What is an applicant tracking system (ATS)?

A hiring manager posts a job on a few job boards and starts receiving applications by email. That inbox is also filled with customer questions, vendor invoices, and marketing messages. As more positions open, it becomes harder to track where each candidate is in the hiring process, which conversations have already happened, and what still needs a response.

That's where an applicant tracking system (ATS) can help. For small businesses without a dedicated recruiter or HR team, an ATS provides a single platform to organize job postings, applications, candidate communication, and hiring workflows. The result is a more organized hiring process and a more consistent experience for candidates.

What is an applicant tracking system (ATS)?

An applicant tracking system (ATS) is software that collects, organizes, and tracks job applicants throughout the hiring process. It gives hiring managers and small business owners one place to manage candidates for every open role instead of relying on email, spreadsheets, or paper resumes.

While large companies have long used ATS software to manage high application volumes, small businesses often adopt one to streamline hiring as they fill more roles and receive more applicants.

At its core, an ATS replaces informal tracking methods with software designed specifically for hiring.

How does an ATS work?

An applicant tracking system organizes and tracks each stage of the hiring process, from posting a job to making an offer. While features vary by platform, most ATS software follows the same basic workflow:

1. Post a job. Publish a job opening to your careers page, job boards, or both from one place.
2. Collect applications. Applications and resumes are stored in a central system rather than in individual email inboxes.
3. Review candidates. Hiring managers can organize applicants, review resumes, and move candidates through stages such as screening, interviewing, and offers. If background checks are part of this stage, employers must follow the Fair Credit Reporting Act (FCRA). This law requires employers to disclose the check to the applicant or employee, get written permission, and follow notice requirements for adverse decisions.
4. Communicate with candidates. Many ATS platforms help manage emails, interview invitations, and status updates.
5. Make a hiring decision. The system keeps a record of each candidate, whether the applicant is hired or not.

Some ATS platforms also automate parts of the process, such as screening resumes for specific qualifications or sending interview confirmations. Others leave more of the review to hiring managers.

Platforms powered by generative AI are streamlining the hiring cycle even more. According to the Intuit QuickBooks 2026 AI Impact Report, 78% of businesses using AI say it has improved their productivity. ATS platforms can apply AI throughout the hiring process, but a person should still review AI-assisted results before they factor into a hiring decision.

Regardless of the features, the goal is the same: to organize hiring so it's easier to track candidates and keep the process moving.

Key features of an ATS

Each stage in the ATS hiring pipeline runs on a specific set of tools. Most systems include some version of the following capabilities.

Job posting and distribution

Publish job openings to multiple job boards and your company's careers page from a single platform. Changes to a job listing can also be updated across supported posting channels without editing each listing individually.

Resume parsing

Resume parsing extracts information such as contact details, work history, education, and skills from uploaded resumes to create searchable candidate profiles.

Some platforms take this a step further with AI-based resume scoring, ranking candidates by how closely their resume matches a job's requirements. This can speed up an initial review, but because these tools learn from past hiring data, they can also carry forward existing bias. A person should still review the results rather than relying on the score alone.

Candidate database

Store applications, resumes, and candidate information, along with the jobs each candidate applied for and their hiring history.

Pipeline tracking

Track each candidate's progress through the hiring process using stages such as applied, screened, interviewing, offer, and hired. Team members can see the current status for every applicant.

Communication templates

Create and reuse email templates for common hiring messages, such as application confirmations, interview invitations, offer letters, and rejection notices.

A growing number of ATS platforms use generative AI to draft or personalize these messages. That can save time, but it's worth reviewing AI-drafted communications before they go out to make sure the tone and details are accurate for each candidate.

Interview scheduling

Coordinate interviews by sharing availability, scheduling meetings, and tracking upcoming interviews within the hiring process.

Reporting and analytics

Generate reports on hiring activity, such as applicant volume, hiring timelines, candidate sources, and other recruiting metrics.

Benefits of an ATS for small businesses

An ATS helps small businesses spend less time managing the hiring process and more time connecting with qualified candidates. Some of the biggest benefits include:

• Faster hiring. Automated job posting, resume parsing, and scheduling help move candidates through the hiring process more quickly.
• Fewer lost candidates. Pipeline tracking helps ensure every applicant has a clear status and next step.
• A more consistent candidate experience. Communication templates and scheduling tools help keep candidates informed throughout the hiring process.
• Less administrative work. Storing candidate information in one place reduces manual tracking and duplicate data entry.

An ATS focuses on hiring, but it works best as part of a broader HR system. Many businesses integrate their ATS with HR, payroll, and team management software so candidate information carries over after a new hire joins the team.

ATS vs. recruiting CRM vs. HRIS

An applicant tracking system (ATS), a recruiting customer relationship management (CRM) system, and a human resource information system (HRIS) all help businesses manage different stages of the employee journey. Because their functions can overlap—and some software combines them into a single platform—the terms are sometimes confused. The key difference lies in where each system fits in the hiring and employment process.

• ATS: Tracks candidates through the hiring process, from application to hiring.
• Recruiting CRM: Helps build relationships with potential candidates before they apply, making it easier to source and engage talent over time.
• HRIS: Stores employee information and supports core HR functions after a candidate is hired, such as payroll, benefits, and time off management.

An HRIS software system picks up where an ATS leaves off, once a candidate becomes an employee.

Small businesses without a large recruiting pipeline often need an ATS and an HRIS. A recruiting CRM can be valuable for businesses hiring at a larger scale or filling specialized roles where waiting on applications isn't practical.

3 Signs your small business needs an ATS

Most businesses notice a few similar signs before investing in an ATS.

1. Managing more open roles. Tracking several open positions and candidates simultaneously becomes difficult without a central system.
2. Too much manual work. Posting jobs, scheduling interviews, and updating candidate statuses takes more time than it should.
3. Candidate communication is inconsistent. Some applicants receive regular updates, while others wait days or weeks for a response.

How to choose an ATS

Choosing an ATS comes down to six things: features, integration, ease of use, pricing, support, and data security and compliance.

Features that match actual hiring volume

The right ATS depends on how often you hire. A business filling several roles at once may need features like pipeline tracking and reporting, while occasional hiring may require only the basics.

Integration with payroll, onboarding, and HR

Look for an ATS that connects with your HR, payroll, or HRIS software. The less manual re-entry required, the less risk of errors.

Ease of use

Choose a system that's easy to learn and use, especially if hiring isn’t your full-time job. A simple, intuitive interface makes it easier to post jobs, review candidates, and pick the process back up when you're hiring again.

Pricing that fits hiring volume

Compare pricing models to ensure they align with how often you hire. Some ATS platforms charge a flat monthly fee, while others charge based on hiring activity or usage.

Support

Look for an ATS with responsive support and resources to help you troubleshoot issues and get answers quickly. This type of support can be especially important if you don’t have a dedicated HR or IT team.

Data security and compliance

Using an ATS doesn’t shift an employer’s responsibility for fair hiring. Employers must still follow EEOC-enforced federal anti-discrimination laws and applicable state hiring requirements, including when software assists with decisions.

Consider these data, security, and compliance areas as you compare ATS platforms:

• Candidate data. Ask how candidate data is stored and protected, and who can access it.
• Background checks. If you require background checks, ask whether the platform—or the screening partner it connects to—supports FCRA-compliant disclosure and consent.
• AI screening. If the ATS uses AI to screen or score candidates, ask how the vendor tests for bias.

How QuickBooks Workforce helps with applicant tracking

QuickBooks Workforce team management software brings applicant tracking, hiring tools, HR, and payroll together in one platform. AI-powered tools can also assist with recruiting tasks such as creating job descriptions. Once a candidate accepts an offer, their information can move directly into onboarding and payroll setup instead of going through a second data entry process.

For a business already running payroll through QuickBooks, that means hiring data and employee records live in the same system instead of two disconnected ones. There's no separate export, no retyping a new hire's information into another platform, and no gap between the moment someone's hired and the moment they're set up to get paid.

By connecting hiring, onboarding, and payroll, QuickBooks Workforce helps reduce manual work, improve accuracy, and get new hires set up faster.