Best Payroll Software For Startups in 2024

An effective payroll process is important for ensuring that your people get paid on time – and the right software solution can help improve efficiency and ensure compliance compared to more mundane, manual payroll practices. The right payroll solution can also help startups overcome some of the common challenges that they encounter as a young operation, including multi-state compliance and managing more than just employees, but contractors too.

We dig into the best payroll software options for startups in this post and how Graphite Financial can help advise your selection.

Why Payroll Software is Essential for Startups

Managing payroll is something that a young startup cannot downplay. Even employees at startups still count on that regular paycheck. However, payroll is important beyond simply ensuring that your people get paid. It’s important for compliance purposes, tax purposes and for meeting any reporting requirements. While manually managing payroll is one option that some startups may opt for, using a robust payroll software program makes more sense to ensure accuracy and streamline this task.

The right software can also help automate certain payroll processes to save time, all while ensuring compliance.

Key Features to Look for in Payroll Software for Startups

Not all payroll programs are created equal, so it’s important to find the one that will work best for your startup. Some of the must-haves that you’ll want to be on the lookout for when weighing payroll software include:

• Automation features to streamline certain tasks and save time.
• Ability to integrate with accounting tools and third-party platforms.
• Employee self-service options, which allow your employees access to view their payment and tax forms at their leisure.
• Secure data storage, encryption and role-based permissions.
• The ability for any payroll platform to scale up as your startup grows.
• A way to report and view data to analyze and enhance payroll operations.

Best Practices for Setting Up Startup Payroll

Once you decide on a payroll system for your startup, it’s important to optimize it so you can ensure it works how you need it to. Some best practices for setting up your startup payroll platform include:

• Ensuring it complies with state, federal and any local tax requirements
• Automating processing when possible to cut down on the potential for manual error and enhance time savings
• Integrating timesheets and other programs where necessary
• Setting up regular intervals to conduct audits to catch mistakes and better the overall process
• Setting up customized reports to assist with record-keeping

The Top 5 Payroll Software Solutions for Startups

While many payroll solutions can help benefit startups, we tend to prefer the following five solutions. Here’s an overview of each of these solutions:

Rippling

This advanced software offering includes automation features and a variety of HR tools to make payroll processing easier and more efficient. One neat feature is Rippling’s unique ability to handle both payroll processing and IT tasks, two key responsibilities that any startup must be able to adequately handle. Rippling allows startups to handle both in one platform. When you combine its payroll, HR and IT features, it offers a three-in-one solution to make life easier for emerging startups.

Another key feature of Rippling is how scalable it is, making it an attractive option for startups that have growth ambitions.

Gusto

Gusto is easy to use and affordable. These are attractive features for growing startups and startup owners who might not have the budget for more advanced systems or the time to spend learning the intricacies of more complicated platforms. Gusto is a platform that’s particularly ideal for small to medium-sized startups, thanks to its ease of integration with other key accounting tools. Additionally, Gusto doesn’t sacrifice affordability for performance. It still represents a comprehensive payroll solution.

Sequoia

Sequoia is a robust payroll platform, with a variety of features – from next-day direct deposit to automation benefits to tax filing capabilities – to really help streamline the entire payroll process. Additionally, it’s an ideal option for startups that are already using QuickBooks payroll for other accounting tasks, as it integrates seamlessly with that platform. It’s available in various pricing tiers so your startup can select the option that works best for it.

JustWorks

If your startup is on a budget, JustWorks is an affordable option. But it doesn’t sacrifice affordability for quality. JustWorks offers a variety of HR and benefits management features, including managing employee health insurance and 401(k) plans. But perhaps the biggest benefit is its competitive pricing and how budget-friendly it is, making it an attractive option for cash-strapped startups.

Deel

Deel is as simple as it is affordable – especially if your startup is managing both payroll and contractor payments. It’s also an ideal solution if you’re using a payment processing system like Square for certain transactions. It integrates directly with Square’s point of sale system and can also help automate certain tasks, like helping you file payroll taxes.

How to Choose the Right Payroll Software for Your Startup

Selecting the right software for your startup depends on both your startup’s unique needs and your personal preference. In addition to selecting a platform that works for your startup, there has to be a level of comfortability with the payroll software as well. Some of the factors you’ll want to weight when choosing the right software for your startup include:

• How the software can perform relative to your startup’s size.
• If the program is scalable and can grow as your startup grows.
• The cost of the program relative to the budget you have to work with.
• If the program can perform any of your specific industry needs.

Simply put, make sure you do your homework with any solution that you’re considering. Cast a wide net initially and then narrow your focus to two or three finalists. As you narrow down your options, read reviews, chat with other users and see if you can do a free trial to test the platform before making your final decision.

Simplifying Payroll for Startup Growth

Selecting the right payroll software should also align with any future goals that you have for your startup, especially growth plans and operational needs. This underscores the necessity of doing your due diligence when it comes to selecting the right program. Make sure you’re having conversations with prospective vendors to better understand how the platform you’re considering can help your startup in the present day and also set your startup for future growth.

Contact Graphite today for assistance with making your selection and to learn more.

FAQs

What are the key benefits of using payroll software for startups?

The right payroll software can automate certain payroll processes like manual data entry to save time and enhance accuracy, all while ensuring compliance. Aside from enhanced efficiency, using payroll software is also more efficient, cheaper and more secure than carrying out the process manually.

How do payroll software solutions help startups with tax compliance?

Some payroll systems provide automated tax calculations, collection and reporting – taking any guesswork out of tax compliance. Such solutions also help reduce errors that are common with manual processing.

Can payroll software integrate with other tools like accounting and HR systems?

Yes, some solutions can integrate with accounting platforms and HR systems. Some systems integrate with HR management systems to help manage benefits administration and more. Other systems integrate with accounting solutions like Intuit QuickBooks payroll to help keep more things in one central place.

How much does payroll software typically cost for startups?

The cost of your payroll software will vary based on the size of your startup and any unique needs. Being that startups typically have fewer employees and less administrative work, costs tend to be fairly affordable compared to more established startups. Additionally, most payroll programs come with a tiered pricing structure so startups can start at one level of service and upgrade over time as they grow and their requirements become more complex.

What’s the difference between full-service and self-service payroll software?

The biggest difference between full-service and self-service is who handles the overall process. With full service payroll software, payroll providers handle the process on behalf of the employer. With self-service, the employer handles the process and pay stubs themselves. There are also some key differences in cost and flexibility between the two methods.

Can payroll software handle payments for both employees and contractors?

Yes, many options can handle both. A solution like Deel is particularly well suited to handle paying employees and contractors, especially noting its ability to integrate with Square’s point of sale system.