5 Things to Consider When Choosing a Payroll Provider

ByDerek CromwellJul.17, 2018

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Choosing a Payroll Provider
When you’re making the move to outsource your payroll services, don’t jump at the first platform you find. Consider these things first before you make a decision.

One of the greatest issues faced by payroll comes in the form of human error. Missed hours, improper calculation, incorrect PTO, neglecting contributions or required deductions; these errors are far more frequent when payroll is manually calculated.

In addition, manual payroll is a repetitive, thankless and complex task that taxes even the most experienced professional.

That’s why the industry has continued to shift in the last decade to focus more on software and web-based applications that automate a great deal of the payroll process. That automated workflow greatly reduces the likelihood of errors.

Likewise, cloud-based payroll solutions, such as Intuit, can reduce overhead costs while freeing up your team to focus on growing your business.

1. What Specific Payroll Services Are Included?

With more than a dozen well-known cloud-based payroll services, with countless smaller operations filling the marketplace, you want to choose a solution that most accurately fits the needs of your business.

Start by identifying your own requirements then search for a payroll solution that delivers what you need, or allows you to build out your service a la carte.

You'll likely want a service that provides most, or all, of the following:

  • Payments for hourly, salary and contract employees, with options including check and direct deposit.

  • New employee reporting.

  • Tracking PTO accrual, use, vacation and sick days (accrual and use).

  • Accuracy guaranteed with all payroll taxes, both state and federal.

  • Benefit deductions including both health and insurance.

  • Deductions for flexible spending accounts, retirement, health savings accounts and contributions to accounts like 401(k).

  • Handling of misc earning and deductions, including bonuses, tips, commission, expense reimbursement and garnishments.

2. What Does the Payroll Service Cost?

In most cases, payroll services charge based on a monthly subscription fee. That monthly subscription is a baseline, with additional fees being levied per month based on the total number of employees you’re tracking in the system.

Depending on the volume of services you use and number of employees, you could pay anywhere from $20 per month to more than $200 per month. Per employee rates can be as much as $5 per employee, per month.

It’s hard to make a decision based on price alone, and you shouldn’t. Most payroll services, such as Gusto,  provide a free trial period where you can demo the web-based application to ensure it’s a good fit for your company.

3. How Are Taxes Handled?

You should limit your selection to payroll services that include payroll tax compliance and accurate tax processing. This includes both federal, state, and end of year taxes for your team.

Avoid working with services that want to charge additional fees for calculating, paying and filing payroll taxes. You also don’t necessarily want to use a service that requires you to manually process taxes. Ideally you want an automated and paperless payroll solution.

4. What Security Protocols Are Used?

Because you’re dealing with extremely personal employee information you need to know that the payroll service you’re using is private and safe from being compromised. The best payroll services utilize the highest encryption standards with cloud-based services, including 256-bit Advanced Encryption which defends against identity and password theft.

In most cases you’ll find the security is on par with that used in the banking industry for online accounts. This means additional firewall protection and 2-factor authentication.

5. Can Employees Access Payroll?

Without exception, your employees, as well as any contract workers, should be able to access payroll. The majority of popular payroll services, like ADP and Intuit, give employees access via a personal portal for viewing pay stubs, updating personal data, etc.

Selecting a provider without an employee portal means all requests will have to be manually handled by your accounting staff which can create disruption in your day to day workflow.

Bonus: 6. How Well Do Web-Based Applications Integrate?

In most cases, web-based payroll solutions are able to seamlessly integrate with the most widely-used accounting software, including Quicken, or Sage 50. If you use older accounting software you might encounter some trouble.

Once you have your system integrated, the information will sync automatically or can be pushed manually. In either case, you won’t have to manually enter payroll anymore and payroll reconciliation will happen automatically.

Lastly, keep in mind that you’ll need a payroll solution that grows with your business as well as your team of employees. You want to select a payroll provider who can scale with you, allowing you to continue to add employees to the system without any massive workflow changes or reconfiguration.

Find a payroll provider that can help you cut costs and grow your business. Check out our in-depth payroll service reviews today.