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As a small business owner, the first payday and handing over employees’ first pay stubs is exciting, right? Perhaps a bit stressful too. It’s your first time calculating payroll, figuring out deductions and benefits and all the little details of handling salaries. Still, your business is supporting everyone’s livelihoods, including your own — what a great feeling!
With time, however, that initial blush wears off. Payday starts to feel like… well, exactly what it is. An important, but time-consuming, chore.
Can’t you just push a few buttons and automate the whole payroll management process? Good news! You absolutely can. All you need is some great payroll software to help.
As you start researching though, you’ll quickly notice that not all payroll software is created equal… In fact, there’s a lot of nuance to choosing the right payroll solution, and some of them come with hidden costs. Okay, take a breath. Here’s everything you need to know about payroll software pricing.
What is payroll software?
First, a quick definition. What exactly are we talking about when we discuss payroll software?
In general terms, payroll software is any on-premises or cloud-based software solution that allows you to manage and automate the payroll process. It also helps you deal with complex calculations (like benefits deductions) and stay tax compliant.
What payroll software doesn’t do is completely remove payroll from your to-do list. While it lightens your administration load in the long-run, you still have to enter the data. It’s a lot simpler and a reliable way to ensure an accurate payroll. But it’s not the same as outsourcing to a payroll service (which comes with a lot of other considerations).
Factors influencing payroll software costs.
What’s important to keep in mind is that using automated payroll software solutions is generally a lot cheaper than completely outsourcing the process. But there are still big differences between software providers.
In order to choose the right payroll software for your business, you need to first take a look at some of the factors that influence how much you end up paying.
Number of employees
The number of people working for your business is a bigger factor than you may think. Many payroll software providers use tiered pricing structures where you get charged a flat rate up to a certain number of employees. That can work well for larger companies, but smaller businesses often need something a bit more personalized.
The other way this might come into play is if there’s a per employee processing fee. As your company grows, it’s something to keep an eye on.
Payroll frequency
In some cases, payroll software providers charge based on the frequency of your payroll. This will be one of the top things to keep in mind if you need unlimited payroll runs or you’re paying your employees weekly!
“Additional services” and “add-ons”
You may also find that some providers charge added fees for anything but the most basic payroll features. While this customized solution approach may be great for meeting your unique payroll needs, you’ll want to keep total cost in mind.
So, handling standard payroll processes, like deductions, might be included. But you could be charged extra costs for tax necessities like your year-end T4/T4As and filing payroll taxes, for being able to make direct deposits or even same-day processing. There may also be charges for fixing payroll errors if it’s not something you can do yourself in the user interface.
Employee location
As it becomes more common to have workforces spread out geographically, it’s worth considering if the payroll software you’re considering does everything you need it to. Remember that different provinces and territories can have different payroll taxes and regulations. Québec, for example, brings some unique payroll challenges to the table, especially regarding remittances for payroll taxes. Because of that, some payroll software won’t include it as an option. Fine if you don’t need it — but useless to you if you do! So make sure the payroll software you choose covers everyone (and every location) you need it to.
Hidden costs
Another factor employers should keep a sharp eye on is that some payroll software providers have hidden fees associated with their service that you won’t necessarily know about until you’re charged. In other words, they’re not giving you everything you need to run payroll from start to finish.
For example, it may not be transparent if additional payrolls or your year-end tax filing with the Canada Revenue Agency (CRA) are considered additional features that incur an additional cost.
Which isn’t to say that you should look for a payroll software provider that does absolutely everything for you (after all, that may not suit your budget or objectives). But your provider should be perfectly transparent about what functionality you get for your money.
In short: Your payroll software package should be an open book, without any extra hidden costs.
Payroll software pricing models.
Different payroll software providers also offer different pricing models, and some of these may be a better fit for your business than others. Luckily, many include a handy quote generator so you can get a sense of what each pay run costs, but here are the common pricing models.
Pay-per-user model
A good option, especially for small companies with only a few employees, is payroll software that charges you based on the number of users. The key consideration here is to make sure the company is charging you “per user” rather than at a blanket rate for “under a certain number of users.” This can be especially important if your business is growing quickly, because the addition of just a few people could push your charges up into higher price tiers and cost you a lot more money.
Pay-per-payroll cycle model
With a pay-per-payroll cycle model, you’re getting charged based on how often you run payroll. This can be a good thing if you operate on a monthly basis, but charges can add up quickly if you’re running payroll weekly or bi-weekly, so you’ll need to shop around for a good price point.
Subscription-based software
With a subscription-based model, you pay your provider a recurring fee on a monthly or yearly basis for access to their software. The exact amount you pay is often worked out on a per-user basis (just like pay-per-user), but there’s an additional subscription fee, and potentially other costs as well for installation and setup.
In other words, there’s a base fee (the subscription), plus potential additional fees with using and setting up the program.
A subscription model can be a good choice, but be sure to check the fine print for exactly what’s included. Especially where services are listed as a “basic plan.”
Many of the big players, like Wagepoint, QuickBooks Online Payroll and Wave Payroll go with this model, for instance.
A transparent approach to payroll software pricing.
In a lot of cases, payroll software providers have offerings that are a mix of some (or all) of the above pricing plans. This can work very well for small businesses, but be sure to opt for something where all the relevant information is crystal clear upfront.
Also take advantage of payroll software that offers a trial period before you commit. It’s also a good idea to talk to the sales team to make sure you’re getting the best fit for your business.
Remember, the best payroll software is one that doesn’t just save you time, it helps you to stay legislatively compliant, gives you insight into exactly what’s happening with your business finances, and meets your unique business requirements.
In other words, it helps make payroll processing easier than ever.
Wagepoint: Priced with small business in mind
Using Wagepoint’s software, you get just that. There are two pricing plans to choose from, with all the features included in each plan laid out plainly. Whether you need one pay run per month or unlimited pay runs, you’ll know what tools you have at your fingertips.
Add onto that great customer service, an employee self-service portal and all around ease of use, you can make the payroll magic happen.
And then, you know, go back to rocking your small business. And building the next big thing that’s going to leave the competition in the dust.
Interested in learning more about Wagepoint’s payroll solution? Get started with a free trial!
