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How to choose a payroll provider in 2021

As a business owner, you’re responsible for  paying your team on a regular schedule. The process of adding up hours worked and calculating employee pay is commonly referred to as running payroll. Running payroll is an essential part of any business, whether large or small. If you’re interested in how the process works, see our article on  how to do payroll.

Many companies choose to  outsource payroll to save time, avoid errors, and stay in compliance with the IRS. This is where payroll providers come in. Companies hire payroll providers to handle the  payroll process from start to finish. Sometimes, these providers help manage other human resources tasks in addition to meeting a company’s payroll needs.

If you’re in the market for a payroll provider, it can be overwhelming. There are many different types of payroll services out there. While providers tend to offer similar services, there are variations in pricing, specific features available, and so on. In this article, we’ll go over  common payroll questions and explain how to choose a payroll service for your company. Read on to learn all about payroll providers, or navigate to a particular section using the links below.

What is a payroll provider?

A payroll provider is a company that handles all sorts of payroll services for different businesses. Payroll companies are typically responsible for processing payroll, which involves the various steps that go into compensating an employee for their work. Thus, payroll providers are tasked with calculating employees’ gross pay, making any necessary withholdings or garnishments, disbursing payment, and creating the payroll records.

Some  payroll service providers offer more services than others. The most basic payroll providers will generally complete the tasks described above—calculating and distributing employee pay. However, other full-service payroll providers can do more than just the bare minimum. In addition to processing payroll, they may handle new-hire reporting, provide access to employee self-service portals, track time and attendance, and more.

What services do online payroll providers offer?

Online payroll providers offer a wide array of different services. While some providers simply process payroll, others come with a number of advanced features that can serve as useful assets to a company. Let’s start by going over some of the basic services that almost all payroll providers offer:

In addition to these basic functions, many payroll systems offer more advanced services. Depending on your company, these extra features can further streamline your payroll process. Some of the more advanced features offered by payroll providers include:

  • Tax filing on a company’s behalf
  • New-hire reporting
  • PTO and sick leave management
  • Software integration
  • Management of employee benefits and retirement plans

Benefits of payroll services

Companies have options when it comes to processing payroll. They can process payroll in-house, hire a full-time accountant, manually process it online, or use an online payroll provider. Each of these options comes with its advantages and disadvantages. However, out of these options, more and more businesses are outsourcing to online payroll providers.

So what are the benefits of choosing an online payroll service provider? There are several positive aspects to consider. With an online payroll provider, you can:

  • Save time: Very few, if any, business owners want to process payroll themselves. While it’s a necessary task, it’s also time-consuming and mundane. By using a full-service payroll provider, business owners can stop spending so much time on payroll and focus on their business.
  • Save money Managing payroll in-house or hiring accountants can quickly become expensive. In 2019, the  median salary of an accountant was $71,550. This figure doesn’t take into account health benefits, paid time off, and so on. Online payroll software performs the same duties as an accountant but generally at a much lower price.
  • Minimize errors: Calculating payroll can get complicated, especially if you have a lot of employees. Processing payroll by hand is bound to result in errors, which can cause confusion and even tax noncompliance. An automated payroll provider can quickly perform complex calculations with minimal errors and file federal and local taxes on your company’s behalf. Some payroll providers even offer to pay for penalties if they make an error on your behalf.
  • Access useful data: Most online payroll services generate detailed  reports for each pay cycle. These reports can provide valuable insights for you as a business owner and may be helpful come tax time. Additionally, many providers have mobile apps and employee portals, so you can quickly access payroll data no matter where you are.

Five things to consider when choosing a payroll provider

If you’re in the market for a payroll provider, there are a few key things to consider before making a final decision. Below, we’ve outlined a few aspects you should take into account when assessing payroll options for your company.

1. Core features

Before choosing a payroll provider for your company, you’ll have to determine which core features you need. Perhaps you’re just looking for a simple way to automate payroll processing. On the other hand, maybe you’d like a payroll service that comes with all of the bells and whistles.

As you do some research into payroll providers, consider your most urgent business needs. It may even be a good idea to make a list of the features you’d like and find payroll providers that meet those particular requirements. Many payroll service companies offer tiered plans, ranging from the most basic package to more advanced ones. Compare your payroll wish list with the features that each tier provides to find the best payroll service for your company.

2. Service integration

It’s possible that your company uses other programs such as accounting software or an HR services system like Gusto. In this case, you may want to get  payroll software capable of integrating with these other programs. This can streamline the payroll process, improve functionality, and make things more convenient for you as a business owner.

3. Payroll software pricing

For many companies, cost is one of the biggest determining factors when deciding on a payroll provider. And rightfully so, since no business owner wants to spend more money than necessary processing payroll. The best payroll services are generally the ones that save companies time and effort at a cost-effective price point.

The  cost of payroll services  varies depending on the features they offer and their pricing structures. Most payroll providers charge companies a flat rate every month or pay period. If you pay a monthly fee, then you usually get to run payroll as many times as you want within that month. However, if you’re charged every pay period, then you’ll pay a fee every time you run payroll.

The number of people you employ can also affect pricing. The majority of payroll providers will attach a small charge for every employee on payroll at your company. Additionally, add ons like tax filing,  direct deposit, and HR service management may come with extra fees.

4. Customer support options

It’s always a good idea to have a plan if something goes wrong. If your payroll software begins to malfunction, who will you call upon to fix the problem? If you can’t figure out how to add the new hires you’re onboarding to the payroll system, who will you call for help?

When you’re shopping for payroll provider systems, see what kind of support they offer their customers. Find out if they have a customer support phone number or an online chat feature available to customers. Consider the support system’s ease of use. Browse through their website to see if they provide any helpful articles, troubleshooting tips, or guides. You might even check out online reviews to see what experiences other companies have had with this particular payroll provider.

5. Tax compliance updates

Payroll providers are often tasked with tax services, such as deducting Social Security from employee paychecks and filing payroll taxes on behalf of companies. However, tax laws are constantly changing. To avoid errors and help your company  stay in compliance, payroll providers must stay up-to-date on laws and issue the correct tax forms. Make sure that the payroll company you use updates their tax tables as soon as new laws go into effect. You might also want to see whether they offer penalty protection in case of a filing mistake.

Final thoughts

Online payroll solutions can make managing payroll easier, quicker, and more efficient for small business owners and HR professionals. However, it’s important that you choose a payroll provider that suits your business needs.

As one of the top-rated payroll companies in the industry, QuickBooks Payroll gives you several user-friendly options to pick from. Choose from three different payroll service tiers to get the features you want at a price that works for you. Even our most basic tier comes with features like benefits administration, next-day direct deposit to employee bank accounts, and expert product support.

Whether you’re running big or small business payroll, it’s important to get the job done right. An online payroll provider will help you do just that. With the tips in this article and some thorough research, you’ll find the best payroll service for your company.

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