6 Best Payroll Software Systems: A Guide for Small Businesses
- Matthew Dangell
- May 9
- 5 min read
Managing payroll manually can quickly turn into a juggling act. Between HMRC submissions, calculating employee deductions, and handling last-minute changes, it’s easy to feel overwhelmed, especially when you're wearing multiple hats as a founder. Without the right tools, you run into errors, miss deadlines, or spend hours on routine tasks.
That’s where payroll software systems come in. These tools simplify payroll processing by automating calculations, tax filings, and payments. Whether hiring your first employee or managing a growing team, the right software can save time, reduce costs, and help you stay compliant.
In this guide, we’ll cover why payroll systems matter for small businesses, how to choose the right one, our top 6 recommendations and some common pitfalls to watch out for.
Why small businesses need a dedicated payroll software system
As your business grows, managing payroll manually can become increasingly complex. Payroll software simplifies the process, offering benefits that extend beyond just paying employees. Here’s how it helps:
Streamline compliance and avoid costly penalties
Payroll software keeps you up to date with tax codes, automates Real-Time Information (RTI) submissions, and reduces manual errors that could lead to costly fines.
Save time and reduce administrative burden
Automate essential tasks like generating payslips, calculating PAYE, national insurance, and pension contributions, and making direct deposits, freeing you up to focus on growing your business.
Scale effortlessly as your business grows
Modern payroll systems easily onboard new employees, manage multi-location teams, and integrate with HR and accounting platforms, making expansion seamless.
How to choose the best payroll software system for your business
Finding the right payroll software starts with understanding your business’s unique needs. The right fit will save you time and support your growth.
Assess your business size and complexity
Your choice of payroll software should reflect the size and complexity of your business. If you're a solopreneur managing one or two contractors, a simple, affordable solution that covers basic compliance is often enough. But as your team grows, your needs become more advanced.
Businesses with multiple employees or international contractors should prioritise a payroll software that offers robust onboarding features, supports multi-currency payments, and can scale alongside your operations.
Identify essential features for your business
Look for payroll software with features like automatic tax calculations, payslip generation, pension integration, employee self-service portals, and support for bonuses or variable pay structures to meet your business’s needs.
Evaluate pricing models and hidden costs
Pricing can vary widely, so check for extra charges per employee or pay run. Ensure you understand what’s included in the subscription, including any fees for year-end summaries or international payments.
The 6 best payroll software systems for small businesses
Choosing the right payroll software can help you save time, improve accuracy, and stay compliant without adding stress to your workweek. Here’s a look at five of the best payroll systems for small businesses, each offering unique strengths to suit different needs.
Xero is a cloud-based accounting platform designed to simplify payroll for small businesses.
Key features:
Streamlined online pay runs
Secure employee data and payroll record storage
Integration with third-party payroll apps
Best for: Small businesses looking for an easy-to-use payroll solution with the flexibility to scale as their needs grow.
Iris is a cloud-based payroll solution designed for modern businesses looking to simplify complex payroll processes. Built-in automation and strong integration features help save time and reduce errors, especially when managing diverse contractor arrangements.
Key features:
Real-time automation to save time
Integrates with existing systems
Supports PAYE, CIS, and Off-Payroll Working
Best for: Companies managing multiple payroll schemes or handling employees and contractors who want to cut down on manual admin.
Sage Payroll is a cloud-based solution designed to streamline payroll management for growing businesses. Accessible anytime, anywhere, it simplifies employee record-keeping and payroll processing.
Key features:
Integrates with Sage Accounting for seamless data sync
Supports leave management, expenses filing, and shift scheduling
Easily manage overtime and employee records with minimal manual input
Best for: Businesses looking for a user-friendly payroll solution with integrated HR capabilities to support a growing team, and those wanting seamless payroll and accounting integration.
QuickBooks Payroll is built for businesses that want a seamless connection between payroll, accounting, and time tracking. With powerful automation and employee self-service features, it simplifies the payroll cycle while saving valuable time each week.
Key features:
Approve timesheets and run payroll in minutes
Syncs payroll, accounting, and time tracking data
Employee access to payslips and timesheets via the Workforce app
Best for: Small businesses already using QuickBooks for accounting and looking to streamline payroll with minimal manual work.
Remote is a comprehensive global payroll solution that goes beyond payments. It combines payroll with in-house HR and legal support, making managing international hires, benefits, and compliance easier, all from one platform.
Key features:
Free consultations with HR and legal experts
Fast onboarding for multiple employees
Customised reporting, tailored benefits plans, and payroll administration
Best for: Businesses expanding across borders that need reliable support for hiring, managing, and paying remote teams.
Rippling offers a flexible and highly customisable payroll system that adapts to your team's structure and workflow. From setting user permissions to running off-cycle payroll, it gives you full control without the extra admin hassle.
Key features:
Customisable user permissions based on employee roles
Run off-cycle payroll at no additional cost
Flexible pay types for one-off or recurring payments like tips or bonuses
Best for: Businesses that need advanced control over payroll processes and want to tailor workflows to fit their internal structure.
Common mistakes to avoid when implementing payroll software
While payroll software can make your life easier, getting started comes with a few challenges. Avoid these common pitfalls to ensure a smooth setup and ongoing success.
Underestimating setup and onboarding
Switching to a new system isn’t instant. Allow time for data migration, proper staff training, and a buffer before your next payroll run. Rushing the process can lead to errors that affect your team’s pay and compliance.
Overlooking integration with existing systems
If your payroll software doesn’t integrate with your accounting or HR tools, you could duplicate work or deal with inconsistent data. Always check for compatibility with your current platforms.
Not giving your payroll processes a dedicated owner
Without a clear owner, payroll tasks can easily slip through the cracks. Designate someone in-house or through outsourced payroll services to manage the process, handle queries, and liaise with accountants or tax authorities.
By planning and assigning responsibility, you can avoid delays, confusion, and compliance issues from day one.
Maximise your payroll software system with expert support
Even the most advanced payroll software needs guidance to deliver its full value. With expert support, you can ensure your system is compliant and working as efficiently as possible for your business.
A payroll expert can help you:
Configure your system for maximum tax efficiency
Stay updated with evolving legislation
Integrate payroll seamlessly into your wider financial processes
At Jump Accounting, we guide start-ups through every stage from choosing the right payroll software to managing end-to-end financial operations.
Ready to optimise your payroll? Book a call with us today!
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