Aug 6, 2023

Top 5 payroll software for small businesses in 2023

Small businesses need a streamlined payroll system to ensure their employees are paid accurately and on time. With so many payroll software options available, finding the best one for your needs can be challenging. This blog post will discuss small businesses' top payroll software options and why they are worth considering. Whether you are looking for affordability, ease of use, or robust features, we have you covered. Let's dive in!

Explanation of the importance of payroll software for small businesses

Payroll software is essential for small businesses, as it allows them to accurately and efficiently manage employee pay. Payroll software can help small businesses save time, money, and resources by streamlining the payroll management process. Small businesses can automate tax calculations using payroll software, allowing for accurate deductions from employee payslips without manual intervention. Additionally, this will enable them to quickly generate and distribute payslips for their employees and manage salary payments and deductions. Not only does this reduce the cost of manual payroll operations, but it also ensures that all employees are paid correctly and on time and that you remain compliant.

Benefits of Using Payroll Software

In today's fast-paced business environment, streamlining operations is crucial for success. One area that often poses challenges for small business owners is payroll. However, with the advent of advanced payroll software, these challenges can be significantly reduced. Here are some benefits of using online payroll software:

Efficiency and Accuracy:

Manual calculations can lead to errors. With top payroll software, calculations are automated, ensuring accuracy and saving time.


Many online payroll software options are HMRC-recognised, ensuring that your business stays compliant with the latest tax regulations.

Easy Access:

Being web-based means you can access your payroll services from anywhere, anytime. This flexibility is especially beneficial for business owners on the move.

Integration Capabilities:

Advanced payroll systems can integrate with other business software, providing a holistic approach to business management.


In the long run, using payroll software can be more cost-effective than hiring external payroll services, especially for businesses with a growing number of staff members.

Criteria for selecting the best payroll software for small businesses

Understand Your Needs:

Before diving into the myriad of options available, understand your business's specific needs. How many staff members do you have? Do you need advanced payroll features or just the basics?


One of the first considerations when choosing payroll software for small businesses is cost. Evaluating the features and services offered concerning what you are willing and able to pay is crucial. Small businesses should also consider additional installation, setup, training, and maintenance fees.

Ease of Use

Small businesses should also look for payroll software that is easy to use and understand. Although the main aspects of UK payroll are relatively straightforward, some specifics can be overwhelming. For example, paying hourly or part-time workers require understanding a few rules related to employment law and holiday pay. Therefore, adopting software that simplifies or even automates those aspects after setting up a few parameters could be interesting.


Ensure the software is HMRC-recognised. This recognition ensures that the software meets the UK's tax standards.

Features and Benefits

Small businesses should also look for payroll software that offers the necessary features and benefits. Some payroll software can provide reporting tools, employee self-service, mobile compatibility, and automated RTI submissions to send your payroll information after running payroll. Additionally, some providers offer integrations with other business software, such as accounting or HR programs.

Customer Support

Finally, small businesses should consider customer support above everything else, especially if they plan to run payroll internally. As mentioned earlier, the initial set-up can be stressful for business owners or managers without any payroll experience. So, choosing a solution that provides access to professionals might be the go-to solution for putting you on the right track.

Free Trial:

Before committing, opt for a free trial. This trial period will give you a hands-on experience of the software's features and usability.

User Reviews:

Look for user reviews online. These reviews can provide insights into the software's pros and cons.

Cloud-based payroll vs installable app

Cloud-based payroll solutions offer many benefits for small businesses. It is less expensive than an on-premises solution, can be quickly implemented, and is more secure than traditional software. Additionally, cloud-based payroll solutions are easier to use and maintain as updates are pushed out automatically.  
However, installable applications offer certain advantages over cloud-based solutions. This type of  solution allows businesses to keep their data secure and provides more control over their payroll operations. Additionally, installable applications are typically less expensive than cloud-based solutions and can be tailored to specific business needs.  
Ultimately, the best option for a small business depends on their individual needs and budget. An installable app may be the best choice if they require more robust features or have limited resources.

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Top 5 payroll software for small businesses

1. Moonworkers: This payroll software is ideal for small businesses with complicated payroll involving hourly workers or contractors, as it is the only market solution that automates payroll for all types of employees. In addition to the typical payroll features such as payslips creation, RTI submissions, and employee self-service app; you can easily schedule shifts, track time and attendance, automate payroll calculations, and find replacements or extras. Moonworkers provides access to payroll advisors to help you set up payroll for the first time or switch to them as well as giving ongoing support.

2. Sage Payroll: Sage Payroll is an ideal payroll solution for small businesses. It offers comprehensive reporting tools and automated RTI submissions. Additionally, it supports payslip printing and direct deposit for employees.

3. 12 by IRIS: 12 by IRIS is a comprehensive payroll software designed to be used across multiple industries. It offers features such as automated RTI, year-end reports, and direct deposits. It also allows you to customize payslips and access employee self-service applications. Additionally, it comes with a mobile app that allows you to manage payroll on the go.

4. Xero: Xero is an online payroll software designed to make the payroll process simple and efficient. It offers real-time updates, automated RTI submissions, and a range of reporting tools. Additionally, it provides direct deposits for employees and integrates with various business systems. It offers payslip printing, direct deposit capabilities, and employee self-service features. Additionally, it supports RTI submissions and automated tax calculations.

5. Quickbooks: Quickbooks is a comprehensive payroll software designed for small businesses. It offers features such as automated RTI submissions, direct deposits, and detailed reporting. Additionally, it integrates with various business systems, such as accounting and invoicing programs. It also provides an employee self-service app and payslip printing capabilities.

Pros and cons



  • Best for customer support and a personalised HR and payroll experience.
  • Automates payroll for all types of employees provides access to payroll advisors, offers comprehensive reporting tools and automated RTI submissions, and supports payslip printing and direct deposit for employees.
  • Simple and quick switching service that includes data transfer and online training.
  • Three-month money-back guarantee and setup come at no extra cost.


  • Doesn’t offer managed payroll and HR services, so you will need the resource to manage everything on the app.
  • Built and developed with specific industries in mind – it could be limiting for other businesses.

Sage Payroll:


  • Offers UK-based 24/7 customer support both via online live chat and over the phone to make onboarding easier (unlike Moorepay and IRIS)
  • The multi-user access feature gives each user a secure login. External guests like a qualified accountant can also be added for additional support.
  • Sage’s built-in corrections feature can amend data without rerunning pay runs. IRIS requires you to use a backup to undo any changes.


  • You'll need to make use of the 24/7 access to a Sage expert - our research found customers report that Sage is incredibly time-consuming to set up.
  • Our researchers do not recommend Sage for new payroll users. We gave it just 2 out of 5 for usability - best for those with software experience.

12 by IRIS


  • Automatic month-end P32 summary updates - dramatically reducing time spent on admin
  • In-depth reporting functionality is available to track employee data to help with key performance and evaluation decisions
  • Customers also reap the benefits of IRIS’s unlimited platinum phone and online support, which is incredibly helpful for first-time payroll software users


  • Because it's more powerful software, IRIS can take longer to install and master than more usable rivals like QuickBooks.
  • Employee Portal and ePay window are only available as a paid-for add-on.



  • Reduce payroll admin and save time by giving your employees limited access via the Xero Me mobile app or the web. They can even enter timesheets and request leave remotely
  • The employee self-service feature is also incredibly handy for viewing payslips and requesting leave online, reducing the need for add-ons


  • You must be using Xero accounting software to access the payroll service for a minimum cost of £6 per month
  • No telephone support in the event of a problem. We recommend you consider a trial before committing to Xero, as the lack of customer support can create difficulties for new users.



  • Data is stored securely in UK IBM data centres with the latest Microsoft Azure cyber-secure technology, removing any risk to business continuity.
  • Employees, managers and admins can see and edit any information you want them to, meaning Moorepay also acts as a sole database for personnel records.
  • Moorepay’s ISO 27001 certificate was reissued in 2021, achieving the international standard of security for protecting personal data.


  • You'll need to fork out QuickBooks' premium plan for more advanced capabilities like tracking employee time and billable hours.
  • Employees can only be paid by direct deposit on Quickbook's lowest-tiered plan. You'll need to pay more for printable options.


Moonworkers: The pricing plans start from £2.5 + VAT per month per employee and cover unlimited payrolls, rotas and HR.

Sage Payroll: The basic plan starts at £8/month + VAT, while the Plus plan costs £18/month + VAT.

12 by IRIS: Pricing starts at an affordable £1.50 per employee/per month.

Xero: Payroll starts from £6/month and can be combined with the accounting software for £20/month.

Quickbooks: It starts at £3/month for up to 5 employees, then increases to £4/month for 6-10 employees, and £5/month for 11+ employees.

Comparison of the top 5 payroll software

Features comparison

In terms of features, Moonworkers offers a comprehensive solution to manage your entire business, automated RTI submissions, payslip printing and direct deposit for employees, an employee self-service app, and automated payroll calculations. Sage Payroll also offers automated RTI submissions, as well as year-end reports, payslip printing, and direct deposits. 12 by IRIS is more comprehensive than the other options and offers features such as automated RTI, year-end reports, and direct deposits. Xero comes with reporting tools, automated RTI submissions, direct deposit capabilities, and integrations with other business software. Lastly, QuickBooks provides features such as automated RTI submissions, detailed reporting, direct deposits, employee self-service app and payslip printing. Most of these vendors offer integrations with HR software and accounting (or embed them directly as part of an all-in-one solution).

Usability comparison

In terms of usability, Moonworkers is the best choice due to its automated complicated payroll calculations involving a variety of workers, access to payroll advisors, and set-up with no extra cost. Sage Payroll is also a good choice for those with experience in software, as it offers 24/7 customer support. 12 by IRIS is better for more experienced users as it can take longer to install and master but offers first-time users unlimited platinum phone and online support. Xero is ideal for those who want to manage payroll online, while QuickBooks might be the best choice for tracking employee time and billable hours.

Customer support comparison

For customer support, Moonworkers is the best option, as they provide access to payroll advisors, while Sage Payroll offers UK-based 24/7 customer support both via online live chat and over the phone. 12 by IRIS allows you to access unlimited platinum phone and online support, while Xero and QuickBooks both offer online support.

Common Mistakes to Avoid When Using Payroll Software

While payroll software offers numerous advantages, it's essential to be aware of common pitfalls to ensure smooth operations:

Not Updating Software:

Always ensure your software is up-to-date. This not only provides new features but also ensures compliance with the latest HMRC regulations.

Overlooking Training:

Even the top payroll software requires some learning. Offer training to staff members responsible for payroll to utilise the software's full potential.

Ignoring Backups:

Always backup your data. While many online payroll software options offer automatic backups, it's good practice to have an additional backup.

Not Reviewing Payroll Reports:

Always review payroll reports for discrepancies. Catching errors early can save time and potential legal issues.

Over-reliance on Software:

While software can handle most tasks, it's essential to have a basic understanding of payroll processes. This knowledge can be invaluable in case of software issues.


Choosing the best payroll software for small businesses can be a daunting process. Before making any decisions, it is important to evaluate your needs and research the available options to find one that fits your budget and meets your specific requirements. Reading customer reviews and comparing features and prices between providers can also be helpful. We also recommend requesting demos to ensure you understand each software specificity. By taking the time to do this, you can ensure that you select the  payroll software that is best suited to your business.

Give us a shot.

Choose Moonworkers online payroll services for professional, reliable, and knowledgeable service.
We have been using Moonworkers for quite some time and compared to other software in the market, we found it very simple to use and excellent. Moreover, the customer service is great.
Shabir D.

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