Payroll is an essential aspect of running a child care—every child care with employees must have a payroll process in place. Small child care owners may opt to manually run payroll to save money, but it often doesn’t pay off, especially as an organization grows. If your payroll management is becoming increasingly time-consuming or error-ridden, it’s time to consider outsourcing the work to a payroll provider.

Whether you are implementing payroll software for the first time or switching payroll systems, there are several critical factors to ensure you choose the best fit for your child care business—like your company size, ease of use, key functionalities, and more.

In this guide, we’ll walk through the top factors to consider for payroll software and the questions to ask when deciding which one is best for your business.

What does payroll software do?

Before diving into the specifics of choosing a payroll provider, it’s important to understand more about the role of payroll software. Payroll services are designed to streamline the process of paying your employees and keep your business compliant. Some common features of payroll solutions include:

Payroll processing: Modern payroll software can make sure that employees are paid correctly—on time, in the right amount, and via their preferred payment method.

Tax compliance and automatic tax filing: Many full-service payroll providers can keep you compliant with federal, state, and local taxes by automating tax calculations, making withholdings, conducting new hire reporting, and enabling you to file important documents, such as 1099s or W-2 forms.

Direct deposits: Many payroll services offer direct deposit capabilities, meaning that employees receive their wages directly into their bank accounts rather than having to cash a physical check.

Non-traditional compensation: Aside from the usual payroll, a solution should be able to handle other types of payment, such as workers’ compensation, bonuses, and wage adjustments.

Recordkeeping and reporting: Want insight into your payroll? Some payroll systems can generate various reports for accounting, HR, and compliance purposes, making it easier to analyze payroll data. Reports may include information on taxes, budgets, wages, and more. Some services will even offer visualizations for the reports if you want to build out accompanying charts.

Software integrations: Some payroll service providers, such as Playground, let you integrate other tools with your payroll system. These include services like time tracking and attendance management, expense management, and benefits administration. Because payroll software calculates wages, taxes, and deductions automatically, it reduces the risk of errors compared to manual entry. Payroll software can also help busy HR and finance administrators save time on routine processes, so they can focus on more strategic work. Let's get into some of the questions you should ask to ensure you select the right payroll provider for your business.

1. Does the payroll service meet your business needs?

Choosing the right payroll software starts with assessing your specific business needs. It’s not just about what the payroll software can do generally, but what it can do for you. Software should align with your center's size, budget, types of workers, and locations. Think about a system that can work for your current size and scale with you as you grow in the future.

Child care size

Consider the number of people working for your child care center. Do you have a small team of two teachers or a workforce of 1,000? This should influence your choice of payroll provider, as different solutions are designed for specific business sizes. Opting for a system designed for medium or large businesses when you run a small business can lead to higher costs and leave you with unnecessary features. However, you do want to think about your growth potential. Will your business expand in the coming years? If so, choose a payroll provider that can scale with you, so you don’t find yourself switching systems quickly to meet your growth needs.

Budget

Budget is a crucial consideration. Determine the cost of using the software against your current number of employees and consider how that cost might change if your business grows. Additionally, you’ll want to look for a provider with transparent pricing to avoid hidden fees. They should be able to tell you about the base fee as well as add-on fees for tax support and compliance, pay run fees, or set-up fees. Do they charge a flat monthly fee, or do they charge per pay run? With information like this in hand, you should be able to calculate your costs from the outset.

Types of workers

What does your workforce look like? Do you have full-time employees, part-timers, contractors, or a mix? Are they salaried or hourly? Your chosen payroll system should be capable of handling the working patterns and payment structures specific to your child care. If you employ a significant number of contractors, ensure that the software can accommodate them, as some systems only handle employees. Some providers also can’t issue paychecks without automatic withholdings. If you prefer separating the payroll process for employees and contractors, make sure you have the staff and budget to manage the two systems. Alternatively, consider child care payroll software like Playground, where you can pay employees and contractors in a single pay run—perfect for child care owners seeking a seamless, all-in-one payroll solution.

2. Does the payroll software have all the features you need?

Now that you've assessed your child care business' high-level needs, it's time to consider the specific features you require in a payroll provider. These features should align with your usage patterns and work seamlessly with your existing systems.

Integrations

Think about the other systems your company uses, such as child care management software, time and attendance systems, or benefits administration management tools. Which ones would be helpful to have integrated with your payroll software? Choosing a payroll solution that fits seamlessly with your existing systems can reduce manual data entry and the risk of errors.

Playground’s payroll software can integrate with every tool your payroll depends on in one system, including time and attendance, family communication, billing, enrollment, expense management, and employee benefits.

Payment methods

What payment methods do your employees prefer? According to some estimates, 80% of employees are paid through direct deposit. However, some prefer paper checks, prepaid debit cards, or even more modern options like Venmo, Zelle, or cryptocurrency. Ensure that your chosen payroll system can handle the payment methods that will best accommodate your employees' needs.

Payment types 

In addition to regular salaries, your payroll software should be capable of handling various payment types. This includes vacation pay, expense reimbursements, commissions, bonuses, and other taxable benefits. What’s more, the system should automate calculations and ensure accurate payments. You’ll also want to make sure that the system can handle paycheck deductions, such as those for retirement, life insurance, or health insurance.

Pay run timelines 

Do you process payroll several days in advance, or do you prefer to do it closer to the actual pay date? Some providers require you to submit payroll up to 25 days in advance of your next pay run—that’s a no-go for many employers. If you have tight pay run timelines, you’ll want to look for a provider that offers flexibility. 

Off-cycle pay runs

Think about how often you need to process off-cycle pay runs for employee paychecks issued outside of the normal pay period. For instance, if an employee quits unexpectedly, you'll need to issue their final paycheck promptly. If your business frequently requires off-cycle pay runs, avoid payroll software that charges per pay run. Conversely, if you rarely need off-cycle runs, this may not be a significant concern. Playground charges a flat monthly fee for payroll services, so you never have to worry about meeting your ever-changing needs.

Additional payroll capabilities

You may need a payroll system that can handle additional tasks like paid time off (PTO) management, workers' compensation administration, unemployment insurance, and other HR-related functions. If your company offers health plans or retirement benefits, you may also want to ensure that the software can accommodate the implementation of those employee benefits.

3. Is the payroll platform easy to use?

User experience, particularly ease of use, is a critical factor when choosing a payroll platform. A user-friendly system can make payroll processing a breeze and reduce the learning curve for your payroll administrators. Here are some aspects to consider.

Cloud-based system

Payroll is critical to your child care operations, and online payroll services with cloud-based systems can be a game-changer. A cloud-based payroll platform offers accessibility from anywhere, at any time, and on any device. Whether you're using a web browser or a mobile device, you should be able to access your payroll information and make updates in real time.

Automation

Look for payroll software that automates repetitive tasks to save you time and reduce the risk of errors. Features like auto-approval can streamline the process, ensuring that payroll is processed efficiently. For example, with Playground, you can build alerts and approvals, meaning that you won’t have to set reminders for payouts or waste time chasing approvals.

Compliance

Staying compliant with tax laws and employment regulations should be a top priority, or else your child care could find itself in hot water, facing fines and other legal penalties. Payroll software can help you navigate the complexities of minimum wage and working hours laws, overtime calculations, and income tax filings. In addition to providing tools to maintain compliance, make sure that the software provider stays up-to-date with regulatory changes. Ask how often its tax tables are updated for compliance.

Complying with security standards should be another top concern. After all, your payroll provider handles sensitive employee data like addresses and bank account information. Check if the payroll service offers encryption or other security measures to protect your employee data.

User interface

A smooth, intuitive interface makes it easy for your team to add new employees to the system, run payroll quickly and accurately, and generate any necessary payroll reports. Playground's user-friendly interface lets you run payroll in just 90 seconds. Moreover, consider whether the payroll provider offers interface customization options to meet your specific needs. Payroll software isn’t just for the HR team—everyone needs to access it in some form. You’ll want to make sure that the platform is straightforward for employee self-service. A mobile app can be helpful for employees who want to see their pay stubs, look at their schedules, or view their tax forms.

Customer support

Consider the level of customer support you require. Who will be responsible for managing payroll within your organization? What is their level of experience and expertise? Look for a payroll provider that can help you troubleshoot, especially if you have a relatively new admin on your team. A self-service portal is helpful, but some payroll providers even offer dedicated customer support representatives who can assist you whenever you encounter issues. Ask what their average response time is to new inquiries.