16 Payroll Software Features You Should Have

The right payroll software adds value to your business. It should save time and money for HR, drive employee engagement, and drastically reduce your compliance risk. But what does that mean in practice?

While a basic solution can handle paychecks and tax forms, the top payroll software companies streamline operations. They have advanced payroll software features that integrate with your existing tools, provide real-time reporting, and empower your HR team to streamline operations.

This article covers 16 payroll software features that set some platforms apart. You’ll learn which features are non-negotiable, which ones solve specific problems, and how to choose a provider that meets your organization’s unique needs.

What Is Payroll Software?

Payroll software is a digital platform that simplifies and automates employee compensation. It calculates wages, withholds taxes, processes payments, and generates compliance reports. Modern payroll systems handle everything from hourly wages and salaries to bonuses, commissions, and benefits deductions.

This type of software applies the correct pay rates based on employee hours, calculates federal, state, and local tax withholdings, and processes direct deposits. Reliable platforms also maintain detailed records, which protect your business in case of an audit.

Quality payroll software reduces errors, saves HR time, and keeps your organization compliant with changing labor laws. It can also give employees access to their pay stubs, tax documents, and payment history through self-service portals.

Importance of Quality Payroll Software Features

Your payroll software has a direct impact on your bottom line. Poor software costs you time, money, and employee trust. Better tools have the opposite effect.

Companies with robust payroll systems process payments faster and more accurately. HR teams can spend less time fixing errors and more time on strategic initiatives. The right features also protect you from compliance penalties, which can be expensive and damage your employer brand. Tax regulations change constantly, and automated tax filing keeps you current without requiring HR to track every new rule.

Modern payroll features also improve the employee experience. Self-service portals let workers access pay stubs and tax forms instantly, without waiting for HR to respond to their requests. Mobile apps give your team visibility into their compensation and easy access to tax documents. On-demand payment options provide financial flexibility, which is a major selling point for certain job candidates.

What Payroll Software Features Should You Have?

Not every payroll system offers the same capabilities. Some can only handle basic wage calculations and tax filing. Others include advanced features that transform HR operations, freeing up your team to focus on strategic initiatives.

Use the following list of payroll management system features to evaluate your current payroll system and compare potential providers. The right combination of features, however, depends on your company size, industry, and your HR team’s specific needs.

1. Automated Payroll Processing
2. Direct Deposit
3. Tax Filing
4. Employee Self Service
5. Payroll Reports
6. Time Tracking
7. Expense Management
8. Compensation Management
9. Customizable Pay Schedules
10. Wage Garnishment
11. Mobile App Access
12. Integration Capabilities
13. Payroll Error Detection
14. Payroll Auditing
15. General Ledger Mapping
16. On-Demand Payment

Common Payroll Software Features

Every modern payroll software solution should include these features.

1. Automated Payroll Processing

Automated payroll processing calculates employee wages, deducts taxes and benefits, and generates paychecks without manual data entry. The software pulls data from your timekeeping system, applies the correct pay rates and deductions, and processes payments on your selected schedule. Automate payroll to eliminate calculation errors and save HR hours of admin time every pay period.

2. Direct Deposit

Direct deposit transfers employee paychecks directly into their bank accounts on payday. Employees receive their money faster and don’t need to visit a bank or wait for checks to clear. This feature eliminates the cost of printing and distributing paper checks while giving workers immediate access to their income.

3. Tax Filing

Tax filing features calculate, withhold, and remit payroll taxes to federal, state, and local agencies. The software automatically updates when tax rates change and generates required forms, like W-2s and 1099s. Automated tax filing reduces your risk of penalties from late submissions or incorrect calculations.

4. Employee Self-Service

Employee self-service portals let workers view their pay stubs, download tax forms, and update personal information without contacting HR. Employees can access their payment history, change direct deposit accounts, and adjust tax withholdings through a secure online platform. This feature reduces HR’s administrative workload while giving employees 24/7 access to their payroll information.

5. Payroll Reports

These tools generate detailed reports on labor costs, tax liabilities, and payment history. HR can analyze trends, track overtime expenses, and easily prepare for audits. Their insights empower HR to make informed decisions about compensation and identify potential issues before they become problems.

6. Time Tracking

Time tracking integrations connect employee hours directly to payroll calculations. The attendance software captures clock-in and clock-out times, tracks breaks, and calculates overtime. This feature also eliminates manual timesheet entry and pays employees accurately for every hour they work.

Advanced Payroll Software Features

These features solve specific HR challenges and streamline complex payroll scenarios.

7. Expense Management

Expense management tools let employees submit receipts and reimbursement requests directly through the payroll system. HR can review, approve, and process expense payments alongside regular payroll. This feature eliminates separate reimbursement workflows and ensures employees receive their expense payments quickly.

8. Compensation Management

HR leaders can use compensation management features to plan salary increases, bonuses, and merit-based pay adjustments. The software models different scenarios, tracks budget allocations, and ensures pay decisions align with company policies. This tool gives leaders visibility into total compensation costs before making final decisions.

9. Customizable Pay Schedules

Customizable pay schedules let you process payroll on different frequencies for different employee groups. You can pay hourly workers weekly while processing salaried employees bi-weekly, all within the same system. The increased flexibility empowers HR to accommodate various workforce structures without creating additional administrative burden.

10. Wage Garnishment

Another valuable payroll feature is wage garnishment, which automatically calculates and processes court-ordered deductions like child support or tax levies. The payroll software tracks garnishment amounts, priority orders, and payment schedules to ensure compliance with legal requirements. Automated garnishment processing protects you from liability and reduces the administrative burden.

11. Mobile App Access

Mobile apps give employees access to their pay information from any device. Workers can view pay stubs, their next pay date, and download tax documents without logging into a desktop computer. Mobile access is especially valuable for field workers and hourly employees who don’t spend much (or any) time at a desk.

12. Integration Capabilities

Payroll integration capabilities connect your payroll system to accounting software, time tracking tools, and benefits platforms. Data flows automatically between systems, drastically reducing the risk of errors or duplicate data entry. Strong integrations create a unified HR ecosystem where information stays synchronized across all your tools.

The Best Payroll Features­­

These features of payroll management systems quickly set them apart from basic platforms.

13. Payroll Error Detection

Payroll error detection tools flag unusual patterns and potential mistakes before you process payments. This software can identify discrepancies like duplicate payments, incorrect tax withholdings, or unusual overtime hours. Catching errors before payday saves you the time and cost of issuing corrections and maintains employee trust.

14. Payroll Auditing

Payroll auditing features provide detailed transaction logs, and compliance tools help with internal reviews and external audits. The system maintains complete records of all payroll changes, approvals, and processing history. These audit trails protect your organization during compliance reviews and help identify process improvements.

15. General Ledger Mapping

General ledger mapping automatically codes payroll transactions to the correct accounting categories. The software assigns wages, taxes, and benefits to specific accounts without manual entry. Use this feature to ensure accurate financial reporting.

16. On-Demand Payment

On-demand pay lets employees access earned wages before the next scheduled payday. When workers can withdraw portions of their earned income as needed, they have greater financial flexibility. This feature helps attract talent and reduces employee financial stress without disrupting your standard payroll schedule.

The Benefits of Payroll Software

Using high-quality payroll system features can help you deliver measurable value across your entire organization. The key benefits of payroll software include:

• Reduced Administrative Burden: Automated processing eliminates hours of manual calculations and data entry each pay period.
• Improved Accuracy: Software calculations prevent costly errors that damage employee trust and trigger compliance penalties.
• Enhanced Compliance Processes: Automatic tax updates and filing keep you current with changing regulations.
• Better Employee Experience: Self-service portals and mobile access give workers instant access to pay information and tax documents. On-demand pay offers them greater financial flexibility.
• Stronger Financial Visibility: Real-time reporting and analytics empower leaders to make informed decisions about labor costs and compensation.
• Seamless Integration: Connected systems reduce errors and duplicate data entry, keeping information synchronized across HR systems.

How to Choose a Payroll Software Provider

When you’re ready to select a new payroll provider, you’ll need to evaluate both the payroll software’s features and the company behind the platform. Consider these factors when comparing your options:

• Your Specific Needs: Identify which features matter most for your organization. A company with 50 employees has different requirements than one with 500. List your must-have features before you start reviewing providers.

• Integration Capabilities: Verify whether the software connects with your existing HR, accounting, and timekeeping systems. Poor integrations will just add to your administrative workload. If possible, look for a unified HCM that offers all the HR systems you need.

• Pricing Models: Look beyond the base price. Some providers charge per employee or per payroll run. Factor in implementation costs, training fees, and any charges for additional features.

• Compliance Coverage: Confirm the provider handles tax filing for all locations where you have employees. National companies will need a provider who can comply with various state and local requirements.

• References: Ask for references from companies similar to yours. Talk to current users about their experiences with implementation, customer support, and software reliability.

Why Choose Paycor’s Payroll Software Features

Paycor delivers all 16 payroll software features covered in this article into one unified platform. From automated processing and tax compliance to mobile access and on-demand pay, we provide the tools that matter most to HR and employees, empowering everyone on your team to drive results.

Here’s what sets us apart: Paycor is an integrated HCM software. Our payroll software seamlessly connects to a broader HR ecosystem, from timekeeping and benefits to talent management and analytics. One database eliminates duplicate data entry and reduces errors.

Take a guided tour to see how Paycor’s payroll can streamline every aspect of your business.

FAQs: Payroll Software Features

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