How to Choose a Payroll Provider

How to Choose a Payroll Provider

Ensuring your business maintains a proper and effective payroll strategy is essential to the long-term success of your company. While many owners struggle to do this themselves, a payroll service provider can help take the weight off your shoulders.

You’re the business owner. You shouldn’t have to worry about managing payroll -- that’s someone else’s job. The more time you spend worrying about payroll, the less time you spend building the future of the company.

Investing in a payroll provider helps build employee loyalty and shows you take the culture of your business seriously. Since every provider claims to be the best payroll provider for small businesses, we’re going to discuss some of the major things you should look for in a payroll provider.

Here are our top-10 characteristics of an effective payroll service provider!

1. Payroll Taxes

There are a lot of reasons why you might consider a more streamlined payroll strategy, but one of the most important is automation. Without it, you open yourself up for errors when deducting payroll taxes because most business owners aren’t experts when it comes to this.

It’s not your fault, you have better things to worry about. That’s why payroll software should be equipped to do this for you with extreme precision. You’re not a tax professional and you shouldn’t have to be.

Look for software that is regularly updated, as well as one that supports 401(k) deductions, HSA deductions, and wage garnishments.

2. Tax Filing Errors

Every business owner understands that perfection is always the goal, but it’s rarely the outcome. Errors happen, mistakes exist, and no one -- not even software -- can run away from them. Unfortunately, that won’t stop the IRS from charging you a penalty or your employees from getting restless.

In the event your provider makes a mistake, it shouldn’t be labeled as your fault. Always ask your provider what happens when an error occurs and whether or not they will take responsibility for the error.

3. Security

Anytime you’re dealing with payroll, you’re handling extremely important and confidential information. Whether it’s an employee’s new hire paperwork or earnings, you have to be confident your provider isn’t prone to security attacks.

It’s best to work with a provider that limits work with overseas companies to prevent the risk of hacking. They should also have a proactive plan in place for when an attack occurs and how to eliminate the threat immediately -- ideally before it strikes.

4. Paycheck Processing

All employees receive a paycheck for the work they complete, but not all employees are paid similarly. Some are paid a salary, some are hourly, and some are paid a fixed-price amount for their work. Even then, some employees are paid different amounts depending on experience.

When choosing a provider that’s right for you, it should have no problem keeping up with all the different employees you’ve hired over the years. If it can’t keep these things organized for you in an efficient manner, find a new provider immediately.

5. PTO & Vacation Days

Manually tracking days off, vacation days, paid time off (PTO), and sick days opens the door for more errors and mistakes. The last thing you want is an employee taking off more time than they’re allowed to due to a counting error on your end.

When looking at the best payroll providers for small businesses, they should have the capability of tracking these days off, as well as a way for employees to easily request time off. Having everything in the same place means you only have to do a brief review instead of blocking out a whole day to determine the schedule for the week.

6. Employee Access

A truly effective provider makes it easy for any employee to access their account at any time of the day. Having this option available to an employee avoids any delays when that employee needs a pay stub or is curious about the amount of time they can request off.

Much like an owner should have these things easily available to them, so should the employee. They experience life changes frequently, so having access to their account can also help with changes of address and changes to new hire paperwork.

7. Payment Options

Did you know 4 out of 5 employees prefer direct deposit as their payment method of choice? Having a provider that supports this payment option is critical to keeping your employees satisfied and also leads to less frustration on your end.

At the same time, there’s still that 1 of every 5 employees that prefer a physical check. With that being said, your provider shouldn’t leave them in the dark. Having the ability to change payment options and having several options available to the employee is essential.

8. Integration

Most business owners have their own way of keeping track of their payroll, accounting, and other financial aspects of their business. Your provider is sure to bring some new concepts and changes to the board, but that doesn’t mean you should have to do a complete overhaul of your process.

Your provider should easily integrate into your current operation and shouldn’t impede on anything happening in your company at that time. A seamless transition means fewer errors from the get-go, which is crucial.

9. Customer Support

It doesn’t matter what product or service you’re talking about, there comes a time when you need customer support to explain something or answer a question. That’s why customer service is so important when searching for a payroll service.

The right service provider won’t have you listening to music when you call them. Instead, you’ll hear a real human’s voice ready to assist you immediately. No strings attached and no distractions, just pure customer support.

10. Costs

When getting started with a service provider, you don’t want any surprise expenses along the way. After all, that’s one of the reasons why you’re switching to a service provider.

To ensure your provider doesn’t try to overcharge you or stay quiet about hidden charges, you should understand what the fees are the following things: tax filings, W2s, 1099s, changes, cancels, direct deposit, check printing, employees that don’t work in a given time period, integrations, PTO tracking, HR features, and annual fees.

You’ll also want to ensure you understand the pay scheduling and whether or not the fees are subject to change.

Now that you have a much better idea of how to find the best payroll providers for small businesses, it’s time to put that knowledge to use for your business. If you’re ready to get started with a provider that meets your needs, contact Consultants In-A-Box today.

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  • Jordan VanMaanen
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