The Most Important Payroll Software Features and Leaders


Sorry payroll service providers, you’ve gone out of style. These days, a do-it-yourself payroll management approach with the help of software is the way to go. Payroll systems tend to be cheaper, users have more internal control and changes are easier to make than with payroll services.

In a short amount of time, payroll systems have become one of the most common HR software on the market. It’s used by small businesses and enterprises alike, showing that they’re universally helpful solutions.

If your business hasn’t adopted a payroll system yet, it’s time to bow to the peer pressure. But that doesn’t mean you should settle for any payroll provider. You deserve the best.

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Critical Payroll Software Features

While evaluating payroll software vendors, keep an eye out for the most critical payroll features. Most payroll providers have plenty of automation capabilities, but the best vendors offer these four features with their standard products. The following are the most important payroll software features and capabilities:

Payroll Processing and Management

Obviously, the most crucial function of any payroll system is to process and manage payroll. At its most elemental, this involves ensuring every employee is compensated correctly via their preferred method of payment. This base provides the foundation for all other additional features of payroll software.

Direct Deposit

Direct deposit is another one of the most important payroll features. After all, the whole point of a payroll system is to make sure your employees get paid. The days of handing out checks at the end of the week are all but gone.

Direct deposit is a win-win for businesses and their employees. Businesses save both money and time by avoiding the printing and distribution of paychecks. At the same time, employees don’t have to worry about losing their checks or experiencing check fraud. And as points out, it helps the environment by saving paper, too.

Tax Filing Services

Properly filing your taxes is kind of a big deal — just ask Wesley Snipes. That’s why the best payroll systems provide tax filing features. Like any manual calculation, calculating tax takes time and has the potential for mistakes. To avoid any miscalculations or issues with federal, state, local, Social Security and other payroll taxes, it’s best to leave it to software.

The same goes for tax documents like W-2s and 1099s. Your payroll system should be able to create them automatically, filling in the deposit information. In addition, it should be able to send those forms to the right agency, handling the tax filing process from beginning to end with minimal oversight.

Compensation Administration

Managing compensation goes beyond standard payroll and wage management, accounting for non-traditional methods of pay. Worker’s compensation, bonuses and adjustments for changes in minimum wage, cost of living, etc. are all handled by compensation management features. This functionality oversees any non-traditional payment practices, providing an extra layer to your overall payroll management strategy.

Oracle compensation

Oracle HCM compensation management features.

Employee Self-Service

Insperity sums up just how beneficial employee self-service capabilities are for payroll systems. They explain that employee self-service “puts all of your employees’ personal payroll data at their fingertips so they have easy access to their pay stubs, W-2 forms and paid time off balance.”

In other words: your employees don’t have to take time away from your human resources department by requesting access to that information. With self-service features, they can quickly get their necessary payroll data and forms whenever they need without help.

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Most categories of business software are required to include some kind of business intelligence or reporting feature. Payroll solutions, as you can imagine, are no exception. This is because reporting is such a useful tool that gives you insights into your payroll processes.

Payroll reports provide a high-level overview of your budget, taxes, workers’ compensation and other payroll data. These reports reveal trends and patterns which HR and accounting departments can use to improve their operations. Whether it’s allocating resources better or managing overtime differently, these insights can lead to cost savings and more efficient payroll processing.

BizRun payroll report

A BizRun payroll report.

Compliance Management

When managing financial matters, compliance is a necessary consideration. Keeping in line with all relevant regulations ensures your business is up-to-date and lawful. This avoids legal action and potential fees that may arise from a lack of compliance management.

Viventium Software compliance

Compliance management from Viventium Software.

The Best Payroll Software Vendors

To be labeled as one of the best payroll software vendors, a payroll provider has to have more than just the above payroll management software features. They also need to have a user-friendly interface and provide additional payroll and/or HR features that make your job easier.

SelectHub compiles data from reviews and factors in key requirements for payroll systems. With this information and a scoring algorithm, we rate and rank tools to present the best solutions to you.

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ADP Workforce Now

ADP’s Workforce Now HR software is a complete HR solution for mid-sized businesses. It’s a cloud-based software, offering mobile accessibility so you can take it wherever you go. As with most HR software vendors, Workforce Now includes benefits administration, talent management, performance management, time and attendance, and, of course, payroll and tax features.

The payroll module of ADP Workforce Now includes all of the payroll system features we mentioned above as well as compliance features. These ensure your payroll processes meet any and all regulatory compliance standards.

ADP Workforce

The ADP Workforce Now platform.

Dayforce HCM

Dayforce HCM is also a cloud-based system that manages all of your HR processes. Dayforce handles everything from talent and document management to benefits, analytics, payroll, tax forms and more. The system offers real-time data for real-time reporting and — similar to ADP — offers compliance features (although they aren’t quite as robust).

The full-service payroll module includes embedded analytics so you don’t have to switch between pages to check the status of your payroll processes. You can also view, edit, fix and preview your payroll in real time, which gives you total control of your payroll management.

Dayforce HCM Payroll

A payroll dashboard from Dayforce HCM.


As with ADP and Dayforce, Namely offers a complete HR solution that includes payroll. Best suited for mid-sized businesses, the system manages benefits, talent management (including onboarding, goals and reviews) and payroll. The self-service side of Namely is easy to use, as it’s built to increase employee engagement and, by extension, employee productivity.

Namely’s payroll module keeps things simple for your HR team. Benefits deductions are kept up-to-date, while payroll taxes are automatically filed. ACA reporting and end-of-year reporting are also automatically generated. Hours worked and each employee’s hourly wage can be integrated easily into the system.

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As previously stated, payroll processing is essential for businesses, and therefore, so is payroll software. Especially in today’s business atmosphere, which often includes many employees, non-traditional work methods and tech-centric processes, payroll systems are needed to stay organized. Most vendors share this common goal but differ in feature offerings and scale. Analyzing the needs of your business will help you find the best payroll system for your organization.

When considering the adoption or update of a payroll system, business owners and their HR departments need to think about the most beneficial features for their employees. The above payroll software feature list covers that which is essential for most businesses. Of course, each business, from small to enterprise, has unique qualifications for their ideal HR software. Once requirements are determined, businesses can begin the process of comparing vendors and finding an HR software most fitting for their needs.

Get our Payroll Software Requirements Template

Alainia ConradThe Most Important Payroll Software Features and Leaders


Join the conversation
  • Jeanine Cloud Rigby - January 23, 2018 reply

    Great list. Every business struggle when it comes to payroll because it is complex and time-consuming. That is why they must use payroll software to make their work easier. Here in the Philippines, most of the firms that offer accounting and bookkeeping services use Dayforce HCM in terms of payroll and tax.

  • Jeanine Cloud Rigby - May 17, 2018 reply

    Thank you for suggesting a wonderful list of ideas on how to handle payroll better. Business always have a hard time with their payroll as it is very complex, time-consuming and complicated as well as it depends on the number of people you have in the organization. With the list you’ve suggested, we could use this blog as a guide on how we would tackle our payroll services with future clients.

  • Humantelligence Inc - June 1, 2018 reply

    Thanks for suggesting all these points.
    Nice article on Payroll software. It will be really helpful for me.

  • Mindspace Outsourcing - September 25, 2019 reply

    Payroll software makes it simple to calculate compensation, pay representatives via direct deposit, and document charges for businesses that want to manage their payroll in-house.

  • Alec Burns - January 17, 2020 reply

    It’s good that you point out that payroll software makes it easy to do direct deposit for your employees. I want to start a company and I’m considering using payroll software for this reason. I’m going to look for a good payroll software program to use.

    Mariah Hansen

    Mariah Hansen - January 21, 2020 reply

    Hi Alec,

    Payroll is great for a lot of things, but direct deposit is certainly one of the features that companies can benefit from the most. If you need any help finding a payroll solution for your business feel free to use our free requirements template or contact us for a comparison report.

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