Must-Have Functions of Payroll Software for Small Businesses

John Coyle

Most payroll services have features that can help you run your business more efficiently. These include unlimited payroll processing, digital pay stubs for employees, mobile access and self-service, PTO management, tax filing and support services and more.

The best payroll software saves you time and money, enhances employee engagement, boosts productivity, minimizes errors and supports compliance. Here are some must-have features that every payroll system should have:


Small businesses require mobile-friendly payroll software to accommodate their team’s busy schedules. Some of the best options feature a convenient and user-friendly dashboard that lets employees access their paychecks, to-do lists, and other key information. This helps them stay on top of their tasks and makes it easy for everyone to manage the system from any device.

In addition, the best small business payroll systems allow you to track important metrics through reports. This can help you reduce costs by keeping spending in check and ensuring every dollar counts. For instance, a good payroll system will let you quickly analyze employee totals, deductions, and taxes to see which departments are spending more than others.

In addition, the best payroll systems will automatically update as tax laws change to ensure compliance. They also offer a range of other features that can improve your bottom line, such as same-day direct deposit and automatic tax filing with penalty protection. Using these tools can free up your time and resources so you can focus on growing your small business.


One of the most important features of payroll software for small business to consider when looking for a payroll system is how fast it can complete processes. This can include the ability to process payments and run reports promptly and how long employees can receive their paychecks and access the information that goes with them.

It is also important for the payroll system to flag any mistakes that might occur during the process so that these can be addressed quickly. This can help ensure a business stays compliant and reputable with all payment and tax filings.

A good payroll system can also include a database that allows employees to update their information and keep track of their pay stubs through an employee self-service portal. This helps to minimize errors and saves time for HR teams. In addition, many systems feature out-of-the-box reports that can be quickly set up for easy insights and customizable reporting tools. This can help a company customize its data to the most relevant metrics for the business.


Using payroll software eliminates the possibility of human payroll processing error when calculating employee totals. That means fewer mistakes equal less money lost. However, the benefits of using payroll software go beyond saving time.

A good payroll system also includes built-in time tracking and attendance reporting tools that help you reduce staff absences. Having these tools makes employees accountable for their wants. It enables you to identify patterns in employee behavior so that you can make changes to reduce the number of days your team is absent.

Some systems have built-in reports and dashboards that give you a clear picture of your business operations. Look for a way to filter the results by date, team, or other details to find the needed data.

When shopping for payroll software, consider the most important features of your small business. Some companies offer solutions specific to your employee count and other needs, such as a small business payroll solution with a single pay stub and online access for your team. Some vendors include tax filing with their products, backed by the promise of tax penalty protection to keep you compliant and safe from expensive fines.


Depending on your business needs, you may need additional software tools to streamline operations. Many vendors offer integrations with payment processing, calendar add-ons and more. These integrations can help you reduce manual data entry, save time and avoid errors.

If you have hourly staffers, look for a payroll solution with a time-tracking function. This feature allows employees to clock in and out directly in the system, eliminating manual calculations and improving accuracy. It also provides real-time insight into your team’s performance, which can be helpful when deciding on staff reductions.

In addition to time-tracking, you should ensure that the tool you choose offers free direct deposit. This feature is a must for both your team members and job seekers, and it reduces costs and paper waste. Look for reporting functions that can provide valuable insights into your company’s operations and compliance status. Some software even alerts you to changes in tax laws so that you can stay up-to-date and avoid costly fines. For instance, Rippling’s software offers this functionality as part of its complete suite.


Detailed payroll reports offer insight into your business. Look for a payroll platform that can generate various information, including profit and loss statements and tax summaries. These customizable reports can help you make data-driven decisions and support your growth strategy.

If you employ hourly staffers, choose a payroll system with a time-tracking feature. Employees can log in to the software and clock in and out, eliminating manual calculations and ensuring accurate records. The system automatically tabulates hours and prints paychecks, including bonuses, commissions, overtime, and tips. Many titles will even transmit wage garnishments to government agencies on your behalf.

The right small business payroll software can streamline your internal compensation processes and improve your bottom line. It can also enhance your employees’ experience by preventing payout delays and providing instant access to their wages. Moreover, it can help you avoid compliance risks by supporting changing laws and records retention requirements. Look for a payroll solution with a pricing model that fits your budget, whether one-time licensing or subscription-based. Then, select the features that suit your needs.

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