The Definitive Modern-Day Guide To Cloud-Based Payroll Software

Shubham Rajpara

Shubham Rajpara

Senior editor

Parul Saxena

Chief editor

Last updated: August 6, 2021

Modern-day problems need modern-day solutions. So in order to grow your business to many folds, stop shuffling between the cells of the excel sheet and enjoy a stress-free month that ends with the cloud-based payroll software that rests you from the error-prone manual calculations. The following article unfolds into a definitive guide on how to do it.

Looking for Payroll Software? Check out SoftwareSuggest’s list of payroll software solutions.

What is a Cloud-Based Payroll Software?

The cloud-based payroll software is a boon for HR departments and employees/ contractors/ freelancers working remotely. The software handles all the payroll-related services like salaries, compensations, bonuses, payroll taxes, etc. In addition, it allows employees to work from home or anywhere remotely and access the same information otherwise.

Managing all the records of the employees manually, collecting exact data from them, keeping track of any possible deductions, taxes, and paying salaries on time can be very exhausting. And payroll mistakes can be costly. For example, the Internal Revenue Service (IRS) found penalties for payroll mistakes worth more than 4.9 million US Dollars in 2019. So switching to good payroll software seems like a necessity rather than a luxury.

Talking about cloud-based payroll software, here are some of its main features: 

How does payroll software work?

To explain in brief, the payroll software works by calculating the working hours and gross wages of all the employees so the employer can directly download the file and pay them timely. As a result, it reduces a lot of work that otherwise would be done manually.

Why should one use cloud-based payroll software?

There are many reasons for employers to switch to payroll software as it offers a wide range of facilities and eases out the process of making payments to employees. Some of its pros are listed down below.

1. Increase in revenue

A business can only dwell and grow if its employee base is happy. And what else can make them happier than having them paid right on time without any hassle? Also, the system provides the employees with a self-service option where they can easily track their records and payroll information at any time, anywhere. In addition, the payslips are downloadable by the employees, and they can even apply for their retirement funds. 

2. Easy management and accuracy

The payroll software has the contact credentials of all the employees and the record of their working hours (including overtime, if any) through which their pay is calculated. And the system, hence, makes accurate and timely payments. This would otherwise be done manually, which is a catch-22 and would take a lot of effort and time because managing the accounts is not a cakewalk. Moreover, several challenges stand in the way, such as tax-related errors, miscalculation of payrolls, missed deadlines, etc. This is where the cloud-based payroll software comes into play and does the job effortlessly and more accurately.

3. Increased Safety and security

There’s a risk that the data can be stolen in the locally stored data, and the disc may also crash. Therefore maintaining the confidentiality of the data is a tough task. However, the payroll software resolves this issue as well where the confidentiality of the employee’s data is well taken care of and is also monitored by the experts to avoid any malicious activity. Also, the data is properly encrypted so no third party can have access to it.

4. Eco-friendliness

Managing the employees’ data manually uses a lot of paper which ultimately affects the environment. Now, as we have an alternative for the same, paper usage can be cut down, and lots of trees can be saved. Furthermore, the environment is also less affected by the harmful effects of ink and cartridges.

Also, according to a study by Microsoft, the cloud-based payroll software can help reduce carbon dioxide emissions and save energy consumption by 93%.

5. Cost-effectiveness

The return on investment makes the cloud-based payroll software a very cost-effective alternative to traditional ways of working. Compared to paperwork, you get timely and faster payroll processing; and hence, saving you a lot of time and money.

6. Time-saving

The payroll system automatically processes the payment, makes the payroll calculations, estimates the tax, and manages other debits (if any), which reduces the work to half or even lesser. You also get to schedule the payments you are going to make.

Here is a comparison table between the time taken (which is a significant amount) for payroll functions with and without the payroll software.

Calculate salaries20 seconds60 seconds
Complete paperwork10 seconds60 seconds
Check tax law compliance20 seconds120 seconds
Calculate timesheets20 seconds300 seconds
Create payroll reports20 seconds120 seconds
Total time1 minute 30 seconds11 minutes

However, there’s one drawback of the cloud-based payroll software: you need a good speed wifi connection to access your data, or else you’ll lose access to it if your internet goes down or power cuts. But with such fast-growing technical advancement, the internet problem seems manageable.

What is the best cloud-based payroll software?

Following are some of the best payroll software to help you get started and suffice the purpose.

1. Gusto: an overall best software

GustoGusto is the best choice for small as well as mid-sized companies as it provides you with four tiers and some additional HR (Human Resources features). In addition to that, it offers automated services suitable for any business, which makes it an all-rounder of payroll software.


  • Gusto debit card for employees  for easier access to their money on payday
  • Paperless paychecks
  • Unlimited bonus and off-cycle payrolls
  • Hourly and salaried employees
  • Easy cancellations
  • Multiple pay rates
  • Flexible payment schedules


Visit here for detailed pricing information.

2. Quickbooks Payroll: easiest to setup

Quickbooks PayrollQuickbooks Payroll is the easiest to set up of all the top payroll software as everything is automated in its system. Its tutorials are enough to get you in, so you need no technical support whatsoever. And if you still face any difficulty, a google search would do the job for you.


  • Create paychecks
  • Direct deposit for employees
  • Direct deposit for 1099 contractors 
  • Helps you file and pay taxes
  • Workers comp payment service
  • 24/7 access to workforce about their paycheck information


Visit here for detailed pricing information.

3. Paychex Flex: for best reporting

Paychex FlexPaychex Flex lets you have a clear and sharp look at taxes, wages, turnover, etc., as it provides you with 160+ reports. In terms of reporting, Paychex Flex is all that’s needed in payroll software. Moreover, it has unlimited payroll runs to ensure the best experience.


  • Online Payroll with an intuitive UI
  • Helps you file and pay taxes
  • Track Time and Attendance
  • Dedicated mobile app
  • Avenues to welcome new hires
  • Integrated system for HR and payroll


Visit here for detailed pricing information.

4. On Pay: best for small businesses

On PayOn Pay is just perfect for small or growing businesses as it has no hidden fees. Something every small-scale business would love. The payroll is automated, but you’ll be needed to run and approve it every time.


  • Unlimited monthly pay runs
  • Helps you file and pay taxes
  • W-2 and 1099 workers
  • Pay salary by direct deposit, debit card, or check
  • Multiple pay rates and schedules
  • Offer payroll in 50 states 
  • Works on mobile as well


Visit here for detailed pricing information.

5. Workful: for best customer services

GustoWorkful is comparatively a recent software and is still no way behind in the race when it comes to customer services. However, it provides top customer support services, is affordable, and is also easy to use.


  • Interactive and user-friendly UI
  • Offers compliance management
  • Multiple pay rates and schedules
  • Offer payroll in 50 states 
  • Track employee work performance and productivity


Visit here for detailed pricing information.

How to set up a cloud-based payroll System?

Now that you’ve made your decision to implement the cloud-based payroll software, it may seem like an overwhelmingly big task, but honestly, it’s not. The payroll system is designed to make your work easy or to reduce your work and not add to it. So here’s what you need to do in order to set it up properly.

First, ensure that you’ve all the pre-requisite material to set up the system. Apart from the general features needed for the payroll software, you may also add additional features like reporting time, HR onboarding, attendance of the employee, employee self-service as per your business’s requirement. Once this is done, you’ll find all you need in one place, and you don’t have to switch between the applications.

Second, have the receipts of the pays and copies of all the reported activities, including terminated employees, contractors, and existing employees’ data. Also, if the tax-related features were there before in your previous system, be sure to keep that in your new software as well for at least four years, if not more. And if possible, consider having all the records physically in a file for at least three years, if not more.

Now is the time to finally install the software in your system. Most payroll software are easy to install and work with. However, you may seek help from an IT professional to ensure smooth working of the software.

You may add the profile of your employees through the in-built template, which helps you add or delete new or existing staff members very quickly. Also, the software has a very easy-to-use UI.


The cloud-based payroll software gives accurate payroll calculation, automatically processes the payment, is easy to use and manage, and has the top-notch security possible. After giving enough reasons and the guidelines to use it, we hope you successfully bring automation into your payroll process.

If you want to get started with a cloud-based payroll software here’s a research-backed list by Software Suggest.

Shubham Rajpara
"Shubham Rajpara is a blogger for IT companies and creative agencies who writes extensively on AI, ML, NLP, Big Data, IoT, Blockchain, and all things Sales & Marketing. He is an aspiring clinical psychologist, who also loves to cook, and do poetry. Reach him out at"

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