When looking to outsource, payroll services are usually one of the first operations that business owners send out-of-house. This is no surprise. If you’re not an experienced accountant who knows all the ins and outs of the tax code, doing your own payroll can become a nightmare, and hiring a fulltime in-house employee to do it is simply not an option or a necessity for many small businesses. As a bookkeeping services provider, my clients often come to me asking just what they should be looking for in a payroll services provider. Here’s a few things I tell them to keep in mind:
Know What Services to Look For
Your first job as an informed consumer when shopping for payroll services is to understand exactly what payroll services are. There are a lot of great online and cloud-based payroll services out there and it can be hard to keep all the details straight. Make sure that any option you’re considering can handle all basic operations like:
Paying all employees and contractors via paycheck or direct deposit.
Tracking paid time off (PTO) as well as sick days and vacation days for all employees.
File payroll taxes
Process earning and deductions such as reimbursements, commissions, tips, garnishments and bonuses
Deduct for 401(k), as well as FSA, HSA and IRA contributions.
Know What It All Costs
Most outsourced payroll firms offer their services for a fixed subscription fee, with a small fee added (generally $1- $5) per month, per employee. These fees can range in size from $15 to more than two hundred/month. This will of course depend on how big your business is and what kind of services you need. Discuss options with your bookkeeping services provider to get some perspective on which payroll firms offer the best value for your money.
Make Sure it Works for You
Most online payroll services will offer a free trial online. This is a great chance to see if their interface and services work for you. When you get set up with an account, go to their website and add employees. This is an interface you will be dealing with a lot so you want to make sure that it’s user-friendly, functional and compatible with you. Your employees also should be able to access personal portals to check on their PTO and see time stubs. Also, make sure you test-drive their customer service. There’s nothing better than having fast, efficient and reliable customer service when you need it.
Ask About Taxes
Tax services that should be handled by payroll include process employee W-2 forms and end of year 1099 forms. This should come standard and any company that tries to charge extra for tax compliance services pertaining to payroll are probably not the best option for your business.
Like your bookkeeping services, you should make sure that your payroll services can be scaled easily and effectively. They may be the right fit for your company today, but will they be the right fit for you in a year? Ask about how they would handle scaling up your services over time, and what it would cost to grow with them?
Now this is one that really can’t be overstated. Your payroll services providers, like your bookkeeping services providers, will be handling important and private financial information regarding your business and your employees. Data security is highly important in situations like this. Before signing on ask about how many layers of security they have for online information, as well as what kind of security is offered at data centers.