How to Choose a Payroll Provider

Discover how to choose the best payroll provider for your small business. Learn the key questions to ask when selecting a payroll service, as well as important features to look for.

Using an efficient and accurate payroll system is a vital part of running your small business. From setting up multiple pay schedules and frequencies to letting the system calculate all the tax rates and deductions, look for payroll software that will help you run your business smoothly.

Questions to Ask When Selecting a Payroll Provider

If you’re searching the internet for “how to choose a payroll provider”, you’ve probably decided that you want some help managing payroll. But that can be a complex decision. There are lots of things that you have to weigh.

Here are some of the most common payroll questions and top things that you should consider when you’re seeking help with payroll. The answers to these questions will be a major driver in your decision.

  • What core features does the provider’s software offer?
  • How easy is the software to use?
  • What does the provider’s solution cost?
  • What is the provider’s brand reputation?
  • What additional services does the provider supply (i.e., accounting, HR, health benefits, and workers’ comp)?
  • What kind of customer support does the provider offer?
  • How easy or difficult is it to switch payroll providers?
  • Does the software integrate with other business management tools?
  • How much control do you want to have over the payroll process?

Essential Payroll Features

1. Automated payroll

You want to make sure that payroll happens on a regular schedule. You are legally required to pay your team on a regular schedule—at least monthly. So you want to make sure that the payroll provider can help you make sure you never miss a payday.

2. Tax forms

Make sure taxes and forms, not just who but how you’re paying your people, are automated. You’ll also want to make sure your payroll tax forms and payments are compliant with your taxing authorities. Automated taxes can ensure that you don’t end up racking up penalties and interest.

3. Employee time tracking

Consider what mobile time tracking features are available from the service and the provider. We live in a mobile world. If you have a company with a mobile workforce, consider whether they can track their time on a mobile app.

4. Direct deposit

Consider how soon direct deposit available after you run payroll. Ideally, it’s available the next day or the same day. Cash is king, and direct deposit can improve your cash flow. Same-day direct deposit allows you to keep your cash in your business and gives you some flexibility if you have to wait to run payroll right before payday.

5. Expert payroll setup

Consider whether the team that’s working on onboarding you to the provider is a team of experts. You’ll want the right help and not work with a provider that is figuring it out with you as you go.

6. Employee payroll portals

Choose a provider that makes it easy for your team to track time, request or track PTO, view their pay stubs. An employee portal is a critical component and a feature that you’ll want to consider.

7. Payroll reports

You’ll need good reporting features to know where your payroll’s going—what’s going to taxes and what’s going to wages. Robust reporting features are an element that you’ll want to consider in the overall core feature set that you’re looking at.

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How Much Does a Payroll Provider Cost?

Typically, if you’re using some sort of payroll software, it usually starts around $20 a month. It goes up from there, depending on your business needs and the features you’re looking for. And different features drive the cost differently.

For example, the number of workers you employ and have to pay using the software may drive up its cost. And if you’ve got additional service requirements—like you need to add an accounting solution—that may add more.

Do You Need Penalty Protection?

Some providers, at the higher levels of their service, will cover some tax penalties for you. And whether you opt for protection depends on your business’s risk tolerance. Think about if you buy a warranty for an expensive piece of electronic equipment.

If you are the person who usually doesn’t buy the warranty, you probably won’t choose penalty protection options. If you’re the person who always buys the warranty, you might pay a little more for your payroll service. But your penalties are covered if something bad happens.

Do You Want to Manage Payroll Yourself?

If you’re less confident in your payroll processes or accuracy, you may want to consider a more robust automated payroll software. Otherwise, you might hire someone to do it for you. If you’re confident in your payroll process and love doing it, you might pick an option that’s more do-it-yourself.

What Payroll and Business Integrations Do You Need?

If you’ve got all the different financial management tasks and components—payroll, accounting, HR—all in one place, they may drive up your cost. But consider some of these additional service components.

Health benefits

Some payroll providers partner with your medical insurance provider and give you the ability to pay your health benefits through the payroll service.

HR services

If you need HR assistance, your payroll provider may partner with an HR provider. An HR resource can help you make sure you’ve got policies in place that are labor-law compliant.

Workers’ comp

Workers’ compensation is a critical component to make sure you’re covered from a liability and financial protection standpoint. And your payroll provider may partner with a workers’ compensation provider to make paying easier on you.

Tax penalty protection

If you’re not protected from tax penalties, you may have to pay out-of-pocket if you miss a payment deadline. That’s definitely an additional service factor to consider.

Payroll provider setup and switching support

Consider what it will take to switch payroll providers and if your chosen provider will make that easy. Payroll is one of those things where there’s no lag. Missing a payday is a big uh-oh. So make sure that you’ve got customized setup and support through the switching process.

Payroll Provider Integrations

1. Time tracking

TSheets and QuickBooks Online work together to allow you to track your employees’ time and then pay them. Tracking your employees’ time is good for compliance and profitability’s sake.

2. Job costing

If you have a job costing feature that integrates within your payroll, you’ll know where your money’s going and which jobs are more profitable.

3. Point-of-sale (POS)

If your provider integrates with or provides a point-of-sale system, you can track your time and payroll to how you’re selling products.

4. Expense management

Budgeting and knowing where your money is going is critical. In addition to your accounting software itself, there’s also managing your expenses separately and having the systems that manage that.

5. General business management

If you’re managing your workflow or different projects, you may want your payroll software to integrate with those business management systems.

Why Integrations are Important When Considering a Payroll Provider

1. They can help you save time

The more you can do in one place without having to duplicate work, the more time you can save.

2. They can reduce errors

If you don’t report payroll properly to the tax authorities, you’re going to have tax errors and, possibly, more penalties. So integrating it all into one place reduces those tax errors.

3. They can provide real-time data

If your payroll provider links up with your accounting provider, you can see exactly how much you’re paying in payroll relative to your income. On the job costing side of things, you can see where your time is going and what different customers and jobs are costing you.

4. They can improve payroll accuracy

When you don’t have to do payroll manually and enter data by hand, you reduce errors and improve accuracy.

Payroll Provider’s Ease of Use

We live in a high-paced, everyone-is-busy world. So if things get bogged down because they’re difficult, complicated, or frustrating, it’s going to make your life not fun. You’ll want to make sure your payroll software is easy to set up because payroll is an ongoing thing. Your payroll service provider should make it easy for you to

  • Run and manage payroll
  • Stay compliant with tax laws
  • Stay on top of cash flow
  • Partner with an accountant

Availability of Expert Customer Support

When you’re looking at customer support, you’ll want to make sure you can get in touch with your provider’s reps. When it comes to challenging issues, you’ll want to be able to speak with a real person.

Other times, you’ll want to be able to search and find answers yourself. So they should have a robust help centre that has useful self-serve materials.

Payroll Provider’s Reputation

Usually, larger, more well-branded, well-known payroll providers have more resources for that robust customer support you’re looking for. They also have a brand that is evolving and improving. So they’re unveiling regular product improvements.

More well-known brands are more likely to be in line with compliance, too. They may have the resources to make sure that you’re always staying up to date on payroll compliance.

Plus, security is critical when it comes to payroll because you’re dealing with Social Security numbers and sensitive data. So they can provide you with more robust data security. If you’re a small business owner who’s just getting off the ground, QuickBooks Online Payroll has put together an amazing suite of services.

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