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What’s a Good Payroll System to Use for a Tech Startup?

02.19.20

HardriveModern and secure software systems are important for every aspect of a growing technology company. That’s why many emerging tech companies are asking “What’s a good payroll system to use for a startup?” With the rise of software-as-a-service (SaaS) solutions for nearly every business function, SaaS payroll systems — including everything from bare-bones freemium-ware to enterprise-grade infrastructure are the future.

The word “startup” can be a somewhat nebulous term. It might, for instance, refer to a small business that plans to remain small, at least for the foreseeable future. (Despite perceptions to the contrary, not everyone goes into business planning to become the next Google!) On the other hand, it could refer to the kind of small, but quickly-growing, company that we tend to think of when we hear the word “startup.”

In either case, a startup is going to have employees, and those employees need to get paid.

And as new business owners quickly learn, payroll isn’t quite as simple as cutting checks every other week. With the burdens of regulatory compliance — not to mention the administrative overhead costs associated with performing tasks manually — payroll can quickly bog down a small business in its key early stages.

Both of these kinds of small businesses will benefit from a software solution that automates key payroll tasks. What’s required from that software system, however, will differ between small businesses who are comfortable right where they are, and startups that are in high-growth mode. Drawing on the expertise of the professionals in our HR and People Services Practice, here’s an overview of what these two categories of startup ought to look for in a payroll system.

Payroll Systems for Small Businesses: Self-Service Solutions

If your employee count is in the single digits, and you have no plans to change that, a self-service system likely has all the payroll features you need. Cheaper and easier to use than more comprehensive solutions, these systems are ideal for companies with 10 to 15 employees. They’ll handle all the basics, including setting employees up with direct deposit, calculating and withholding income taxes, and serving employees documents as they need them.

While more economical than more advanced solutions, the tradeoff is these solutions tend to lack in-depth reporting, which can help owners and business leaders identify important trends in the data. They also lack other “nice-to-haves” from a payroll system, such as the ability to work with a benefits broker. Realistically, however, the average small business isn’t offering more complex benefits like 401k-matching or childcare, and some self-service payroll platform do in fact offer solutions for things like health insurance, at least on a basic level.

If you’ve determined a self-service system will suffice for your needs, we advise you look for a user-friendly system geared towards small businesses, like Gusto. Whatever solution catches your eye, make sure to take advantage of free trials offered by vendors to ensure you’re comfortable with the user interface and it truly has all the features you need.

Payroll Systems for Growing Businesses: Human Capital Management Platform

For a growing startup, payroll shouldn’t be thought of as a standalone function. The system that compensates your employees is intimately connected with the systems that administers employee benefits and tracks employee hours, leaves of absences, promotions, learning opportunities, generates reports and ultimately aligns people to strategy—the list goes on. As your company grows, each of these functions will become increasingly complex, and a system that integrates the data from all of these different areas can save your employees a lot of time, your HR department a lot of headaches and your company a lot of expenses.

It’s the ability to provide all that and more that makes us recommend human capital management platforms to emerging or mid-market companies planning for high levels of growth. Because when the HR data is fully integrated, these synergies appear in places you might not immediately think of. Take a common situation for a corporate HR function: tracking and resolving employee compensation issues. If payroll data is at the HR professional’s fingertips, they’re empowered to resolve compensation-related issues right then and there. Once you recognize payroll is just one element of human capital management, and maintaining an efficient, healthy, motivated workforce, then you’ll surely agree it’s a major asset to have payroll data seamlessly integrated with all your HR data — and be willing to pay a little extra for solutions that offer those features.

In addition to these integrations, these systems are more customizable, allowing you to optimize processes to fit your company’s specific needs. In many cases, you’ll also gain access to a benefits broker, who can procure ideal benefits packages, which in turn assists you in attracting top talent to your organization.

Integrated Payroll and HR Data: Your Business’s Strategic Advantage

Whether it’s a self-service, standalone service, or just one element of a broader HR platform, our favorite payroll tools for both small business and larger business integrate, to one degree or another, data from payroll with other kinds of HR data. If you take away just one thing from this article, it’s that the better integrated your payroll data is with your other HR data, the better your employees will perform, and the more efficient your organization will be.

BPM for HR and People Services

BPM is one of the largest California-based accounting and consulting firms, ranking in the top 50 in the country. Let us help you change the way your workforce engages at work and how your company engages with your workforce. From complete HR outsourcing, consulting and recruiting to PEO transitions and an engaged culture, our HR and People Services group can scale up or down with your organization and help keep your options open from the beginning. Whether you need project based help, a long term partner, or just a nudge in the right direction, we have the expertise to deliver an effective and strategic solution to any HR challenge. Contact today by visiting https://www.bpmcpa.com/HR.

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