How To Choose a Payroll Software?

Choosing the right payroll software solution is a high-impact decision.

It goes beyond just processing paychecks. The right system helps you stay compliant, pay people accurately, and reduce manual work across HR and finance.

If you're searching for payroll solution now, you're probably dealing with one of three scenarios:

• Your current system is outdated or error-prone
• Your team is growing and payroll has become more complex
• You're starting fresh and want to set it up right from the beginning

Whatever the case, this guide will walk you through the process—step by step and you’ll learn:

• What questions to ask yourself (and your vendor) before you commit
• What features actually matter—and which ones just sound nice
• A guided process to compare tools, involve the right stakeholders, and choose with confidence

Whether you're the final decision-maker or supporting someone who is, you’ll leave with a clear checklist and fewer unknowns.

Let’s get started.

Questions to Ask Yourself Before Choosing Payroll Software

Before you look at vendors or compare pricing plans, it’s important to understand what your business actually needs.

These questions will help you identify gaps, set priorities, and avoid buying software that looks good on paper but doesn’t solve your real problems.

1. What are our biggest payroll pain points right now?

Start with the problems.

• Are payroll processes taking too long?
• Are you seeing payroll errors in calculations, tax filings, or pay periods?
• Is your team spending hours on manual data entry?

Make a list of what’s slowing you down. The right software should remove friction, not just add features.

2. Who’s involved in running payroll, and how tech-savvy are they?

Think about the actual users.

• Is it just HR, or do finance and operations play a role?
• Will managers need access to reports or approvals?
• Do you have team members who aren’t comfortable with complex tools?

Your payroll software should be easy enough for everyday users, but powerful enough for technical workflows if needed.

3. What types of employees or contractors do we need to pay?

Not all payroll systems handle every worker type equally well.

• Do you pay salaried staff, hourly workers, freelancers, or international employees?
• Do you offer bonuses, commissions, or shift differentials?

The more diverse your workforce, the more flexibility your payroll tool needs.

4. How often do we run payroll, and do we need flexible pay schedules?

Most businesses run payroll weekly, biweekly, or monthly. But what if that changes?

• Will you need to run payroll off-cycle?
• Do you offer on-demand pay or variable pay periods?
• Are you expanding into other countries or states with different pay rules?

Look for software that supports multiple frequencies and can adapt to future growth.

5. What systems does payroll need to connect with?

Payroll doesn't work in isolation. It often connects to:

• Time tracking software and/or scheduling software
• Your HRIS or HR management system
• Accounting or ERP tools
• Tax reporting or compliance platforms

Write down your current tools and check whether the payroll platform integrates natively—or requires manual workarounds.

6. What are our legal, compliance, or security requirements?

Depending on your region and industry, you may face strict rules around:

• Tax filings and reporting
• Employee classification
• Wage laws or union contracts
• Data protection and access control

If you’re in healthcare, government, or finance, look for tools that are SOC 2, GDPR, or HIPAA compliant.

7. What is our budget, and what ROI do we expect?

Don’t just ask what the software costs. Ask what it saves you.

• Will it reduce admin hours?
• Avoid compliance fines or late fees?
• Eliminate the need for outsourcing?

A small business might only need core payroll software features. A growing team may need support for multi-location payroll, integrations, and custom reports. And enterprise might need automated payroll software or even full service payroll. Match your spend to your stage of growth.

8. What does “success” look like for us 6–12 months from now?

Before you commit to a platform, define what a win looks like.

• Faster payroll runs?
• Fewer errors?
• Happier employees?
• Reduced reliance on external accountants?

Set 2–3 measurable goals so you can evaluate whether the software delivers real value—not just bells and whistles.

Once you have a clear sense of your internal needs, it’s time to evaluate which vendors are capable of meeting them.

Questions to Ask Payroll Software Vendors

1. How do you handle different employee types (full-time, part-time, contractors)?

Not all platforms are built to support a complex and blended workforce.

Ask the vendor whether their software allows you to pay hourly and salaried employees in the same payroll run.

Confirm if the system can process 1099s for contractors alongside W-2 employees.

If you operate across different regions, ask if it supports multi-state or multi-country payroll without manual intervention.

2. What systems do you integrate with—and how seamless are those integrations?

Payroll software rarely functions alone, so smooth integration is essential.

Ask if the system connects directly with your time-tracking, HRIS, and accounting tools.

Clarify whether data syncs automatically in real time, or if you'll need to rely on manual uploads.

Find out if integrations require developer support or if they are plug-and-play with minimal setup.

3. How do you handle taxes and compliance?

Handling tax obligations accurately is critical to staying compliant and avoiding penalties.

Ask whether the software calculates, withholds, and submits federal, state, and local taxes on your behalf. Confirm if they are a Registered Reporting Agent with the IRS.

Ask whether they offer a tax filing guarantee and if they cover any penalties due to filing errors made by the system.

4. What are your payroll run options?

Your payroll system should be flexible enough to meet routine and unexpected needs.

Ask if you can run payroll as often as needed, without limits or extra fees.

Check whether it supports off-cycle payments such as bonuses or corrections.

Ask if features like on-demand pay or same-day direct deposit are available for employees who need more flexibility.

5. Can your system support multiple locations, currencies, or tax rules?

If your organization operates in multiple jurisdictions, your payroll tool must adapt to local requirements.

Ask if the software automatically applies location-specific tax rules based on where employees work.

Confirm if it can generate compliant payslips across regions and handle multiple currencies where needed.

Ask how the system manages tax filings when employees relocate or work remotely from different locations.

6. What kind of reporting and dashboards are included?

A strong payroll system should offer insights—not just outputs.

Ask what types of reports come standard, such as payroll summaries, tax liabilities, or benefit deductions.

Confirm whether reports can be customized based on department, location, or pay type.

Also ask if reports can be scheduled, exported, or integrated with your financial planning tools.

7. How is your pricing structured?

Understanding the total cost of ownership helps avoid surprises down the line.

Ask whether the vendor charges a flat monthly fee plus a per-employee rate.

Confirm if they charge extra for year-end filings, garnishments, off-cycle runs, or tax services.

Ask which features are included in each pricing tier, and which are considered add-ons.

8. How secure is the platform?

Data security should be baked into the software, not added later.

Ask if the system uses encryption for data in transit and at rest.

Confirm whether multi-factor authentication is required for user access.

Ask if you can set different access levels for admins, managers, and employees.

Also verify whether the software is compliant with standards like SOC 2, GDPR, or ISO 27001.

9. What does customer support look like?

When issues arise, reliable support makes a big difference.

Ask what support channels are available phone, chat, or email, and during which hours they operate.

Confirm the typical response time for high-priority issues.

Ask if you’ll be assigned a dedicated account manager, and whether in-house payroll experts are available for complex questions.

10. Can the system be customized to fit our business?

Payroll isn't one-size-fits-all, so flexibility is key.

Ask whether you can customize pay schedules, deduction rules, and tax settings to match your business needs.

Confirm if the platform allows for custom reporting by region, department, or business unit.

Ask whether the system can scale with your team as you grow, without requiring a platform migration.

By combining your internal priorities with the right vendor insights, you’re now ready to move into a structured selection process.

5-Step Payroll Software Selection Process

Step 1: Define Your Needs and Priorities

Start by reviewing your answers to the internal questions you asked yourself earlier. What pain points did you uncover? Are you struggling with compliance, manual entry, or integration gaps?

Identify your most urgent problems, then outline your must-have features (e.g., tax automation, direct deposit, multi-location support) versus nice-to-haves (e.g., customizable dashboards, on-demand pay). This becomes your internal requirements document.

Step 2: Shortlist Vendors Based on Fit

Using the vendor-focused questions from earlier, evaluate which platforms best align with your needs. Eliminate any tools that can’t support your workforce structure, don’t integrate with your existing systems, or fall short on security or compliance. Narrow your list down to 3–5 serious contenders. This is also a good time to request product demos or speak with peers in your industry to hear what’s working for them.

Step 3: Conduct Demos and Ask Critical Questions

Now that you’ve shortlisted vendors, go into each demo prepared. Use the full list of vendor questions we covered to guide these conversations.

Don’t just ask what features exist, ask how they perform in real scenarios. Request examples from companies similar to yours. Ask for a test environment if available. Document each vendor’s answers in a side-by-side matrix so you can compare offerings clearly and objectively.

Step 4: Build the Business Case

Take what you’ve learned and turn it into a compelling case for stakeholders. Highlight the current challenges your business faces and show how each vendor addresses those pain points.

Estimate potential ROI, whether that’s reducing human error, saving time on administrative tasks, or lowering compliance risk through improved accuracy. Include implementation time, base fee/pricing, and expected outcomes. The clearer and more concise your case, the faster you’ll get buy-in from leadership or finance.

Step 5: Implement and Drive Adoption

Once you’ve selected your payroll software, the focus shifts to implementation. Work closely with the vendor’s onboarding team to map out the transition. Assign a point person internally who will lead setup and field questions.

Ensure employees are informed about what’s changing and why it matters to them. Offer training sessions and share any available support resources. Schedule a check-in 30 to 60 days post-launch to measure adoption and address any issues.

Still Confused About Which Payroll Software to Choose?

You've done the research. You've asked the right questions. But if you're still unsure which payroll system is right for your business, you're not alone.

Choosing the best payroll software isn’t always black and white. That’s why we built WebHR Payroll to check every box that matters.

• Easily run payroll for salaried, hourly, or contract workers
• Automate tax calculations, filings, and compliance
• Integrate with your existing HR and accounting tools
• Support multi-location and multi-currency teams
• Gain insights through smart reports and dynamic dashboards

Whether you're running payroll for 10 or 1,000 employees, WebHR makes it easy, fast, and error-free.