pay for the software, so confirm that all the fees are accounted for before making your final decision.
Some extra costs to look out for include:
- Implementation or setup fees
- Employee training expenses
- Upkeep or ongoing support fees
- Fees per user (or seat)
- Fees for additional features or services
5. Is there a free trial you can sign up for?
Many software providers offer prospective customers a free trial or pricing tier to test things out for themselves before signing a contract. If your chosen provider offers one of these options, set aside some time to sign up and try the tool out for yourself.
Aim to use as many features as possible during your free trial --- and, if possible, ask a few of your employees to put it through its paces as well. Set up any dashboards you might need to see how useful they are, test out the mobile app if they offer one, and see if they have any beta features you can try.
Confirm that the software meets your needs and is easy to use and navigate for your employees, too.
The payroll platform created with startup founders in mind
If you're a startup founder experiencing startup-specific payroll issues, why wouldn't you turn to a solution designed specifically for people like you?
Our software rolls payroll, tax compliance, and employee benefits into one automated platform, so all your HR tasks are managed in one place. And because you've got bigger things to worry about, we handle your tax registrations and compliance so you can do what you do best --- running your business.
See for yourself why startups choose Warp by requesting a demo today.
