What Are The Different Types Of Payroll Software?
Payroll apps makes it easier to run your business, pay your employees, and prepare taxes. But which type of payroll software is right for your business?
There are four types of payroll software systems to choose from: traditional payroll software, industry-specific payroll software, payroll software for accountants, and professional employer organizations (PEOs).
Each option will make it easier to process payroll for your business but may be designed for specific users or provide advanced services.
Here’s a look at the four different types of payroll software systems.
The Four Types Of Payroll Software
|Type Of Payroll Software||Definition|
|Traditional Payroll Software||Most common payroll software type; takes a one-size-fits-all approach to running payroll for businesses across all industries and sizes|
|Industry-Specific Payroll Software||Traditional payroll software with added functionality and features based on industry|
|Payroll Software For Accountants||Traditional payroll software with a client-based approach; for accountants who manage payroll for their clients|
|PEOs||Software for businesses to manage payroll data; PEOs use the data to run payroll and manage HR for their business clients|
Keep reading for an in-depth exploration of the four types of payroll software.
Traditional Payroll Software
You can think of traditional payroll software as a kind of one-size-fits-all solution, as it tends to offer a wealth of features that can be used by all types of businesses.
For example, a small family-owned restaurant paying tipped workers could use the same traditional payroll software solution as an enterprise-sized business paying employees across multiple states.
The best payroll software takes customization and versatility to the next level by including support for third-party integrations, benefits administration, employee management features, basic HR support, and more.
Industry-Specific Payroll Software
Industry-specific payroll software is designed to help businesses in a specific industry run payroll and typically includes features such as specialized reports, additional integration options, and compliance tools.
For example, the best restaurant payroll software comes with features that are specifically useful to those within the foodservice industry. This type of payroll software will usually have more integration options for POS systems, scheduling, time-tracking, and inventory management software. There’s even payroll software for nannies, so if your business has a specific industry, chances are there’s a payroll software to help with your specific needs.
Construction payroll software, on the other hand, features support for certified payroll (mandated by the Davis-Bacon Act).
Depending on your industry, you may be able to simply add an integration to a traditional payroll app that fulfills the compliance or reporting needs you may have, rather than opting for specialized payroll software.
Payroll Software For Accountants
Payroll software for accountants is essentially just traditional payroll software with an added layer of client management. Payroll software for accountants is distinct from industry-specific payroll software because it can be used for client businesses across multiple industries.
Generally, accountant-focused payroll software features a home dashboard where accountants can easily toggle between their clients and manage payroll and HR tasks (think benefits deductions).
The best payroll software for accountants includes more features and benefits to help accountants attract clients, such as discounts, support for HR features and functionality, and advanced customer support options.
Accountants may also gain access to perks, such as revenue sharing, discounted services for their firm, and more.
Professional Employer Organizations (PEOs)
A PEO is a human resources (HR) company that enters into a contractual co-employment arrangement with another business. A co-employment agreement enables a PEO to manage a business’s HR tasks, including running payroll, payroll taxes, benefits administration, employee management, and hiring.
Technically, PEO services are not payroll software. However, we include PEOs on this list because they utilize payroll software to help manage a business’s payroll. In fact, the PEO is responsible for confirming payroll data via payroll software.
That’s why the best PEO companies are often the same as the best payroll software providers. For example, ADP, Paychex, and Rippling offer excellent PEO services on top of their excellent payroll services.
Which Payroll Software Is Right For Your Business?
Although you’ll have several payroll software options to choose from, the type of software that’s best for your business should meet all of your business’s unique payroll needs.
Do your research ahead of time, test different apps, and consider each payroll software’s offerings against your business’s needs to find the best fit. Learn more about how to choose the best payroll software for you business and what the key benefits of payroll software are.