Choosing a Payroll Services Company – Part 1
Outsourcing payroll services is a lifesaver especially for small business owners with limited manpower resources and if you sign-up with a reputed payroll services company you can be sure of their best practices and professional approach.
But to choose the best among so many payroll service companies, all claiming to be prompt at their job is a tedious but fruit-bearing exercise.
We have compiled a series of factors that would assist you in choosing a suitable and dependable payroll service company for your business.
Choosing a Payroll Service: How to Fish
You may start with a basic search on your favorite search engine for payroll service and chances are that you may end with thousands of results to choose from. Ascertaining quality service providers from the search result is a hard task but is not impossible if you break down the results systematically.
For beginners, it is advised to first focus on those service providers who are referred through your known ones. This gives an opportunity to know first-hand what role the outsourced payroll services play and what are the pros and cons. Primarily, it would assist you in crystallizing your thoughts on whether you need a third-party payroll service or you are better off hiring an in-house staff.
Be aware not to straight away fall for large payroll service providers as they might try to up-sell other related services in the package that you might not need like time management or human resources. This will turn out to be an expensive affair for your small business model.
It would be a good practice to assess your business requirements before signing up a contract. Lament over your business plans for the coming year. Ask straight pointed questions and make notes – a question like do you want to have human resources services in the service bundle along with payroll, is the payroll service provider capable to handle different federal and state taxes, how much growth in terms of human resources you expect in form of full-time, part-time and contractual hires, what budget you have set aside for the payroll service, etc. These probing questions always assist in crafting your exact business requirements before you sign-up for a payroll services company.
Additionally, you could be running a business that has union workers. Before signing up a payroll services company make sure if they have handled such cases. There could be a number of things that are not part of the usual business practice. For instance, if you run a restaurant, the servers are tipped on top of the bill. The payroll services company that you want to sign-up for should be aware of how to file taxes for such cases. Considering all the factors in length and breadth of your business practice you may end up with a much narrowed down list of choices.
You may also search online for comments and reviews about the payroll services company through Yelp and other business review websites.
Choosing a Payroll Service: Service Portfolio and Pricing
With the filtered list of payroll service providers, you should try to map all your business requirements with the service palette that the payroll company has to offer.
Basically, the payroll whether you opt for an in-house payroll software or hire a payroll services company it is supposed to perform three major tasks – That it pays your employees promptly on time and accurately, it calculates your taxes accurately and files the same on time so as to keep you compliant with the law and keeps you safe from IRS penalties. You should always ensure that the payroll services company that you sign up is following best practices and has a trustworthy standing among its customers.
After you have pinned down the list of prospective payroll services company it is time now to revisit your list of immediate essentials in terms of services that you want from the payroll company, moreover, it would also be good to check for custom requirements that you would need upfront and those that are not charged extra viz – W-2 forms, online pay stubs, employee time tracking etc. It would turn out to be a good deal if you get these extras and more at no extra cost to your pocket.
As a crucial check before you freeze a payroll service company, it would be good to have, if the payroll company has a web platform for its services. This would ensure that the data integrity is maintained and the system remains error-free. Often, contemporary payroll companies will do a reentry of the data that the user has sent across giving rise to data duplication. In short, a payroll services company having a web platform to perform its task is a good have.
The pricing model when you sign-up with a payroll services company depends on the number of employees and the services bundle that you agree upon –still it makes sense to be clear whether you will be charged by the month or by payroll period. Some payroll services companies have ready-made packages with varying features and options and of course different pricing. You should be wise not to fall for an all-inclusive services bundle initially. It is suggested that you start out small with basic package and then upgrade as you go ahead.
It is also observed that some of the payroll services companies would seize your taxes at the time doing the regular payroll, this way they accrue interest on the amount till it is time to file the tax. Taxes have to be filed within a certain time, few of the payroll companies would take money from you but wouldn’t file the taxes till the time window exist. Thus earning interest on your money and you, in turn, might be facing cash-flow issues.
Though there is nothing illegitimate about such a practice, if the payroll services company doesn’t do it – it is a benefit for you.