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Payroll Service Vs. Payroll Software
Payroll Service Vs. Payroll Software
November 19, 2021 / Sarah Pritzker
Payroll Service Vs. Payroll Software
November 19, 2021 / Sarah Pritzker

Your heart begins to race, a cold sweat breaks out across your forehead, and your knees start to tremble as you collapse into your chair. It’s that time of the month again. That’s right, it’s payroll time.

But what if there was a way to alleviate all the waterworks, all the mind-numbing hours and brain-twisting calculations. No, this isn't science fiction, it's a reality. And it's called payroll automation. Two of the most incredible words in the human language for any business manager, payroll automation, takes away the painful and tedious task of processing payroll every month.

All at once, a wave of hope, relief, and jubilation washes over your entire body. Yes, the possibility is real, and you’ve even got choices. In 2021, businesses have the choice to go with a dedicated payroll software or to opt for a full-blown payroll service. Payroll processing is an excellent way to take the burden of payroll off your shoulders. Good brands will offer convenient features like third-party app syncing, so you can sync your employee timesheets and accounting software with payroll, end of the year reporting and other tax compliance features, and human resources benefits management.

Both software and service will take care of your payroll processing, but which is right for your business? Here’s a head-to-head comparison of the two, so you can decide which glorious option you’ll incorporate into your business to make your life more pleasant instantly.

Factor #1 Cost

While we all want to implement automation as often as possible to alleviate the more humdrum or frustrating aspects of our day-to-day lives, most businesses simply can’t afford that kind of overhaul. Cost is an important factor when it comes to incorporating any new technology, and it’s no different with payroll processing.

This one has an obvious winner. Payroll software is significantly less expensive than a payroll service. With software, you purchase it with a single payment, and then it’s yours forever. Good products will come complete with software updates and helpful customer support for troubleshooting and questions. Services require you to sign up and pay for monthly or yearly contracts, so your cost is continuous.

Winner: Payroll Software

Factor #2 Security

Another important factor to consider is the security of your options. Whenever you outsource any task for your business, you automatically open the door for security issues. When it comes to payroll, the risk is even greater because you are sending over sensitive and personal information about your employees, including paycheck and personally-identifying details.

Of course, most payroll services have strong security policies in place to ensure there are no security breaches or issues that arise. But the fact still remains that sensitive data is in transit and sitting in the hands of an outside party. Payroll software holds no such security threats. In fact, it eliminates other security issues by keeping everything in-house and under a single app. There’s no sharing information at all, so security is tighter.

What’s more, payroll software comes with important features to keep security under wraps. You can implement password protection for various pieces of data, so only the appropriate personnel can access the files, and you can lock off entire blocks of information, so nobody else can see it. Without question, software takes all in the security department.

Winner: Payroll Software

Factor #3 Learning curve/Ease of Use

Here’s where things start to get interesting. Payroll software comes with a lot of benefits, but at the end of the day, you are still doing the work yourself (or at least initially). As with any application, payroll options come with a bit of a learning curve. You need to figure out how the system works, how to sync it up with other programs, and how to input data properly. You are going to want to learn how to define parameters, set up schedules, and establish rules. Even the best payroll software will require you to sit with the system, play around with the options, and run through the features in order to get things up and running.

Payroll services, on the other hand, are much faster and easier to pick up. You don’t really have to learn a system, just hand over the information. And the service does all the work for you.

Winner: Payroll Service

Factor #4 Flexibility

In most businesses, change is inevitable (and encouraged, in fact). Employees change positions, get raises, and leave their positions. There are new hires, new wages, and new human resource benefits being juggled all the time. For this reason, how flexible a system is and how easy it is to make changes should also be a factor you take into consideration when comparison shopping any payroll solution.

Since the software sits on your system and you have upfront access to the entire payroll structure, it’s a lot easier to make changes and tailor the processing at a moment’s notice. You don’t have to wait for your account manager to come into the office, approve your changes, upload your changes, and update your system. You can do all that on your own and whenever you want. Plus, modern payroll applications are designed to be mobile-friendly. So you can access your payroll and make changes from anywhere you want.

Payroll services, on the other hand, can often only be reached during business hours, require that you speak to someone in order to make changes, and the changes may come at a delay or additional cost, which could cause problems for you.

Winner: Payroll Software

Factor #5 Extra features

This is the hardest factor to arrive at a concrete winner. That's because both options provide you with solid features that make payroll processing easier, and also enhance other areas of your business flow. For example, payroll software comes with great features like employee calendars, payslips generation, processing reminders, tax compliance and updates, direct deposit, and more. Payroll services offer you more professional and personalized assistance that can be a valuable asset for businesses looking for a lot of tailored assistance.

Winner: Payroll Service

Payroll Software Vs. Payroll Services: Which is Right For Your Business?

As you can see, payroll software holds more and greater advantages for most businesses. But you need to weigh the factors that are most important to you. While it’s generally easy to learn the payroll software’s system, if you’re looking for total hands-free, a payroll service is better for you. It’s also a better option if you really want an account manager who will walk you through everything and be there to make changes for you.

On the other hand, if you’re looking for a more cost-efficient, flexible, and secure solution, payroll software is your best bet. Software is a great way for companies to save money, keep their sensitive data in-house, and have complete control over all payroll aspects.

What you do need to be sure to do before purchasing any payroll software is check on the specs. A good application will afford you the most flexibility, convenience, and efficiency. It’ll offer you comprehensive services and powerful features to make payroll effortless and fast. Make sure the software you are considering checks off all your boxes so that it can deliver the same results as a dedicated payroll service without any of the disadvantages that come along with these services. Top features to look for include automated payroll processing, tax compliance, direct deposit, timesheet and employee calendar syncing, and the ability to generate payslips.

Ready to take a load off your shoulders? Check out some of the best payroll solutions on the market today.

By Sarah Pritzker
Sarah Pritzker is a professional writer who loves scouring the web looking for the coolest products and services at the best prices. Sarah writes for Sarah has lived and traveled all over the world, but has finally settled down with her family in the Middle East - and yes, she misses winter!