Payroll Software

Guide to Do-It-Yourself Payroll Software

Make payroll easier with an accounting suite, payroll software or an online service
By John Henshell

	Payroll Software Smart Shopping Look for payroll software as part of accounting software suites Stand-alone payroll software will generally be the lowest-cost choice Look for payroll software compatible with the software used by your corporate accountant

Calculating payroll taxes, computing employee deductions, writing checks — a payroll system can be tedious and time-consuming. That's why, traditionally, business owners have hired payroll services to handle the chore for them. These days, however, a growing number of business owners are opting to tackle the task with easy-to-use payroll software programs. Payroll solutions generally include some combination of the following features:

1. Ease of use for someone without bookkeeping experience
2. Calculate employee earnings and deductions
3. Deduct federal, state, and local payroll taxes in accordance with the laws
4. Print payroll checks
5. Prepare and print related tax forms, such as W-2s
6. Generate reports and keep IRS-required records
7. Enable electronic direct deposits to employee bank accounts (optional)

Action Steps to Implement Payroll Software

The best contacts and resources to help you get it done

Consider an accounting suite with a payroll solution Many popular accounting programs include basic payroll software; others require you to purchase an add-in module.

I recommend:  Three of the most popular accounting suites — QuickBooks, MYOB and Peachtree — include payroll solutions. See how their payroll capabilities rate in TopTenREVIEWS' Accounting Software Reviews.

Compare stand-alone payroll software programs A separate payroll software program may suit your needs better than a component of an accounting suite. In general, stand-alone programs are cheaper than full accounting suites and may offer more of the features you want. In many cases, files from these payroll software programs can often be imported into popular accounting programs.

I recommend:  Popular stand-alone payroll software includes ZPay and PenSoft.

Sync up with your accountant It may be wise to choose the same software used by your accountant. This enables your accountant to import your payroll software files in a snap, which can save time auditing your books and preparing your taxes. And that saves you money.

I recommend:  If you need an accountant, find one through your contacts or start with the local chapter of The American Institute of Certified Public Accountants.

Get help with payroll software Sometimes, even the simplest small business payroll software program can leave you scratching your head. If you run into problems or questions, check the manufacturer's Web site for FAQs and customer support.

I recommend:  If you can't find an answer to your payroll software query, seek help from your peers. QuickBooks offers a community discussion forum where you can ask your payroll questions.

Tips & Tactics for Smart Use of Payroll Solutions

Helpful advice for making the most of this Guide

• Expect to pay an annual fee to update the tax tables in your payroll software.
• Some payroll solutions may require you to purchase checks from the software manufacturer.
• Look for payroll software that is targeted to a business your size, and will work if your payroll grows.