Payroll software is all about how you pay your employees. It is a digital solution that manages the entire process from working out how much money each person is owed to filing the correct taxes. This means you don't need to worry about manually paying you employees, and it reduces the risk of error, as it's easy to make a mistake if you have a DIY payroll spreadsheet for your small business.

Instead, payroll software works by automatically performing the calculations needed for each employee. This includes working out gross pay, net pay and tax. Once these calculations are completed the software can then process the payments via direct deposit and digital payslips.

Payroll software can also include a self-service portal which means your employees can access their payslips and update their personal information. This can reassure your employees that they will be paid on time and it reduces any extra admin.

Payroll software does normally come at an extra cost, but there are some key benefits that small business owners should consider if they want to address common pain points. For example:

• Reduces errors - manual payroll can lead to human error, which then impacts the efficiency of your business

• Saves time - payroll can be a time-consuming process, but payroll software automates repetitive tasks

• Scales with you - as your business grows, so do your employees, which makes a manual payroll system more difficult to manage

• Extra security - most payroll software solutions come with security measures that protect your employees' confidential information

• Gives peace of mind - it's important your employees are paid on time, and payroll software offers consistent payments via direct deposits

The right payroll software for your business will depend on your own requirements and what budget you have available. Here are some things to consider when you're comparing the market:

1. Review your business needs

It's important to understand your business needs before looking at software as this will help you to decide on what features are essential. For example, how many employees do you have and how often do you pay them? This will determine the type of software you'll need.

2. Decide on a budget

Your budget will always play a key role during the decision-making process, and the cost of payroll software can vary. Compare the different prices by reviewing what is included in each package. Unsurprisingly, free payroll software will have limited features, but it depends on your business needs as this could still be suitable.

3. Compare different features

Once you understand your needs and budget, you can review the features on offer. Payroll software can include robust reporting, compliance support and extra security - but weigh this up with what your small business needs to succeed.

4. Think about the future

You'll want payroll software that grows with your business, so make sure there aren't any limitations when you're choosing the software.

Sage

Sage streamlines the process of paying employees as it handles everything from tax to payments. It also simplifies complex tasks like pension deductions, and ensures compliance with tax laws, so you can manage employees on one platform.

QuickBooks

QuickBooks' payroll solution works with its accounting software, meaning you can manage payroll and overall finances in one place. This maintains accuracy and provides a clear, real-time view of your company's financial health.

Xero

Xero's payroll software also integrates with its accounting software, providing a platform for managing both finances and employee payments. Small businesses can benefit from its tax and pension calculations and there's a employee self-service app to reduce administrative tasks.

ADP

ADP has a payroll and HR solution that automates key tasks for small businesses. It streamlines payroll processing with scalable HR tools and there's plenty of support to help you manage your growing workforce with confidence.

IRIS

IRIS offers a range of solutions and it's fully compliant with UK-specific regulations like RTI and automatic enrolment. It automates pension reports, and offers a roll-back feature to easily correct any mistakes.