How to Choose a Payroll Service
Choosing the best payroll service for your needs can help you save you time and money. A good payroll service will pay employees and file and pay payroll taxes.
The only thing more conventional than “keeping the books” is screwing them up. In fact, the two typically go hand-in-hand, as the IRS penalizes about one out of every three business owners for payroll errors. Choosing the best payroll service for your needs can help you to reduce bookkeeping and other errors.
Even if mistakes weren’t so commonplace, doing your own payroll can still cost you. The valuable time and energy you spend figuring out how much money you have to give away could be spent actually making money. That’s why so many businesses are turning to outsourced payroll services.
“One of my rules is if you have one employee, get a payroll service,” says Rhonda Abrams, president of the business services site The Planning Shop and author of the guidebook Hire Your First Employee. “The penalties for screwing up are so much more expensive than the cost for payroll.”
A good payroll service will, at the very least, get checks to both the IRS and your employees on time, taking most of the weight off your shoulders — but not all of it. The paychecks themselves may be out of your hands, but this is still sensitive information that’s immensely important to your company, so it’s critical that you pick the right service for your small business.
Tips for Choosing a Payroll Service
When payday rolls around employees automatically assume they will not only be paid but be paid the correct amount. An easy way to ensure everyone is receiving payment and the IRS is not on your back is to use a payroll service. Use these tips to evaluate and choose a payroll company to handle your small business needs
Recommendations:
One way to find a payroll service is to ask other small businesses for their recommendations. A recommendation from someone you know means that chances are they will be honest about their level of satisfaction with the company. Once you have a few services you are interested in ask if they can provide you with two or three references from clients who have businesses similar to your own. Recommendations are the best way to discover the reputation and quality of the firm.
Also find out how long the company has been in business, and check their reputation with the Better Business Bureau, as well as by searching online for the term, reviews, along with the name of the payroll company. These are important facts to know because ultimately it’s your company, not the payroll company that’s responsible for reporting and paying in payroll taxes. Should a payroll company you deal with fail to remit your payroll taxes to the government (and perhaps go out of business), you will have to pay the money owed to the government yourself, even though the payroll company took it out of your account
Prices and Hidden Fees:
The first question on everyone’s mind and the first question that need to be asked is: How much? They may charge a flat-fee with an additional charge per check or a charge based on the frequency of payroll. You may want to pay your employees every week but find that every other week will save you money. This is something that should be taken into consideration. Also, be sure to see a detailed breakdown of the bill to discover those hidden fees that some companies may “forget” to mention. For example simply changing an employee to direct deposit or adding a new employee might accrue additional charges. You may also want to ask if the charges and fees you were quoted are subject to change and if so, do they increase frequently?
Special Services:
In addition to paychecks, payroll services often offer other special services for businesses. These special services include direct deposit, customized reports, as well as the administering of employee benefits, retirement plans, and pre-tax deductions for medical insurance or childcare. Some companies are capable of developing customized software tailored to your specific needs. If you have employees in different states you must make sure the company has national coverage capabilities.
TIPS FOR CHOOSING A PAYROLL PROVIDER
Are you considering converting to a new payroll provider, but hesitant to make a change? You may be concerned about missing payroll periods or data errors during the transition, but it doesn’t have to be chaotic. The key to a successful payroll conversion is a streamlined conversion process that meets the unique needs of your company while minimizing the amount of work required to get started. When you’re ready to make the switch, here are six things to consider when choosing a payroll provider.
TIMING OF A PAYROLL CONVERSION
Deciding when to implement a new payroll solution is important. If you are considering a mid-year conversion, Quarter 2 is a good time to start the process. Another option is to convert at the end of the year. The ideal time to begin a year-end conversion is October so it doesn’t conflict with any year-end processing you need to handle.
DATA CONVERSION
When considering a conversion, it’s important to also look at whether the payroll system is unified with core HR and attendance. When payroll, core HR, and time tracking data are stored in a centralized database, this provides many benefits
Look for a provider who assigns a dedicated implementation manager with the experience to translate the differences in the systems and suggest improvements that will increase productivity, reduce the potential for errors, and drive down costs
DATA INTEGRATION CAPABILITIES
Many companies have existing business investments for benefits, such as general ledger software, point-of-sale (POS) systems, and retirement packages. The ability to integrate these existing systems with an online payroll system is a huge benefit as all of the data is accurate and up-to-date.
How to Choose the Right Payroll Service
Consider factors like cost, features, ease of use, and more as you shop for a payroll system. Running payroll might not be your forte, but it’s a necessary part of being an employer. To ease your responsibilities, you could try a payroll service, a type of software as a service (SaaS).
How much do I know about payroll?
If you aren’t a payroll expert, you need an easy-to-use software solution. Payroll software automates a complex process, and the point of automation is to free your time, not take it up.
Which basic features should a payroll software have?
First, let’s go over the key parts of running payroll. Running payroll is the process of entering the hours employees worked during a pay period, calculating their gross wages, determining deductions, and giving employees their net pay.
Payroll software saves you from manually running payroll. Here are a few basic features you should keep an eye out for when shopping for payroll software:
Taxes: Payroll software automatically withholds taxes from each employee’s paychecks. If you want the software to go a step farther and file taxes for you, opt for a full-service payroll software.
Accuracy: Mistakes on payroll result in penalties for your business. Find a provider that guarantees accuracy.
Multiple payment options: If you want the option of paying employees with direct deposit or paychecks, find a provider that accommodates both and offers free direct deposit. According to the National Automated Clearing House Association(link is external) (NACHA), 82% of workers receive their wages via direct deposit, so try to offer this payment method.
Time and attendance integration: Some software providers offer a time and attendance add-on to help with attendance management. This lets employees enter the hours they worked. All you need to do is approve their hours.
How much do I want to spend?
Deciding how much to spend on payroll is challenging since many factors go into the cost. To get started, learn what other businesses spend on payroll services.
Considerations to Make While Choosing A Payroll Service
Determining how to choose a payroll service for your business can be difficult. There are many payroll software providers and features from which you can choose. Whether this is your first time looking for payroll software or you want to switch software programs, you need to know what to consider. Knowing what to look for in a payroll service can help you make a good purchase.
What will you find in this guide about how to choose a payroll service?
Our guide includes 10 points you should consider while choosing a payroll software solution. A few of the points you can learn about in this guide include types of payroll software, software costs, and software security.
In each of the 10 sections, we provide you with a list of questions to ask yourself. The questions are helpful tools to assist you in thinking about your needs and what type of software will work best for your business.
At the end of the guide, there are related articles about small business payroll service options. You can use the articles to further your learning and improve your business’s payroll program
When you download and read our guide to choosing payroll software, you can prevent a bad payroll software decision. You don’t want to be locked into a contract or discover hidden fees for the features you need. You should purchase payroll software that you like on the first try.