By: Bridget Bryan Toth, EA
Key Takeaways:
- Business owners should be aware of when to outsource their payroll responsibility, as the process has become more complex in recent years.
- When looking for a payroll provider, four main issues to consider include: ease of use and integration; pricing; levels of service; and customer service.
- The interface should be user-friendly and intuitive, the help section or customer service readily available, and reports easily accessible.
- Tiered pricing structures should be considered when choosing a provider, depending on the size and complexity of the business’s payroll needs.
- Level of service should also be evaluated and chosen based on what is needed (e.g., basic payroll services to a part-time or full-time HR department).
- Customer service reviews should also be taken into account before deciding which provider is right for the business.
When a business grows to the point that it needs to outsource its payroll function, shopping for the right payroll provider can be a daunting task. Whether your business just added its first employee or its tenth, as an owner you have probably reached the point where you are wearing too many hats. It’s time to outsource the payroll and make your life easier.
Payroll is much more complex today than it was even a few years ago. The days of issuing paychecks with just federal and state tax withholdings are long gone. Today’s payroll is complicated with factors such as overtime, changing minimum wage rules, varying state and local tax withholdings, employee benefit plan deferrals, and not to mention all the Covid payroll special factors and credits in the past several years, all adding to the complication of doing your own payroll.
In addition, there are other compounding factors and emerging issues such as remote work, which may involve employees who work in one state but reside in another, necessitating adding more state compliance filings for these remote workers.
It’s essential that business owners know when to reach out for payroll support and select the provider that will best meet their needs. If your company’s payroll is becoming too complex to handle internally, or if it just takes too much time that you don’t have to spend, the time for change is now.
Top Four Issues When Choosing a Payroll Provider
The top four issues to consider when looking for a payroll provider are:
East of Use and Integration
All payroll services are accessible online today. When shopping around be sure to ask for an online demo so you can see the process before you commit. Questions to consider:
Is the interface user-friendly and intuitive?
Can you find things on your own?
Is the help section or customer service readily available?
Can you find your payroll summary and other reports easily?
Where do I find the copies of the returns that have been filed for me?
Do I pay my own payroll taxes or let the service do it for me?
How does the payroll platform interface with your internal accounting software?
These are all good considerations to take during your decision-making process.
All payroll services provide reports for your files such as payroll summaries, payroll journal reports, cash requirements for payroll taxes and direct deposit amounts for your employees. These reports are usually available in PDF or in Excel format, depending on your desired method of record keeping. It’s important to consider what kind of functionality you need and take that into account when evaluating payroll systems. For ease of integration, it’s also a good idea to ask your accountant about the interface capabilities for your accounting software to eliminate any surprises later.
Pricing
Payroll companies offer tiered pricing structures that enable you to pay for the level of service that’s right for the size and complexity of the customers’ payroll needs. Whether you have two or two hundred employees, paying them weekly, biweekly, or monthly, your needs will be different than the next company. There are varying levels of complexity involving retirement plans, health insurance, garnishment, multiple states compliance issues and even outsourced HR needs, that will require a higher level of service.
Levels of Service
Payroll is a complex function, and you will likely need service and support around issues such as changing wage laws, benefit deferrals and a host of other HR-related matters. With the multi-tiered service levels available, the payroll providers offer levels from basic payroll services to a part-time or even a full-time human resources (HR) department.
The HR portion of this can include benefits management, recruiting, and onboarding of employees. Outsourcing HR for a fixed monthly price can be a huge advantage for you both financially and in general HR knowledge. If you are a small company and don’t need a full-time HR person this could be your answer. The HR field has become more complex in recent years and difficult to keep up with all the changes as they come to the surface, so an outsourced team may be what you need.
That said, we caution you to be realistic, and only take on the services you need for now. You can always upgrade your tier of service as your needs change, but it’s important to know what is available to you. It’s called service for a reason, it’s meant to be a service that helps you, not to make your life more complicated than it needs to be.
Customer Service
This is the top complaint we hear about payroll providers. While it is true that different people have different experiences with the same provider, it does make sense to look for reviews on various payroll services when making your decision. Another thing to consider is working with the customer service or help desk to keep in mind their availability and hours of operation so you are not left frustrated when running payroll outside of normal business hours.
In Summary
Payroll may be your immediate pain point, but it does not have to be. When selecting a payroll provider, you’re really looking for a partner that can help you remain in compliance with wage, tax and employee benefit regulations at a fair price. Make sure it’s a provider that gives you confidence, not additional stress. For guidance on finding the right payroll provider for your business, contact your KRD advisor.
