7 Must-Have Payroll Software Features

February 25, 2021

Payroll software is essential to the modern day workforce. Here are the seven must-have features of Payroll software for your business.

Blog Post

Prior to the introduction of payroll software, payroll was a tedious, labor-intensive, and error-prone process. While payroll solutions were initially seen as a luxury, organizations worldwide now recognize payroll automation as a business necessity.

Twenty-five percent of employees revise their Form W-4 at least once a year. Sixty percent of businesses experience fluctuations in payroll from one pay period to the next, and only 60% of employees are confident that their paychecks are accurate. These statistics confirm that payroll software has become a need rather than a want for small and large businesses worldwide.

What is payroll software?

Payroll management software automates and streamlines the process of paying your employees for their work. These programs calculate gross wages based on hours worked, calculate and deduct taxes and benefits premiums, and generate an ACH or direct deposit file. The vast majority of organizations with even a handful of employees utilize payroll software.

What are some of the most important objectives of the payroll process?

The most important objective of the payroll process is accurate and timely compensation for the work performed. If your organization is experiencing frequent inaccuracies or delays in compensation to employees, the payroll process likely needs to be refined.

What features should my payroll software have?

It’s common to assume that all payroll software functions in the same way. In fact, many business owners choose a payroll solution based on price alone under this assumption. Unfortunately, they often discover too late that it doesn’t meet the needs of the organization and is lacking critical functionality.

When building the business case for payroll software and comparing solutions, take into consideration these key features of full-service payroll systems:

Timekeeping integration

If you have hourly employees, you'll want to choose payroll software that offers a timekeeping module or integrates with your timekeeping software. This negates the need for manual entry, improving efficiency and accuracy overall.

Direct deposit

Direct deposit is one of the single most important payroll features to your employees and candidates. Employees and job-seekers expect instant, convenient access to their paychecks. It also reduces the burden on you, the employer, by eliminating the need to print and distribute paychecks.

Expense management

If your industry involves reimbursable employee expenses, like travel and lodging, then software with expense management capability is the best fit. These solutions automate the expense report and payment processes, saving time and improving the timeliness of reimbursement. It also ensures records are easy to find when needed.

Employee self-service

Employee self-service offers two primary benefits. It gives employees access to make certain changes to their profile themselves (like their bank account number or home address), and it gives employees direct access to their vacation balances, pay stubs, and W-2 forms. The result? Your HR crew spends time working on culture and accountability rather than clerical tasks.


The ability to run payroll reports is critical, and not all payroll systems include this feature. Ask what kind of reports you'll be able to run so you know whether you'll have access to the data you need before committing.

Tax filing

The best payroll systems will have built-in tax tables that are automatically updated as tax rates change, taking the guesswork out of deductions, and streamline the tax filing process. Your software should automate tax filing and the generation of W-2s.

Garnishment management

Managing garnishments can be complex, and when it comes to wage garnishment orders, compliance is imperative. Choose a payroll software that includes garnishment management for the most accurate and efficient process.

What are the goals of payroll software?

Payroll software is designed to achieve several key goals:

  • Streamlining the payroll process for greater efficiency, which results in cost savings (less hours invested to achieve the same outcome).
  • Improved accuracy and timeliness of paychecks. In fact, payroll mistakes are twice as likely in organizations that don't use a third-party solution.
  • Simplified compliance with DOL standards, current and changing tax rates, and records retention laws.
  • Better accessibility to important data presented in a meaningful and customizable way, driving more informed decisions.
  • Support for business growth. Scaling requires automation and artificial intelligence.

Who can benefit from payroll software?

Any organization with employees and/or independent contractors can benefit from full-service payroll software. Even a small business with one employee will likely find manual payroll to be inefficient and error-prone. However, it's important to note that most payroll vendors design their solution for clients that meet certain size criteria. For example, some solutions make sense for smaller businesses with 50 employees or less while others are only cost-effective for large organizations with at least 1,000 or 10,000 employees.

How does payroll software work?

Paylocity's payroll software automates and streamlines the payroll process. Paylocity calculates employee wages, calculates and withholds taxes, deducts benefits premiums, and issues pay through direct deposit according to your payroll schedule. You can request a demo to see the software.

Insider tips for choosing a payroll provider

When it comes to selection and implementation of a payroll solution, practice makes perfect. These tips can help you avoid common mistakes and make the right selection the first time.

  • Engage shareholders early. Ask those involved in the payroll process which features are important to them, and invite them to demo different options prior to making a decision.
  • Explore the support available once you implement the software. Will you have access to a tech support line? What’s the average ticket response time?
  • Check out online reviews before making a commitment. Are their clients generally satisfied? Do they have a high BBB rating?
  • Discuss any quirks unique to your business with the account manager to ensure the system can accommodate them. For example, do you have variable deductions like cafeteria charges? A per-piece compensation structure? Complex shift differentials? Those are important things to know in advance.
  • Appoint a superuser and provide them with additional time to become proficient so they can serve as an expert and trainer for others within the organization.

Why Paylocity's payroll software?

As you look for the right payroll processing solution for your business, you'll find that there is no shortage of options to consider. At Paylocity, we urge business owners and decision-makers to go back to their list of critical features. Compare each potential solution to that list before making a final decision.

Paylocity's HR and payroll software features check all the boxes:

  • Timekeeping
  • Direct deposit
  • Expense management
  • Employee self-service
  • Reporting
  • Tax filing
  • Garnishment management

To learn more or get started today, visit the Paylocity team online today.

Request a Demo