WHY DOES YOUR BUSINESS NEED A PAYROLL SERVICE?
Payroll services may be one of the most valuable products in which your company invests. We outline the key ways payroll services can benefit small businesses in the article, Why Your Small Business Needs a Payroll Service. Payroll services not only help you avoid costly mistakes but also allow you to focus on what’s important: your business.
CHOOSING A PAYROLL SERVICE
While choosing the best payroll service for your business may seem a bit overwhelming, you can find the right match with some solid research and a list of key criteria. Below are six factors to consider as you evaluate payroll service providers.
Cost is one of the most important factors to consider when choosing a payroll service provider. Several elements impact a provider’s overall cost, including:
- What’s the base cost of the payroll service? Many providers offer different packages at different rates so explore a variety of options. Look for offerings that include only the services you need—and watch out for any providers trying to talk you into a more costly package with services you may not use.
- What’s the payment structure? Some providers charge by the month, year, or pay period. Decide which structure works best for your business, keeping in mind that the per-pay-period option may be more costly given your payroll schedule. For example, if you run payroll on a weekly basis, it may be more cost-effective to choose a service provider with a flat monthly or yearly rate.
- Is a contract required? Some payroll providers require long-term contracts while others offer a month-to-month relationship.
- Do they charge per new employee/contractor? Ask how much it will cost to add a new employee or contractor to your payroll.
- Are there any setup fees? Some providers charge an initial setup fee. Ask what’s included in those setup fees and determine if they will offset any of your internal costs, such as the time associated with migrating your data to the provider. And, if you’re not fully committed to this provider, you may want to avoid paying setup fees if there’s a chance you could move to a new provider in a few months.
- Are there additional fees? Check if there are add-on fees for services not included in your package as well as for running reports and filing paperwork. Understanding these additional fees upfront will help you avoid costly surprises later on.
- Are there any opportunities to bundle? If you also need other services (e.g., human resource management, benefits administration), you may be able to bundle them with your payroll service for a discount.
2) AVAILABLE SERVICES
When you start researching payroll service providers, make a list of services you expect to need over the next year. Consider the following as you build this list:
- How much you expect to grow
- How many employees you expect to have
- If you plan to give raises
- If you need a service that can manage different state taxes
- How you want to pay your employees (e.g., direct deposit, check, etc.)
- What additional services would benefit your company
After making a complete list of your needs, think about if you prefer a full-service or self-service solution. These two options have a direct impact on your level of involvement.
- Full-service payroll solutions – With this option, your payroll service provider assigns a specialist to your account to help you process payroll and answer questions. This option may be best for new businesses or for business owners who prefer a hands-off solution.
- Self-service payroll solutions – This option, on the other hand, allows you to submit payroll information and manage your account at any time (including after-hours). This option may be best for companies that want greater control or have more experience with payroll processing.
After considering your needs and deciding if you prefer a full-service or self-service solution, think about any additional services that might benefit your business. Other common services offered by payroll solutions providers include:
- Tax advice and filing services
- Human Resources (HR) solutions
- Benefits administration
- Paid Time Off (PTO) management
- Reports (e.g., new hires, payroll-based analytics, etc.)
- Web-based systems
When selecting a payroll service provider, choose a company that is an expert in their field. A good payroll company should employ well-educated bookkeepers, tax professionals, and accountants. It should also provide support in additional areas, such as human resources best practices and benefits administration. As a small business, you may benefit from having access to a wide variety of payroll and finance-related professionals.
Don’t forget to research a payroll service provider’s reputation, including these key aspects:
- How long has the payroll service provider been in business?
- How do business review sites assess the provider?
- Are there any customer reviews available online?
- Has this provider had any data breaches?
- Was this provider recommended by someone in your business community?
A payroll service provider with a solid track record offers an extra level of trust in the accuracy and security of your data.
5) EASE OF USE
Ease of use is a key factor to consider when choosing a payroll provider. Here are some key questions to ask:
- Is the software intuitive?
- How quickly can I add new employees to the system?
- How much time will it take for me to run payroll?
- Can my employees easily access and update their personal data?
- Do I (or my staff) need prior knowledge of payroll in order to use the software?
- How much time will system setup require? Will someone from the software company help me with setup or do they offer easy-to-follow tutorials?
- Whom do I contact if I need help, and what are the hours of operation for support? Will I be charged for support?
The final factor you should consider when selecting a payroll service provider is security, including liability.
- When researching potential providers, check out their privacy laws. Your provider will handle sensitive employee and business data so need to feel confident they will safeguard your information. You may also want to look into their encryption and authentication policies as well as any past data breaches.
- In addition, you need a responsible provider. You need to
- Find out who will be held responsible—you or your payroll service provider—for any tax errors and any penalties or fees associated with those errors.
Choosing the best payroll service provider for your company requires a bit of research beyond the overall cost. You must also consider a provider’s additional service offerings, expertise, reputation, ease of use, and security. As you begin researching providers, use this comprehensive guide to help you make the right decision for your business.