Businesses need payroll to manage the payment of salaries and wages to their employees. Payroll includes keeping track of employee hours worked, calculating taxes, deductions and other withhold amounts, and making accurate and timely payments to employees and tax agencies.
Payroll is an important function for businesses as it impacts not only the financial well-being of employees, but also the reputation and compliance of the business. Inaccurate or late payroll payments can lead to low employee morale and potential legal and financial consequences for the business.
Moreover, payroll plays a crucial role in ensuring compliance with various tax laws and labor regulations. This involves correctly calculating and withholding taxes, making timely payments to tax authorities, and providing required reports and statements to employees and government agencies.
Overall, a well-run payroll system is critical for the smooth operation of a business and the financial stability of both the company and its employees.
What federal & State laws affect payroll?
There are several federal laws that affect payroll and the administration of employee compensation in the United States. Some of the most significant ones include:
- Fair Labor Standards Act (FLSA): This law establishes minimum wage, overtime pay, and record-keeping requirements for covered employees.
- Internal Revenue Code (IRC): This law governs the taxation of employee compensation, including the calculation and withholding of federal income taxes, Social Security, and Medicare taxes.
- Social Security Act: This law established the Social Security program, which provides retirement, disability, and survivor benefits to eligible workers and their dependents. Employers are required to withhold a portion of each employee’s pay and contribute a matching amount to fund the program.
- Affordable Care Act (ACA): This law requires employers to offer health insurance coverage to full-time employees and their dependents, and imposes penalties for non-compliance.
- Employee Retirement Income Security Act (ERISA): This law sets standards for employee benefit plans, including pension plans, health plans, and other types of employee benefits.
- Family and Medical Leave Act (FMLA): This law provides eligible employees with up to 12 weeks of unpaid leave for specified family and medical reasons, and requires employers to maintain their health insurance coverage during the leave.
It is important for businesses to stay informed of changes to payroll-related laws and regulations and to ensure that their payroll practices are in compliance with applicable federal and state laws.
In addition to federal laws, there are state laws that also impact payroll. Some of the state laws that can affect payroll include:
- State minimum wage laws: Each state sets its own minimum wage, which employers must pay to employees who work within that state.
- State tax laws: Each state has its own tax laws, which can impact payroll. For example, some states have a state income tax, while others do not.
- State overtime laws: Some states have different overtime laws than those set by the federal government. For example, some states have a higher minimum salary threshold for exempt employees.
- State family and medical leave laws: Some states have their own family and medical leave laws, which can impact payroll. For example, some states require employers to provide paid family leave to employees.
- State garnishment laws: Each state has its own laws regarding wage garnishment, which can impact payroll. For example, some states have restrictions on how much of an employee’s wages can be garnished.
- State payroll tax laws: Some states have their own payroll taxes, in addition to federal payroll taxes.
- State unemployment insurance laws: Each state has its own unemployment insurance laws, which can impact payroll. For example, some states have higher unemployment insurance taxes for employers.
It’s important for businesses to understand the payroll laws that apply in the state where they operate, as failure to comply with these laws can result in penalties and fines. Employers should seek professional assistance, such as from a payroll service provider or a payroll consultant, to ensure they are in compliance with all applicable state and federal payroll laws.
For the numerous HR professionals out there who are ready to implement a payroll system for the first time or jump shit from their current provider, here is a very biased list of the most popular payroll systems among our peers.
#1 – ADP Payroll System
Automatic Data Processing, Inc. (ADP) is a global provider of human resources, payroll, and benefits administration solutions. The company was founded in 1949 in Paterson, New Jersey by Henry Taub.
ADP started as a provider of payroll services to small businesses and quickly grew to become a leader in the payroll processing industry. In the 1960s, the company expanded its offerings to include computer-based payroll systems, and in the 1970s, it introduced its first human resources information system.
Over the years, ADP has acquired several other companies and expanded its offerings to include a full range of human capital management solutions, including benefits administration, talent management, and time and attendance.
Today, ADP is a publicly traded company with over 60,000 employees serving clients in over 140 countries. The company has a long history of innovation and a commitment to providing high-quality payroll and human resources solutions to help businesses of all sizes manage their most important asset—their people.
Some of the key features of ADP include:
- Payroll processing: ADP provides a comprehensive payroll processing solution that calculates taxes and deductions, generates paychecks, and integrates with various banking systems for direct deposit. The platform also supports multiple pay frequencies and can handle complex payroll calculations.
- Benefits administration: ADP offers a range of benefits options, including health insurance, 401(k) plans, and flexible spending accounts. The platform makes it easy for businesses to manage employee benefits and ensure compliance with regulations.
- HR management: ADP provides a centralized platform for managing employee information, including job titles, time off requests, and contact information. The platform also includes HR tools and resources to help businesses stay compliant with employment laws.
- Compliance: ADP helps businesses stay compliant with federal and state payroll tax laws and regulations. The platform generates the necessary tax forms and reports, and provides guidance on compliance requirements.
- Time tracking: ADP offers an integrated time tracking solution that makes it easy for businesses to track employee hours, approve time off requests, and run reports on employee attendance.
- Employee self-service portal: ADP provides an employee self-service portal where employees can access their pay stubs, benefits information, and time off requests. The portal is designed to be user-friendly and accessible from any device with an internet connection.
- Mobile app: ADP offers a mobile app that provides employees with access to their pay stubs, benefits information, and time off requests from their smartphone or tablet.
Here are some common themes from negative reviews of ADP:
- Complexity: Some users find ADP’s platform to be overly complex, with a steep learning curve and a lack of user-friendly design.
- High cost: Some users are unhappy with the cost of ADP’s services, finding it to be too expensive for the features offered.
- Slow customer service: Some users have criticized ADP’s customer service team for being slow to respond to support requests or for providing unsatisfactory support.
- Limited reporting capabilities: Some users have expressed disappointment with ADP’s reporting features, finding them to be limited in scope and not as comprehensive as they would like.
- Integration issues: Some users have encountered problems integrating ADP with other systems, such as accounting software or time tracking tools.
These are some of the common themes from negative reviews of ADP. It’s important to note that opinions about payroll systems can be highly subjective and can depend on a number of factors, including a company’s size, industry, and specific needs. When evaluating payroll systems, it’s important to consider both positive and negative reviews, as well as your own specific needs, to make an informed decision.
#2 – Paylocity Payroll System
Paylocity is a leading provider of cloud-based payroll and human capital management solutions. The company was founded in 1997 by Steve Beauchamp in Arlington Heights, Illinois.
In its early years, Paylocity focused on providing payroll and human resources solutions to small and medium-sized businesses. The company quickly established a reputation for delivering innovative, user-friendly solutions that helped its clients streamline their payroll and HR processes.
Over the years, Paylocity has continued to grow and expand its offerings. In addition to payroll and HR, the company now provides solutions for benefits administration, time and attendance, and talent management.
In 2014, Paylocity went public on the NASDAQ stock exchange and has since become one of the fastest-growing providers of cloud-based payroll and HR solutions in the United States. Today, Paylocity serves over 20,000 clients and has over 3,000 employees. The company continues to be dedicated to helping its clients simplify and streamline their payroll and HR processes so they can focus on growing their businesses.
Some of the key features of Paylocity include:
- Payroll processing: Paylocity provides a fast and efficient way to process payroll, calculate taxes and deductions, and generate paychecks. The platform integrates with various banking systems to facilitate direct deposit.
- Benefits administration: Paylocity offers a range of benefits options, including health insurance, 401(k) plans, and flexible spending accounts. The platform makes it easy for businesses to manage employee benefits and ensure compliance with regulations.
- HR management: Paylocity provides a centralized platform for managing employee information, including job titles, time off requests, and contact information. The platform also includes HR tools and resources to help businesses stay compliant with employment laws.
- Compliance: Paylocity helps businesses stay compliant with federal and state payroll tax laws and regulations. The platform generates the necessary tax forms and reports, and provides guidance on compliance requirements.
- Time tracking: Paylocity offers an integrated time tracking solution that makes it easy for businesses to track employee hours, approve time off requests, and run reports on employee attendance.
- Employee self-service portal: Paylocity provides an employee self-service portal where employees can access their pay stubs, benefits information, and time off requests. The portal is designed to be user-friendly and accessible from any device with an internet connection.
- Mobile app: Paylocity offers a mobile app that provides employees with access to their pay stubs, benefits information, and time off requests from their smartphone or tablet.
#3 – Rippling Payroll System
Rippling is a modern, cloud-based payroll and human resources management platform. The company was founded in 2016 by Parker Conrad and Prasanna Sankaran in San Francisco, California.
Rippling set out to disrupt the traditional payroll and HR space by offering an all-in-one solution that integrates payroll, benefits, time tracking, and other HR functions in a single platform. The company’s goal was to simplify the HR process for businesses and help them save time and money.
Since its launch, Rippling has quickly gained popularity among businesses of all sizes, and has received recognition for its innovative approach to payroll and HR. The company has received several awards and has been recognized as one of the fastest-growing private companies in the United States.
Today, Rippling serves businesses of all sizes, from startups to large enterprises, and has over 100,000 users. The company continues to evolve its platform and add new features, staying ahead of the curve in the rapidly changing world of payroll and HR technology.
Some of the key features of Rippling include:
- Payroll processing: Rippling provides an easy and efficient way to process payroll, calculate taxes and deductions, and generate paychecks. The platform integrates with various banking systems to facilitate direct deposit.
- Benefits administration: Rippling offers a range of benefits options, including health insurance, 401(k) plans, and flexible spending accounts. The platform makes it easy for businesses to manage employee benefits and ensure compliance with regulations.
- HR management: Rippling provides a centralized platform for managing employee information, including job titles, time off requests, and contact information. The platform also includes HR tools and resources to help businesses stay compliant with employment laws.
- Compliance: Rippling helps businesses stay compliant with federal and state payroll tax laws and regulations. The platform generates the necessary tax forms and reports, and provides guidance on compliance requirements.
- Time tracking: Rippling offers an integrated time tracking solution that makes it easy for businesses to track employee hours, approve time off requests, and run reports on employee attendance.
- Employee Onboarding: Rippling’s employee onboarding process streamlines the new hire process by allowing businesses to electronically store, manage and share important employee data, such as I-9 forms, W-4 forms and benefits information.
- IT management: Rippling offers a comprehensive IT management platform that helps businesses manage their technology infrastructure, including software and hardware inventory, user accounts, and security.
Here are some reasons why a business might choose Rippling for payroll:
- All-in-one solution: Rippling offers a comprehensive all-in-one solution for payroll, HR, benefits, and IT. This makes it a convenient and efficient option for businesses looking to streamline their processes.
- User-friendly platform: Rippling’s platform is intuitive and easy to use, making it accessible for businesses of all sizes. The platform is designed to provide a seamless experience for users, from HR to payroll and beyond.
- Customizable and flexible: Rippling offers a high degree of customization, so businesses can tailor the platform to their specific needs. It also provides a range of flexible options to accommodate different business requirements.
- Advanced automation: Rippling uses advanced automation to streamline payroll processes and reduce manual workload. This saves businesses time and reduces the risk of errors.
- Integration with other systems: Rippling integrates seamlessly with other tools and systems, such as accounting software, making it easier for businesses to manage their payroll and HR processes.
#4 – Gusto Payroll System
Gusto, formerly known as ZenPayroll, is a cloud-based payroll and benefits platform that helps businesses manage their employee payroll, benefits, and compliance. The company was founded in 2011 by Joshua Reeves, Tomer London, and Edward Kim in San Francisco, California.
Gusto set out to simplify the payroll and HR process for small businesses by offering a user-friendly, all-in-one platform. The company’s mission was to help small business owners focus on running their businesses and take the hassle out of payroll and HR management.
Since its launch, Gusto has quickly gained popularity and has become one of the leading payroll and HR solutions for small businesses in the United States. The company has received recognition for its innovative approach to payroll and HR, and has received several awards for its growth and impact on the HR technology industry.
Today, Gusto serves over 100,000 small businesses and has over 1,000 employees. The company continues to focus on making payroll and HR easier for small businesses and helping them focus on what they do best: running their businesses.
Some of the key features of Gusto include:
- Payroll processing: Gusto provides a fast and easy way to process payroll for hourly or salaried employees. The platform calculates taxes and deductions, generates paychecks, and handles direct deposit.
- Benefits administration: Gusto offers a range of benefits options, including health insurance, 401(k) plans, and flexible spending accounts. The platform makes it easy for businesses to manage employee benefits and ensure compliance with regulations.
- HR management: Gusto provides a centralized platform for managing employee information, including time off requests, job titles, and contact information. The platform also includes HR tools and resources to help businesses stay compliant with employment laws.
- Compliance: Gusto helps businesses stay compliant with federal and state payroll tax laws and regulations. The platform generates the necessary tax forms and reports, and provides guidance on compliance requirements.
- Time tracking: Gusto offers an integrated time tracking solution that makes it easy for businesses to track employee hours, approve time off requests, and run reports on employee attendance.
- Mobile app: Gusto offers a mobile app that provides employees with access to their pay stubs, benefits information, and time off requests from their smartphone or tablet.
There are several reasons why a business might choose Gusto for payroll:
- User-friendly platform: Gusto is known for its user-friendly platform, which is easy to navigate and use. This makes it accessible for businesses of all sizes and eliminates the need for extensive training.
- Comprehensive payroll solution: Gusto offers a comprehensive payroll solution that includes payroll processing, tax compliance, and benefits management. This helps businesses streamline their HR and payroll processes.
- Excellent customer support: Gusto has a reputation for providing excellent customer support. The company’s support team is available to assist businesses with any questions or issues they may have.
- Seamless integrations: Gusto integrates seamlessly with other tools and systems, such as accounting software, which makes it easier for businesses to manage their payroll and HR processes.
- Affordable pricing: Gusto offers flexible pricing options that are affordable for small and large businesses alike. This makes it a cost-effective option for businesses looking for a comprehensive payroll solution.
What payroll system is the most affordable?
The most affordable payroll software can vary depending on a number of factors, such as the size of your business, the number of employees, and the features you need. It’s difficult to determine which payroll software is the most affordable without knowing more specific information about your business.
In general, Paylocity is known for being an affordable option for small to mid-sized businesses. Rippling is also a cost-effective option for businesses, especially those that need a comprehensive HR solution in addition to payroll. ADP and Gusto are both known for being more expensive, but they also offer more robust features and customization options.
Ultimately, the most affordable payroll software for your business will depend on your specific needs and budget. I would recommend comparing the features and pricing of each software to find the one that is the best fit for your business.
When choosing payroll software for your business, it is important to consider your specific needs and budget. Some businesses may prioritize affordability and simplicity, while others may need more comprehensive features and customization options.
If your business has specific requirements, it is important to carefully compare the features of each software to ensure that they meet your needs. You should also consider factors such as customer support, user experience, and integrations with other software or platforms that your business uses.
It is also a good idea to read reviews and ask for recommendations from other businesses in your industry to get a better understanding of which payroll software may be the best fit for you.
If you have experience with any one of the payroll systems mentioned in this article, please leave your comment down below. A lot of people will come to appreciate your insight.