Grace is Cledara's in-house financial accountant, who thrives in businesses with fast-paced growth. Grace's role is to provide insights to the wider business, she has been heavily involved in cross-functional projects stretching across the introduction of global benefits, financial modelling and KPI reporting procedures.
Payroll is an essential part of every business's day-to-day operations. Proper payroll management brings clarity to your accounting team and certainty to your employees. But it can be a time-consuming and confusing process. In particular for fast-growing startups.
Unfortunately, inefficient payroll handling can:
- Undermine your employees’ trust
- Expose your company to major security risks
Here’s where automated payroll systems come in handy.
In today’s post, we’ll share:
- What is a payroll automation system
- Why you should implement payroll automation at your startup
- How to choose an automated payroll system
- The pros and cons of doing automated payroll on Excel
- Our favorite payroll automation tools for 2023 and beyond
Ready? Let’s get started!
What Is a Payroll Automation System?
You already know what payroll is. But let’s agree on a definition, so we’re on the same page.
In a nutshell, payroll is the process of paying your employees. To do so, you must not only take into account your employees' earnings but also their benefits, withholdings, and taxes.
Moreover, the concept of payroll could also include:
- Employees’ financial records
- Employees’ paycheck distribution
- Annual records of employee earnings
Payroll is essential to running a business, but it can have a high cost. In fact, according to a Deloitte survey, 27% of HR staff spend most of their time handling payroll and it’s mostly done manually.
It goes without saying that this time would be better spent on higher-value work. And the best and most scalable solution is a payroll automation system.
Why You Should Implement a Payroll Automation System
With an automated payroll system, you can:
- Pay your employees automatically, globally
- Automatically calculate overtime, raises, PTO, and more
- Streamline tax filings
- Process direct deposits
- Generate payroll reports
- Calculate tax withholdings
- Bring transparency to your financial planning process
- Guarantee legal compliance
Strategic automation is the key to keeping your team focused on business growth and efficiency. And accounting is no exception. Payroll automation saves you time and money while improving the employee experience and optimizing your accounting processes.
But how do you automate payroll, and choose the best payroll automation tool for your company?
How to Choose the Right Automated Payroll System
There are hundreds of automated payroll systems available, for companies of all sizes, industries, and budgets. Before you choose one, make sure it fits your company's needs.
We suggest you prioritize the following features:
- Employee data management
- Time and attendance tracking
- Federal, state, and local tax filing
- Tax penalty protection
- PTO tracking
- Same-day direct deposit
- Software integrations
- 24/7 support
- What do similar companies at our growth stage use?
- Can I integrate my existing HR software with this payroll automation tool?
- Is this tool suitable for my company's size?
- Will this tool grow with my company?
- Will this tool’s pricing fit our budget as we grow or will it become prohibitive too quickly?
The Pros & Cons of Doing Automated Payroll in Excel or Google Sheets
At this point, you may be wondering why a classic spreadsheet isn’t enough to handle payroll.
Doing payroll in Excel or Google Sheets has some pros:
- It requires little to no training
- It won't add to your software expense
But that's about it.
There are many more reasons why you will not want to manage your payroll with a spreadsheet. Yes, you guessed it. At the end of the day, Excel or Google Sheets aren't designed for the dynamic and complex nature of payroll processing. So:
- A spreadsheet won't fully automate your payroll, it'll just help you manage it manually
- Logging your payroll on Excel is time-consuming and prone to human error
- Excel's ability to simplify your tax filings is limited
- Excel won't be able to compile the documentation associated with your payroll, forcing manual work
There are many payroll automation options out there designed specifically for payroll processing. In the next section, we'll share our top 5.
The 5 Best Payroll Automation Tools for Startups
In this section, we’ll explore some of the best payroll automation tools for startups.
We’ll focus on:
- Vendor reliability
- Customer support quality
- Integration channels
When it comes to payroll automation tools, our top 5 picks are:
Let’s take a closer look at some of these payroll automation softwares.
QuickBooks is an accounting tool for small businesses that includes a Payroll module.
QuickBooks’ key features are:
- Free 24-hour direct deposits. You can submit your entire team's payroll the day before payday, before 5 PM.
- Same-day direct deposits.
- An intuitive, beginner-friendly interface.
- A comprehensive set of payroll and tax compliance features.
- Automatic tax updates.
- Labor law posters.
- Forms and extra services for 1099 contractors.
- Continuous monitoring of state and federal tax rates.
- Easy access to tax forms.
- The possibility to file and pay taxes through the platform.
- Fast, unlimited payroll runs.
- Expert help from US-based tax specialists.
QuickBooks Payroll easily integrates with other tools from Intuit, their parent company. Nonetheless, Intuit also offers QuickBooks Payroll as a standalone service. This option’s ideal if you’re happy with your current accounting software and don’t want to switch over to QuickBooks.
Additionally, QuickBooks Payroll is available for Android and iOS devices and offers a free trial.
Pricing for Intuit Quickbooks' standalone automated payroll is straightforward:
- The Core plan starts at $45/month + $4 per extra user
- The Premium plan starts at $75/month + $8 per extra user
- The Elite plan starts at $125/month + $10 per extra user
Gusto is a comprehensive payroll management platform that combines payroll automation, compliance, and benefits management features.
Gusto was specifically designed for US-based small and growing businesses.
Some of Gusto's key features include:
- The ability to centralize payroll and benefit management
- Onboarding management features
- An error-proof payroll management system
- User-friendly dashboards and controls
- Mobile time-tracking
- Workforce costs calculations
- The possibility to submit payroll taxes straight from the platform
- Easy tax reporting and compliance
- Access to Gusto’s digital wallet for all employees
- No long-term contracts
- Over 150 integrations
- Access to HR specialists (for Enterprise clients)
Here’s a quick look at Gusto’s pricing plans:
- The Simple plan is ideal for small teams. It starts at $40/month + $6 per employee.
- The Complete plan was designed to meet the needs of growing and busy businesses. It starts at $60/month + $12 per user.
- The Premium plan is a premium service aimed at enterprises. It offers certified HR support. Currently, its pricing is not publicly available. But previous versions of this plan started at $149/month.
Rippling is a comprehensive HR platform. Besides payroll, it also allows you to manage employee benefits, recruitment, training, and more. In other words, Rippling lets you streamline and automate all your HR operations.
Some of Rippling’s key features include:
- No-code automated workflows and approval
- Custom HR reports
- IT management features, allowing businesses to oversee employee devices and apps remotely
- Flexibility and extensive customization
- HR and payroll data integration
- Automated tax filing and compliance, including forms like I-9s to W-2s
Rippling’s pricing starts at $8/month/user.
Wave is an accounting tool designed for small businesses in the US and Canada.
When it comes to payroll, Wave’s key value proposition is that you can manage payments, deductions, and taxes for both employees and contractors in one user-friendly platform.
Some of Wave Payroll’s key features include:
- Extensive accounting tools covering invoicing, online payments, lending, receipts, and more
- Tax management
- Time tracking and overtime management
- Profit and loss reporting, sales tax reporting, exchange rate calculations, and reconciliation of payments
- Personalized tax filing for employees and contractors, according to their state of residence
- Direct deposit payments
- The ability for employees to update their banking and contact information, as well as access W2 forms, and pay stubs
- Automatic payroll deposits into your employees' accounts
Wave offers a free 30-day trial to get you started. Once that period ends, pricing plans vary based on your business stage and complexity.
Here’s a quick look at Wave’s pricing:
- For businesses operating in California, Florida, New York, Virginia, Washington, Illinois, and North Carolina: A $35 monthly fee + $4 per user
- For businesses operating in any other U.S. state: A $20 monthly fee + $4 per user
- For Canada-based businesses: A $20 monthly fee + $4 per user
Deel is a cloud-based payroll solution and compliance software. Deel is ideal for business with international teams. Its automated onboarding, payroll, and compliance features were designed for remote, international teams.
Some of Deel’s key features are:
- International contract-signing and payment management for over 150 countries
- Localized benefit solutions, including pensions, bonuses, vacations, and equity grants
- Integrations with HR accounting and reporting software
- Automated invoicing and flexible withdrawals for all contractors
- Over 120 currencies available for withdrawal, as well as the ability to deposit funds directly to a Deel prepaid credit card
- A GDPR-compliant system with extensive security credentials
- 24/7 chat support
Deel doesn’t offer a free trial. Pricing starts at $49/month per team member.
In this post, we highlighted the importance of an automated payroll system and shared 5 great payroll automation tools for growing startups.
These payroll automation tools aren’t just time-savers. More importantly, they can help you centralize key data and bring transparency to your startup’s finances.
However, payroll isn’t the only expense you should keep an eye on. Right there behind payroll is the second largest expense for most companies. You guessed it - software subscriptions.
Do you even know how much your team is spending on software? Do you have a system to track your tech stack and detect redundant tools? What about the ability to see who is actually using the software you’re paying for?
Cledara helps you simplify your SaaS management. With Cledara, you can:
- Get full visibility of your software stack
- Reduce unnecessary software costs
- Streamline your employee onboarding
- Make sure your team always has access to the tools they need
Interested to learn more? Book a Cledara demo today!