How to choose the right payroll software: a guide for accountants and bookkeepers

Payroll requires lots of admin, and has to be done each month, every month. So, the opportunity to simplify and automate parts of the process could save you and your clients plenty of time.

All businesses are required to use software for payroll reporting, so getting your software right can be the difference between a fast and frictionless payrun, and a disorganised, delayed one.

In this guide, we show you how to find the best payroll software for accountants, bookkeepers, and clients. Follow each step to find the payroll software system that’s right for you.

1. Software complies with changing regulations

Regulations aren’t static – they change frequently. It’s not enough to have payroll software that just works for you and your clients, today. You need payroll software that’s fit for the future. Otherwise, you’ll be switching providers every time there’s an update to legislation.

Non-compliance can also result in penalties and fines – for example, if payroll information is filed late, or not at all. And, HMRC requires businesses to keep accurate payroll records for at least three years from the end of the tax year they relate to. Failing to meet either of these standards could cause reputational harm for you and your clients.

When changes to tax, minimum wage, or employee benefits happen, this also needs to be reflected in payroll software. Opting for payroll solutions that automatically update in line with regulation makes it easier to comply with new rules. You don’t even need to update the systems yourself, which saves you additional time.

Xero’s payroll software automatically updates tax information for the new tax year, such as increasing tax codes and carrying authorised ones over. Plus, pay and deductions are automatically calculated for you, so the right amounts go to staff and HMRC. No complex maths required.

2. Integrates with accounting platforms

When your accounting system and payroll software are connected, it can save you time and improve accuracy for client submissions.

For example, modern integrated software automatically creates journal entries for every payrun, complete with expenses and liabilities using the assigned account codes. Payroll information flows into the accounting software, so you don’t need to update records in two separate places. This can save you time on manual data entry and reduce the risk of human error.

You also only need to learn one system for both payroll and accounting work. With accounting tasks and payroll housed in one piece of software, it’s easier to find the information you need, combine insights for deeper analytics, and see how your clients are performing across the board.

Xero’s integrated accounting and payroll software lets data flow smoothly between both products. You get automatic journal entries, payroll-specific reports, and secure data storage in one simple-to-use system.

3. Ease of use for accountants and clients

Clients may not be part of preparing RTI submissions or adding employee data, but your payroll software should still be client-friendly.

Modern payroll software gives you features clients will value, too, such as digital payslips and payroll reports they’ll appreciate. Some features to look out for include dashboards with key payroll information like total payruns, leave to approve, and timesheets, plus self-service options that let your clients’ delegate tasks to their teams.

The best payroll software UK practices will always want to ensure that they are using an HMRC recognised software giving them confidence that RTI submissions will meet the governments requirements

With Xero payroll software for accountants and businesses, manual RTI submissions are a thing of the past. Payroll details are sent to HMRC after every payrun, helping you submit on time. And, accountants can now view and manage all their payroll clients from a single dashboard using Xero’s Payroll Manager.

Plus, clients can give their staff access to Xero Me – our app that lets teams request leave, submit timesheets, and view their payslips. It’s software that doesn’t just make payroll simple for you, it makes it smooth for clients and their teams.

4. Scalability and flexibility

Chances are, you’re not just doing payroll for a single client. Your payroll software needs to work for all clients and scale as your practice grows.

One of the benefits of having software that automates payroll processes is that it works for a handful of clients, or hundreds. Unlike manual processes, which require more staff and more time to scale, automated processes can work for any number of clients.

Your software should be able to handle a range of employment situations and changes, from increased employee headcount and varying pay schedules to contractor payments. Flexible payroll software lets you handle multiple clients and client types with a single subscription. This standardises your practice operations, as you don’t have to familiarise yourself with multiple payroll solutions.

Software like Xero supports businesses of all sizes and industries. You can run multiple pay cycles for clients with staff who need to be paid at different frequencies, and there’s support for off-payroll workers too.

Pay and deductions are calculated automatically for all employees, whether your clients have teams of 1 or 100. Plus, staff can self-serve with the Xero Me app, requesting leave and accessing payslips in a few clicks.

5. Employee self-service features

While modern payroll software simplifies processes and improves accuracy for practices, your clients’ staff also stand to benefit.

Self-serve features – where employees can access payslips, annual leave, and time-off requests – can save employers from needing to chase up teams or trace back leave approvals. Employees also get more control over their schedules and payslips. Businesses can give additional permissions to staff who are allowed to accept or reject leave requests, helping the process flow and making staff scheduling easier.

With Xero’s cloud payroll software for accountants, UK businesses can also get access to Xero Me – a self-service app for managing timesheets, payslips, leave requests, and more. Your clients’ teams can even submit expense claims for reimbursement – saving you and them the task of chasing up receipts.

6. Robust reporting and analytics

Being able to send RTI, EPS, and FPS submissions to HMRC is an essential software requirement. But, internal reporting features can also help your practice and clients handle payroll more effectively. With detailed reports on payroll, your clients get a broader view of their business performance and finances.

Payroll reports can help you and your clients get vital insights on payroll activity, as well as compliance obligations, and ensure the right amounts go to the right people. For example, modern payroll software can show you amounts owed to HMRC (in P32 and P11 reports), the status of pension auto enrolment for employees, and CIS deductions.

With Xero payroll software for accountants and their clients, you can create payroll employee and activity summaries, and auto-enrolment summaries to check pension statuses. Help clients drill down into their payroll data and make smart workforce decisions.

7. Cloud-based accessibility and security

When your payroll software is attached to a specific device, productivity can stall. User restrictions and desktop software make it harder to get work done.

But, cloud-based software not only enables remote working and collaboration, it helps keep private data and documents secure. Your clients’ payroll information is sensitive – with their teams’ addresses, banking information, and national insurance numbers attached. Keeping this information safe is essential for GDPR and client protection.

With cloud-based payroll, you can set your team up with specific permissions, limiting access to sensitive information but enabling your practice to get work done. You can also securely share reports and specific information with your clients, by adding them as viewers.

Xero payroll software is cloud-based and the data is encrypted. Protected by multiple layers of security, payroll data in Xero stays safe but remains accessible to your team and clients (with the right access). Data is backed up automatically, and records kept in Xero are fit for payroll recordkeeping requirements.

What’s more, your practice team can work from anywhere, provided they have internet access. So, whether you’re all in the office or spread across the country, you can still get payroll tasks done.

Why choose Xero for your accounting firm’s payroll

Xero cloud payroll software for accountants makes every pay run smoother.

Our payroll software is designed to comply with regulations now and in the future, with automatic updates and alignment with new tax information. Plus, Xero payroll integrates with our core accounting software, meaning information flows into accounts and reports for your clients. Xero payroll software is scalable and flexible, and you can take advantage of fully automated RTI submissions for every single client. Payroll Manager is designed specifically to support accountants and bookkeepers manage their payroll clients from a single dashboard, creating efficiency in their practice and saving them time.

Payroll programmes for accountants also need to work for clients – which is why we’ve made self-serving simple for employees with the Xero Me app, and provide plenty of reports you can use internally with clients to help them monitor every payrun.