Best Payroll Software for Small Business in the UK 2022 (2023)

If you employ staff, you are responsible for collecting Income tax and National Insurance from them on behalf of the government. This is done through Pay As You Earn (PAYE) deductions taken from their wages, salary or commission. As many small businesses do, you can outsource this payroll function or keep it in-house.

While many small companies still do manage their payroll manually, this is time-consuming and prone to error. So, the best solution for most SMEs is to automate the process using specifically designed payroll software for small business.

Not too long ago, this would have been unaffordable. But now, given the wide range of cost-effective products on the market, including pay by the month cloud payroll software, it’s a realistic option.

Setting up the best payroll software for your business

If you are employing people for the first time, you will need to first register with Her Majesty’s Revenue and Customs (HMRC) as an employer beforehand and complete certain tasks to set up payroll.

With any kind of payroll software, you will first need to enter into the system each person’s employment details. This includes their tax code, which determines how much PAYE and National Insurance you need to deduct.

You can get most if not all this information from their P45. HMRC’s starter checklist details the information you need to get from new employees.

Then, just update an employee’s record with all changes to wages or salary paid and any holiday pay or other entitlement, and the payroll software does all the necessary tax and NI calculations.

Keeping payroll information safe

While it’s important to keep comprehensive records for HMRC, you must ensure you follow new General Data Protection Regulations (GDPR). These have come into force as of May 2018 and govern how organisations collect, store and use personal data, not just for payroll, but also accounting, marketing, sales and customer service purposes.

If you would like to learn about the impact of GDPR on payroll you can read our article here: GDPR compliance for small business.

In brief, under GDPR you can hold only the minimum necessary details about someone. This information has to be accurate and kept confidential. When you collect it, you have to tell them why you need it and what you are going to do with it.

You must also be prepared to show this information to the individual concerned should they ask to see it. If you are using online payroll software, your service provider also needs to be GDPR compliant.

(Video) Best Payroll Software for Small Business in 2022

Choosing the best payroll software for small business

Which is the best small business payroll software for you will depend on factors such as your company’s size, the level of technical support you need, the accounting software you currently use and whether your staff are salaried, paid by the hour, or receive a commission.

However, these are some of the important functions and common features you should look out for.

  • Real Time Information (RTI). To give an accurate, up- to-the-minute picture of tax paid and other deductions, the government introduced RTI. HMRC expects everyone to use only payroll software that is RTI compliant.
  • If you pay bonuses, commission and overtime, look for a system that can easily be customised to your business needs. If your payroll rarely changes, software that offers automated rules and scheduling will enable you to run the same processes every week or month with very little input.
  • With most people paid through BACS, you will want payroll software that can handle this, or you will have to set up a separate system to do so.
  • Be aware that not all systems will print out payslips, or send an Employer Payment Summary (EPS) report or Earlier Year Update (EYU) to HMRC. Again, all useful to have.
  • UK businesses are now required to automatically enroll employees into a pension scheme and make payroll deductions accordingly. So choosing software that can auto-enroll new employees and manage pension payments and records will be another time saver.
  • If you need to access the payroll system from a smartphone or tablet, then consider software that works across multiple devices. But check if there is any loss of functionality when working on a smaller screen.
  • Having multi-user access is useful if you want staff to be able to download previous payslips or look up their pay history, for instance.
  • There is always a learning curve implementing any new software, so you may want to consider the level of technical and ongoing support available from the vendor.

Best payroll software UK 2022

So, which should you go for? Here’s a quick assessment of some of the best and most user friendly ones.

All have been approved by HMRC to ensure they accurately calculate tax and NI, offer auto enrolment and are RTI compliant. You can find the full list of HMRC approved payroll solutions here.

Xero – Best small business payroll software UK

Has many good features and is easy to customise for any type of small business. Directly integrates into their accounting software which is a plus.

The Xero mobile app offers a self-service option employees can use to view their payslips, submit timesheets or apply for leave.

30-day free trial. Standard pricing starts at £5 / mo in addition to your package fees for up 5 payroll employees. Each additional employee £1 extra per month.

Best Payroll Software for Small Business in the UK 2022 (1)

QuickBooks – Best payroll software for medium-sized business UK

A leader in the cloud space and a good option if you are already running the QuickBooks accounting package. Have increased their number of integrations in 2020 to 700+ business apps. It’s very comprehensive and covers all of the bases.

(Video) Best Payroll Software in 2022

It also includes a mobile app and portal where employees can change their details, access payslips or request leave. Offer direct integrations with supported pensions providers and can handle CIS or salary sacrifice schemes and even court order deductions.

30-day free trial. Standard payroll is £4 / mo + £1 per paid employee per month. Advanced payroll is £8 / mo. Must be combined with a QuickBooks subscription.

Best Payroll Software for Small Business in the UK 2022 (2)

Sage Business Cloud Payroll – Simple payroll for small business UK

A comprehensive web-based solution from one of the best accounting software firms. It integrates easily with Sage’s other systems for faster financial management.

Alternatively, you can run payroll on it’s own in the cloud. Has some direct integration to popular AE pension providers. You can also print or email your payslips, P60s and reports to save yourself from all that paper clutter.

It’s easy to amend previous pay runs and adjustments are handled automatically.

Try it free for 30 days, then standard pricing starts at £7 per month + VAT if you have between 1 and 5 employees. It’s important to note that all features are included even in the basic plan. Pricing changes according the number of employees.

Best Payroll Software for Small Business in the UK 2022 (3)

BrightPay – Best desktop payroll software UK

BrightPay positions itself as ‘a breath of fresh air’ for those tired of other payroll products. It has won Payroll Software of the Year 2018 and Payroll Software of the Year 2019.

(Video) 5 Best Payroll Software for Accountants (in 2022)

Although a desktop solution, BrightPay still manages to bring cloud functionality to those that need it through their optional Connect add-on.

This will get small business owners get automated cloud backup, online employer dashboards, annual leave management, client payroll entry and approval and an employee self-service portal.

In addition, you can event connect to the most popular cloud account software such as Xero, Sage or Quickbooks through their API.

It also has a good-looking interface, is easy to use and offers free support.
Pricing starts at £49 for firms with 3 employees and fewer. Cloud functionality through BrightPay is available as an add-on and starts at £0.50 per month per employee.

Best Payroll Software for Small Business in the UK 2022 (4)

MoneySoft – Easy to use desktop payroll software

MoneySoft’s Payroll Manager is a comprehensive and RTI compliant payroll software, designed to be easy to use so data entry is intuitive and straightforward.

Automatic Enrolment of Workplace Pensions come standard. If you’re not ready to move your payroll to the cloud this is a viable option.
MoneySoft’s payroll manager is only available as a desktop package.

The plus side is that it integrates with their bookkeeping software, Money Manager 7 which is a one off purchase of only £110 + VAT. It can be used for any number of businesses and personal accounts.

Pricing starts is £74 per year for one company with up to 20 employees.

Best Payroll Software for Small Business in the UK 2022 (5)

(Video) SMALL BUSINESS PAYROLL EXPLAINED! (UK BASICS)

KashFlow – Comprehensive accounting software

The payroll package can be used on it’s own or integrates with KashFlow’s own online accounting software, making it easy to transfer payment details between the two.

A self-service feature means employees can access payslips and their individual data from anywhere and at any time. The downside is Automatic Enrolment is not included an costs extra.

Payroll core starting at £6.75 for up 5 employees or combined with accounting at £22.50 per month. Pricing for additional employees is £1.13. Automatic enrolment module is £1 / mo / employee.

Best Payroll Software for Small Business in the UK 2022 (6)

Basic PAYE Tools – Best free payroll software for small businesses.

This is HMRC’s own software. Good for firms with 1 or 2 employees who want the most cost-effective solution. It performs most payroll tasks but can’t produce payslips.

Changing payroll systems

Some packages will obviously be a better fit for your business than others, so it makes sense to take advantage of a free trial to try out different ones and what each has to offer.

If you already run payroll software and change to another package, you may not be able to use the same Payroll IDs on the new system. If you try to, then you may end up with duplicated records and wrongly calculated PAYE.

Your business could be in serious trouble if you aren’t paying the right amount of tax. You can find more information on changing payroll software systems on the HMRC website.

Payroll is an essential task for every employer, so making sure you have the right system in place will benefit your business. For example, having the right payroll expenses included as part of the business budget can help determine if there will be enough to cover wages in the coming months.

(Video) Gusto vs QuickBooks Payroll in 2022

If you’re in the process of deciding on a solution for your business BrooksCity can help. Our team of accountants in London can help advise you on the payroll package that will work best for your business and even set it up. Getting it right in the first place can save you a lot of headaches later. For more information you can contact us or request a quote directly here.

FAQs

What is the most popular payroll software in UK? ›

Best payroll software UK 2022
  • Xero – Best small business payroll software UK.
  • QuickBooks – Best payroll software for medium-sized business UK.
  • Sage Business Cloud Payroll – Simple payroll for small business UK.
  • BrightPay – Best desktop payroll software UK.
  • MoneySoft – Easy to use desktop payroll software.

Can I do my own small business payroll? ›

If you don't have extra funds to spend on a payroll service, the DIY approach can save you some cash. Doing manual payroll isn't the most straightforward task, but armed with the right knowledge, time, and a sturdy calculator, you can do payroll for your small business yourself.

What is the easiest payroll program? ›

QuickBooks earns our nod for the easiest setup because its user interface is so intuitive for anyone familiar with QuickBooks. In addition to customer service, there are ample resources online to get anyone on board with their payroll services.

What payroll software do most companies use? ›

Best Payroll Software of 2022
  • #1 Gusto.
  • #2 OnPay.
  • #3 Patriot.
  • #4 Block (formerly Square)
  • #5 ADP.
  • #5 SurePayroll.
  • #7 Intuit QuickBooks.
  • #8 Paychex. #9 Namely.
1 Nov 2022

Can I do my own payroll UK? ›

If you decide to run payroll yourself, you need to complete certain tasks to pay your employees for the first time. You can choose when and how often to pay your employees. Register as an employer with HM Revenue and Customs (HMRC) and get a login for PAYE Online.

Is QuickBooks popular in the UK? ›

Our independent reviews are funded in part by affiliate commissions, at no extra cost to our readers. QuickBooks is relied upon by small businesses across the UK – who love its features, straightforward pricing (including regular deals and discounts) and customer support.

What is the best way to pay yourself from a small business? ›

There are two main ways to pay yourself as a business owner:
  1. Salary: You pay yourself a regular salary just as you would an employee of the company, withholding taxes from your paycheck. ...
  2. Owner's draw: You draw money (in cash or in kind) from the profits of your business on an as-needed basis.
12 Jul 2021

How do I run payroll for my small business? ›

How to process payroll yourself
  1. Step 1: Have all employees complete a W-4 form. ...
  2. Step 2: Find or sign up for Employer Identification Numbers. ...
  3. Step 3: Choose your payroll schedule. ...
  4. Step 4: Calculate and withhold income taxes. ...
  5. Step 5: Pay payroll taxes. ...
  6. Step 6: File tax forms & employee W-2s.
12 Jan 2021

Is there a stand alone payroll software? ›

Payroll Mate® is complete, stand-alone and desktop-based payroll software that fits the needs of both small businesses and accounting firms. Download free trial now and start running payroll in-house using a Windows desktop, laptop or tablet computer.

How do I manually prepare payroll? ›

How to manually calculate payroll for your small business
  1. Step 1: Prepare your business to process payroll. ...
  2. Step 2: Calculate gross wages. ...
  3. Step 3: Subtract pre-tax deductions. ...
  4. Step 4: Calculate employee payroll taxes. ...
  5. Step 5: Subtract post-tax deductions and calculate net pay. ...
  6. Step 6: Calculate employer payroll taxes.
18 May 2022

How do I choose the best payroll system? ›

The payroll software you choose should be adept at factoring in earnings, salary revisions, bonuses, one-time deductions, leave, and attendance so you can process payroll with a single click. You should also look for software that will automatically and securely mail payslips and tax documents to employees.

What are 2 different types of payroll systems? ›

The four most common types of payroll schedules are monthly, semi-monthly, bi-weekly, and weekly, and each has its own set of pros and cons that determine which approach best fits a given organization.

What systems do companies use for payroll? ›

  • OnPay Payroll Software. OnPay provides straightforward pricing for small businesses. ...
  • Intuit QuickBooks Payroll. QuickBooks has a variety of plans at a wide range of price points. ...
  • Gusto Payroll Software. ...
  • Paycor. ...
  • ADP Payroll Software. ...
  • Paychex Payroll. ...
  • Rippling. ...
  • Deluxe.
3 Nov 2022

How do I do payroll manually UK? ›

How to run monthly payroll
  1. Record the pay of all your employees, whether it's salaried or hourly.
  2. Calculate all deductions from their pay, including Income Tax and National Insurance contributions. ...
  3. Calculate the amount of National Insurance that you'll have to pay as an employer. ...
  4. Produce payslips for your employees.

How do small businesses pay employees UK? ›

How to pay staff
  1. Register new staff with HMRC. The first step for any business taking on staff with pay over the lower earnings limit is to register with HMRC. ...
  2. Payslips. Employers are legally required to give employees a payslip before or on their pay date. ...
  3. P60. ...
  4. P11d. ...
  5. Further reading on payroll.
15 Nov 2021

How do I pay myself a salary UK? ›

Sole traders and partnerships pay themselves simply by withdrawing cash from the business. Those personal withdrawals are counted as profit and are taxed at the end of the year. Set aside a percentage of your earnings in a separate bank account throughout the year so you have money to pay the tax bill when it's due.

Is QuickBooks desktop being phased out 2022? ›

Your access to QuickBooks Desktop Payroll Services, Live Support, Online Backup, Online Banking, and other services through QuickBooks Desktop 2020 software will be discontinued after May 31, 2023. This also means you won't receive critical security updates starting June 1, 2023.

Is it better to use Excel or QuickBooks? ›

QuickBooks Online is much easier to set up and use than Excel, which requires some knowledge of formulas. QuickBooks Online is a double-entry accounting system that automates most processes, saving time. You'll need a thorough understanding of bookkeeping systems to customize Excel to keep your books.

What is the easiest accounting software to use UK? ›

  • QuickBooks – Best overall. 4.7 out of 5. Bookkeeping. Advanced Features. ...
  • Xero – Best Software Attributes. 4.6 out of 5. Bookkeeping. Price. ...
  • ClearBooks – Best for Bookkeeping. 4.2 out of 5. Bookkeeping. ...
  • Zoho Books – Best for project tracking. 4 out of 5. Bookkeeping. ...
  • FreshBooks – Easiest to use. 4 out of 5. Bookkeeping.

What percentage of my business should I pay myself? ›

An alternative method is to pay yourself based on your profits. The SBA reports that most small business owners limit their salaries to 50% of profits, Singer said.

How do you pay yourself a salary when self-employed? ›

When you do pay yourself, you just write out a check to yourself for the amount of money you want to withdraw from the business and characterize it as owner's equity or a disbursement. Then deposit the check in your personal checking or savings account. Remember, this is “profit” being withdrawn, not a salary.

Should I pay myself through payroll? ›

Sole Proprietorship or Partnership: In most cases, you're not allowed to be on payroll. You can still pay yourself from the company's income, but that pay is not tax-deductible. Partnership agreements allow for pay to be given in various ways, but it's usually best to take distributions and make estimated tax payments.

Is there a free app for payroll? ›

TimeTrex's free open-source payroll software is perfect for business owners who want smooth time-tracking integration with basic payroll features. Those basic features include paycheck calculations, direct deposit options, tax form generation, and employee access to paystubs.

What software is used in managing a small payroll? ›

The bottom line: The best payroll software for many small businesses is Gusto. With comprehensive payroll features, automated payroll tax administration, and scalable plans, Gusto works nicely for small and midsize businesses in many industries.

Does small business need payroll software? ›

Benefits of using payroll software

Choosing the right payroll and HR software for your small business can help you grow, keep your employees happy, and ensure that you're complying with all tax and legal requirements without having to hire a dedicated person to manage these things.

Is ADP good for small business payroll? ›

ADP provides small business payroll systems that are fast, easy to use and backed by expert support. In fact, three out of four customers spend 15 minutes or less running payroll with us. Here's what small business owners can expect when using our payroll service: Wages and tax deductions calculated automatically.

Can I run payroll in QuickBooks without subscription? ›

If you choose not to subscribe to any of the QuickBooks Desktop Payroll Services, you can set up payroll without a subscription. QuickBooks Desktop won't calculate your payroll taxes or provide payroll tax forms. You must manually calculate your payroll tax figures and enter them for each paycheck.

Can I get QuickBooks payroll only? ›

Skip the option for QuickBooks Online and select just the Payroll subscription. Review the monthly charges and cost per employee. Click Add next to Payment Method (if a payment method is not on file) Click Save.

Is payroll free in QuickBooks? ›

Try QuickBooks Payroll for free for 30 days.* To get started, call 877-202-0537 or sign in.

Is Excel Good for payroll? ›

Excel is considered a great tool for payroll management as it is easy to use and versatile. Additionally, it has several functions that allow for simple calculations within seconds. Its simple layout also allows for visual representations of the payroll data.

Can Excel be used for payroll? ›

Many small and medium businesses use Microsoft excel for their payroll. Using excel is easy and can save you from clerical errors which you may end up while doing payroll manually. Data entry:- Saves you from entering redundant data.

Does Excel have a payslip template? ›

A document including all the details on the payment due to an employee for work accomplished within a certain period is known as an excel payslip template. It includes details on base pay, benefits, taxes, and overtime.

What are the 4 steps of running payroll? ›

Follow these steps to manually process payroll:

Calculate gross pay. Determine deductions. Calculate net pay. Issue payments to employees through their preferred delivery method (e.g., paper check, direct deposit).

What is the formula for payroll? ›

Your manual payroll calculations are based on the pay frequency and their hourly wage. So, for someone who is full time making $11 an hour on a biweekly pay schedule, the calculation would look like this: 40 hours x 2 weeks = 80 hours x $11/hour = $880 (gross regular pay).

What is the most common payroll? ›

The most common payroll schedules
  • Weekly payroll. A weekly payroll schedule means that your employees will get paid every week on the same day of the week, often Friday. ...
  • Biweekly payroll. A biweekly pay schedule means that your employees will get paid every other week on the same day, often Friday. ...
  • Semi-monthly payroll.
19 Aug 2021

What are the three basic types of payroll accounting? ›

Types of Payroll Accounting

There are three basic types. These comprise accrued wages, manual payments, and initial recordings.

What is basic payroll? ›

Difference Between Basic and Gross Salary

Basic salary is a rate of pay agreed upon by an employer and employee and does not include overtime or any extra compensation. Gross salary, however, is the amount paid before tax or other deductions and includes overtime pay and bonuses.

What is SAP payroll? ›

What is SAP payroll? SAP SuccessFactors Employee Central Payroll is SAP's payroll software. The software unifies global payroll management and administration on a single platform for more accurate and compliant processing.

What software do accountants use for payroll? ›

Some of the most popular options for payroll software for accountants include Gusto, ADP, QuickBooks, Paychex, SurePayroll, OnPay, Rippling, and Patriot.

How much is payroll for small business? ›

Small business payroll costs FAQs

Most payroll providers have a base fee from $30 to $150 dollars per month that increases by $2 to $15 per employee. There are additional costs to add on depending on how regularly you pay employees and whether you are using basic payroll services or a full-service payroll provider.

What is the most used accounting software in UK? ›

  1. FreshBooks. FreshBooks is a well-respected all-rounder when it comes to web-based accounting software in the UK for 2022. ...
  2. Sage Business Cloud Accounting. Some of the best cloud accounting software UK businesses can adopt comes from accountancy veteran Sage. ...
  3. QuickBooks. ...
  4. Zoho Books. ...
  5. Kashflow. ...
  6. Xero. ...
  7. FreeAgent. ...
  8. GnuCash.

Is ADP in the UK? ›

Payroll Services & HR Solutions - Award-Winning | ADP UK. Don't know your HRIS from your HRMS? Discover the meaning of the latest UK payroll and HR terms and abbreviations with this free glossary.

Is there a better accounting software than Xero? ›

We have compiled a list of solutions that reviewers voted as the best overall alternatives and competitors to Xero, including QuickBooks Online, NetSuite, Sage Intacct, and QuickBooks Desktop Pro.

What are 5 main accounting software being used in accounting? ›

The 5 Best Accounting Software for Small Businesses of 2022
  • Best Overall: QuickBooks Online.
  • Best for Micro-Business Owners: Xero.
  • Best for Service-Based Businesses: FreshBooks.
  • Best for Part-Time Freelancers: QuickBooks Self-Employed.
  • Best Free Software: Wave.

Which software is mostly used in accounting? ›

No doubt Tally is the most famous and widely known accounting software in India for over two decades. Starting with the MS-DOS based edition tally has seen many changes and is now a complete ERP package in itself.

Who is ADP's biggest competitor? ›

Competitors and Alternatives to ADP
  • Oracle.
  • SAP.
  • UKG.
  • Ceridian.
  • Paycor.
  • Freshworks.
  • ZingHR.
  • Epicor.

Is Workday and ADP the same? ›

ADP Workforce Now and Workday HCM are similar solutions. Both help you manage all your human resources processes in one place. Both have loads of features, but suffer slightly in terms of usability because of all this functionality.

Who uses ADP for payroll? ›

Companies using ADP Payroll for Payroll include: T-Mobile US, a United States based Communications organisation with 75000 employees and revenues of $80.12 billion, Deere & Company, a United States based Manufacturing organisation with 75550 employees and revenues of $43.58 billion, Cambridge Associates LLC, a United ...

Do I need an accountant if I have QuickBooks? ›

Even if you manage your money using QuickBooks, it's worth having your tax return checked and approved by an accounting expert. If you have a more complicated business structure, such as a limited company, it's rarely advisable to do your own tax return, given the detailed knowledge required.

Can you get QuickBooks for free? ›

Students and teachers can get a free access to QuickBooks Online through our Intuit Education Program (IEP). You can apply and set up your account by visiting our website or sending an email to education@intuit.com.

Is there a cheaper program than QuickBooks? ›

Xero is a more affordable program than QuickBooks, with the price ranging from $11 to $62 per month. The company offers three pricing tiers to choose from once your 30-day free trial is over. These plans differ based on the number of bills, invoices and quotes.

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