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10 Questions to Ask When Choosing a Payroll Service

These days, it’s very typical of businesses to choose a payroll service rather than managing payroll all on their own. When it comes to in-house vs. outsourcing payroll, outsourced payroll services make processing payroll much less complicated and time-consuming. With robust software, automated tax filing options, and even added HR resources, payroll services provide a great solution for your payroll and tax filing needs. Not to mention, they are very affordable! 

Since there are so many services available today, you’ll certainly have to ask some questions before finding the best payroll service provider for your business. To help you navigate the process more easily, take a look at these 10 questions to ask when choosing a payroll service.

Related: Our Complete Payroll Service Buyer’s Guide

1. What payroll features do you require?

First thing’s first. You need to make sure the payroll service you choose includes all the features your business requires. At the very least, you should ensure the service has auto-processing for payroll. This way, your employees get paid on time, and your payroll taxes get filed and paid on time as well. 

However, these days there are lots of payroll service features available, so make sure to review features with your team to determine your needs. To help you get started, here are some of the most commonly used payroll service features: 

  • Automatic payroll processing: Set up auto-processing for your organizations’ payroll at a chosen frequency, such as weekly or bi-weekly
  • Direct deposit: Give employees the option to set up direct deposit, in addition to paper checks or debit card options 
  • Tax forms: Provide easily accessible tax forms for employees, such as W-2 forms
  • Tax penalty protection: Ensure you are covered when it comes to tax penalties, such as IRS deadlines 
  • Time and attendance tracking: Integrate payroll and time tracking, so you can seamlessly track employees’ time worked 
  • Employee portal: Let employees log-in to their individual portal to manage payroll items, such as time off requests and tax forms 
  • Online pay stubs: Allow employees to access their pay stubs online
  • Reporting and analytics: Get real-time activity, status, and ad-hoc reports about payroll processing 
  • Health benefits, 401k, and workers’ comp: Take advantage of built-in benefits offerings for your employees

2. How much does the payroll service cost?

One of the most important factors when it comes to choosing a payroll service provider is the cost. You need to make sure the overall cost of the payroll service fits within your business’s budget. Of course, each payroll service is priced differently. When doing your research, you may see service’s charge by the:

  • Pay period
  • Month 
  • Year 

These costs will vary depending on the features and integrations the payroll service provides. For instance, if you choose an integrated payroll and HR service, chances are you will pay more.

You can expect to pay anywhere between $20-$100 per month (as a base fee) for a good payroll service, plus an additional $1-$5 per employee. Beware of services that charge more than $100 per month in base fees, as this exceeds what is typical of the industry.

Additional charges 

Also be sure to ask about additional charges. This is very important! You may find that a payroll service fits within your budget on paper, but the additional charges involved really add up over time. Some common additional charges to look out for are:

  • Set-up and installation
  • Training 
  • Add-on features and integrations
  • Full service tax filing 
  • Impounding taxes 
  • Check signing 
  • Direct deposit 
  • Customer support and maintenance 

We recommend comparing overall costs of each payroll service alongside one another, including all additional costs. Keep in mind that some payroll services offer discounts for some situations, so be sure to ask before signing up!

3. What is the payroll provider’s contract length?

Before choosing a payroll service, keep in mind that you will be signing up for a subscription-based contract. This means that you’ll be locked into an agreement with the payroll service provider for a duration of time. If you decide you want to switch providers – for instance, because you found a service with features and pricing better suited to your needs – you will not be able to do so until the contract is up.

What are the subscription lengths for the payroll providers you are considering? If you are new to using a payroll service, you may consider finding a provider who offers a shorter subscription term (ie. month-to-month), such as Paychex. This will give you the chance to decide whether or not you want to use it for the long-term and you’ll be able to easily switch should you decide to do so.

4. How frequently can the provider process payroll?

Most payroll providers today have several options available when it comes to the frequency of payroll processing. However, your company might have certain processing needs and expectations. Make sure to check with each payroll service provider’s offerings to ensure they offer the frequency you need. Most payroll services today let you choose between the following processing frequencies:

  • Weekly or bi-weekly
  • Monthly or semi-monthly 

You can always call each payroll provider to ask if they offer any additional payroll processing frequencies, as well.

5. What integrations are available?

Does the payroll service provider you are considering allow integrations with back-end software you already use? This question may be very important for businesses who use software on a daily basis and want payroll to integrate seamlessly with these systems. Take a look at some of the common software with which payroll services can integrate:

  • Time and attendance systems
  • Point of Sale (POS) systems
  • Accounting and tax preparation software
  • Customer Relationship Management (CRM) systems
  • Business operations and analytics software 
  • Hiring software
  • Legal and compliance software 
  • Expense management software
  • And more

Most payroll service providers will b e able to provide you with a list of integrations they support. So make sure to ask so you can maintain productivity when implementing your new payroll software.

6. Are you looking for an integrated Payroll and HR solution?

Keep in mind that many payroll services today let you streamline your payroll, accounting, and even HR needs all in one platform. If your HR team is currently managing payroll on their own, on top of all their other HR responsibilities, this is definitely something worth considering. While integrated payroll and HR services normally cost a bit more than payroll services alone, there are many benefits to bundling these two needs:

  • Time savings on administrative tasks
  • Cost savings on HR expenses
  • Improved data security (ie. salaries and social security numbers)
  • Convenient access to data
  • Labor-law compliant HR policies 

7. Do you plan to manage the payroll process yourself?

Today, you have the option of choosing a payroll service that’s more automated or more “do-it-yourself,” depending on your preference. An automated payroll service will be more hands-off. It will help you boost accuracy and avoid errors in payroll processing. In addition, it will help your team save tons of time when it comes to managing your payroll needs.

You can also choose a “do-it-yourself” payroll service. This will give you more control over the payroll process as well as give you more oversight as to how it’s done. Managing your own payroll process can also help you save some money, compared to an automated service. However, keep in mind that it will be a time commitment! 

8. How easy-to-use is the payroll software?

Payroll software is likely something that you will be using regularly. For that reason, it’s smart to choose a software with good ease-of-use. The last thing you want is a complicated software interface that can slow down your workflow when working on  payroll. 

When choosing a payroll service, make sure to take the software for a “test drive.” Consider things like set-up, dashboard management, tax law compliance, etc. Many payroll software providers will provide “free trials” or demos for your convenience. This way, you can ensure you are choosing a software that you’re comfortable with using.

9. Who is liable for potential payroll errors?

When choosing a payroll service, make sure to look into who will be responsible for any potential errors. When you don’t process payroll properly, you’re at risk for tax errors and penalties, which can cost your business lots of money if you are held responsible. 

Many automated payroll services take responsibility for any potential errors in the payroll process. Make sure to ask the provider whether or not they offer tax penalty protection. If you are going to be liable for error, you should look into whether or not the software has a tool that helps you detect any errors before submitting payroll.

10. Does the customer service suit your needs?

Every payroll service provider has a different customer support system. When it comes to challenges with payroll processing, you will likely want the reassurance of having a customer support representative available to help as soon as possible. At least, you’ll want to be able to access online resources to help facilitate the payroll process when needed.

When choosing a payroll service, pay attention to the customer support hours of operation. Determine how to contact customer support - for example, via phone, email, live chat, etc. Also check whether or not the provider has online resources to use in the event you cannot get in touch with customer support. If the provider’s customer support team is closed or unavailable during your business hours, this may be a “red flag” warning you to choose a different service. 

Note: it’s also important to some businesses that they have one customer support representative that works directly with them. It can be frustrating to have to introduce your company and needs to new representatives every time you need help. For this reason, you may want to see if you will be assigned a single customer support rep, or if you will have to speak to someone new each time. 

Looking to find the best payroll service for your business’s needs? Our online comparison tool matches you directly with the best payroll services that provide what you are looking for. Get started for free by visiting our payroll service quote form and compare the best prices.

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