Payroll software empowers SMBs to run with greater accuracy, compliance, and confidence. Learn how to choose the right system, implement it smoothly, and unify payroll with your HR system.
Blaise Radley
Editorial Strategist
Workday
This week marks National Payroll Week in the US, a time to recognize the critical role payroll professionals and systems play in keeping businesses running smoothly. For small businesses, effective payroll management isn’t just about paying employees on time, but a cornerstone of compliance and employee engagement.
But despite its central importance to business health, 87% of respondents to a recent Workday survey said the evolving complexity of payroll is a challenge. A separate survey of 1,000 small business leaders found that:
Modern payroll software—especially when unified with the company’s HR systems—can help reduce these risks and keep payroll running smoothly. To realize these benefits, teams must take steps to deploy the software properly from the start and avoid rollout issues that could frustrate employees or disrupt operations.
Workday research found 87% of businesses report the evolving complexity of payroll is a challenge.
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Payroll software can be a powerful tool to transform how small businesses manage their most critical people processes. It helps create a streamlined, compliant, and insight‑driven operation that saves time, reduces risk, and supports growth.
It’s also becoming a requirement for modern businesses—even small ones—to keep up with the demands and pace of operations today. Workday research found that while almost all payroll leaders (92%) recognize its strategic importance, 89% say their current solutions could be doing more to support their business and 90% agree leadership could be more involved with elevating payroll’s impact.
Further, G2 reports that businesses using automated payroll systems experience 70% fewer compliance issues and 30% fewer errors overall. The right payroll platform offers powerful benefits for small business that include:
When payroll is part of a unified HRIS system, these advantages are enhanced even further. A single system can manage tax forms, benefits, time tracking, onboarding, and performance data all in one place. Integrating payroll and HR delivers a single platform for workforce management, keeping people processes aligned and reducing the friction of switching between disconnected tools.
Choosing the best payroll platform for your small business means looking for a solution purpose-built for the pace, resources, and compliance demands of small business operations. Smaller teams often operate with leaner administrative support and need a system that simplifies complex tasks without sacrificing accuracy.
It’s also important to consider how it integrates with your HR solutions, or provides HR functionality. These are key features to look for:
Selecting a platform with these capabilities helps small businesses operate with confidence while also laying a durable foundation for growth.
Businesses using automated payroll systems experience 70% fewer compliance issues and 30% fewer errors.
Successful payroll software implementation starts with organizing and verifying your data, configuring system settings, and aligning integrations so the platform works seamlessly from the start.
This level of preparation prevents common small business challenges related to payroll, such as processing errors, compliance with tax regulations, and maintaining a system that’s intuitive for both administrators and employees. Here are the key steps, including helpful checklists to ensure each stage is a success.
Before you compare software options, map out exactly what your payroll process needs to handle. This should include:
Document all your must-have features versus nice-to-have extras to help you choose a platform that meets your highest-priority needs. Without defined goals from the outset, identifying the right tool will prove difficult.
Once your requirements are clear, evaluate HR and payroll platforms that align with them. Compare each solution with your business needs, as well as:
Read reviews from other small businesses in your industry to learn how each system performs in real-world use. Finally, request demos or free trials to test navigation, speed, and integration with your existing tools, such as accounting software or time-tracking apps.
Before implementation, collect all the information your payroll software will need. This includes:
On the company side, have your Employer Identification Number (EIN), state tax IDs, and business bank account details ready. Having complete, accurate data upfront reduces onboarding delays and payroll errors.
Once you have your data, set up the core system preferences, including each of the following:
If your software offers compliance alerts, enable them so you’ll be notified of changes to payroll tax laws or deadlines. Without the proper settings in place, you won’t get the maximum utility out of your payroll system.
Maximize efficiency by connecting your payroll software with accounting platforms, time-tracking tools, and HR systems. This reduces manual data entry, keeps records consistent, and ensures payroll data flows seamlessly into your financial statements.
If you offer benefits, integrate with your provider to automatically sync deductions and contributions. Verify that all integrations are secure and compliant with data privacy regulations.
Before officially switching to your new system, run at least one test payroll cycle alongside your old process. Compare results to confirm that gross pay, deductions, tax withholdings, and net pay match expectations.
This testing phase helps identify configuration errors, missing data, or integration issues—allowing you to correct them before employee paychecks are at stake.
Ensure anyone responsible for payroll understands how to use the system. Provide training on each of the following processes:
After training, process your first live payroll and monitor results closely to confirm everything runs smoothly. If your platform provides self-service, ensuring your employees are informed and engaged can drive major efficiencies.
The benefits of payroll software multiply when it’s part of a unified HR platform.
The benefits of payroll software multiply when it’s part of a unified HR platform. Combining payroll, benefits administration, time tracking, onboarding, and compliance management in one system gives you a single source of truth for all workforce data.
For small business owners, that integration saves hours each month and helps to minimize the headaches of juggling multiple disconnected tools. Payroll data flows directly into HR records, benefits deductions stay accurate, and compliance tracking becomes automatic.
Instead of thinking of payroll as a stand-alone task, view it as the backbone of your people operations. A unified HR and payroll system ensures every pay run is accurate, every compliance requirement is met, and every employee interaction—from onboarding to benefits changes—is handled in one place.
That level of efficiency not only protects your business from costly errors but also builds trust with your team and gives you the bandwidth to focus on growing your business.
Is your business ready to transform its approach to HR and payroll? Download the Workday HCM and Payroll Buyer's Guide to refine your solution selection criteria and build a compelling business case for change.
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