What you need to know about big vs. small business payroll

Payroll is a fundamental part of running a business, but how you manage it depends largely on the size of your organisation. A small business with a handful of employees has very different payroll needs from a larger company managing hundreds of staff across multiple locations.

So, how do payroll needs differ between small and larger businesses, and what’s the best payroll software for each type of company? Let’s break it down.

Key differences in payroll needs for larger and small businesses

No two businesses are alike, but one thing is certain: as a business grows, payroll complexity increases. Here’s how payroll needs to shift between small and larger businesses and what to consider when choosing the right system.

Payroll complexity & employee numbers

One of the most obvious differences is how many employees a business has and how complex its payroll structure is.

• Small businesses typically have fewer employees, making payroll relatively straightforward. Wages are often fixed, and payroll is usually handled by the business owner or a small admin team using spreadsheets or basic software.
• Larger businesses have multiple departments, pay structures, and employment types (full-time, part-time, casual, contractors). Managing different pay rates, deductions, and allowances across a larger workforce requires a robust payroll system with automation and compliance tools.

Compliance & reporting requirements

In New Zealand, payroll compliance isn’t optional. Businesses must meet strict requirements for wages, tax deductions, leave entitlements, and KiwiSaver contributions.

Small businesses must comply with IRD payday filing, the Employment Relations Act, and the Holidays Act but typically have fewer complex hurdles to manage.

Larger businesses must navigate additional complexities, including:

• Tracking leave entitlements across larger teams, especially when employees have varying work schedules
• Secure access levels for various users
• HR functionality including recording training, visas etc and ability to upload documents, i.e. Employment Agreements

Payroll processing & automation needs

A business with five employees might get away with manually processing payroll, but as that number increases, payroll quickly becomes a full-time job.

• Small businesses often rely on spreadsheets or basic payroll tools. While this might work initially, it can lead to errors, missed tax payments, and inefficient record-keeping.
• Larger businesses need automated payroll processing to handle cost centre splitting, leave tracking, and KiwiSaver contributions without manual input.

Without automation, businesses can face:

• Miscalculated wages and tax deductions
• Late payments to employees
• Non-compliance with IRD regulations

Handling different types of employees

The types of employees you hire also impact payroll complexity.

Small businesses tend to have a simple payroll structure with full-time and part-time employees on fixed salaries or hourly rates.
Larger businesses often have a mix of:

• Salaried employees
• Casual workers
• Contractors with varying payment schedules
• Shift-based workers with allowances and overtime pay

Choosing the right payroll software for your business size

Now that we’ve covered how payroll needs differ by business size, let’s look at what to consider when choosing the right payroll system for your business.

Integration with business systems

Payroll doesn’t work in isolation. Your payroll software should integrate seamlessly with your other business tools.

• Small businesses benefit from payroll solutions that sync with accounting software like Xero, making tax reporting and bookkeeping easier.
• Larger businesses require payroll systems that integrate with HR software, allowing for streamlined leave management, employee record-keeping, and compliance tracking.

A payroll system that integrates well with existing software reduces manual work and minimises errors, creating a smoother payroll process.

Scalability matters

A payroll system should grow with your business.

• Small businesses need payroll software that is easy to use but flexible enough to scale as they hire more staff. What works for a five-person team should adapt efficiently to greater payroll demands when that number doubles.
• Larger businesses require software that can handle high employee volumes, different pay rates, and compliance obligations without slowing down.

With iPayroll, businesses can start small and scale up as their payroll needs grow, ensuring they always have a reliable payroll system.

Cost vs. value of payroll systems

Payroll pricing is always going to be a key factor for businesses. While affordability is key for small businesses, often the most cost-effective option in the long run is investing in a trusted, reliable payroll system. Small businesses should look for a cost-effective solution that saves time through automation and compliance tracking.

• Larger businesses need efficient payroll automation to reduce admin workload, prevent costly payroll errors, and improve payroll accuracy at scale.

Investing in the right payroll system now can save businesses thousands of dollars in payroll errors, compliance fines, and manual labour costs.

Support & security of payroll processes

Regardless of business size, payroll security should never be compromised.

• Payroll software must offer bank-level encryption, secure access controls, and regular security updates to protect employee and company data.
• Having local customer support is also crucial. Small businesses may need assistance setting up payroll, while larger enterprises need ongoing guidance to comply with changing payroll laws.

iPayroll provides secure, scalable payroll solutions with expert support from a New Zealand-based team that understands local payroll regulations.

Find the right payroll fit for your business

Payroll isn’t one-size-fits-all. Whether you’re a small business looking for simplicity and automation or a larger company needing compliance tracking and integration, choosing the right payroll software makes all the difference.

With iPayroll, you get a payroll solution that is designed to grow with your business. If you’re ready to streamline your payroll, get in touch with iPayroll to start your free demo today.