Selecting a Payroll Service

By: Michael | Published: September 8, 2010 | Filed under: Small Business Advice, Small Business Tools

As small business owner, if you have started hiring employees you will quickly come to realize how much work is involved with keeping an accurate payroll. This information must be kept accurate to comply with strict IRS criteria. Considering how intense all the record keeping involved is, most small companies are best suited just employing the aide of a payroll management service. Let’s look at how to weigh your options in the payroll management search.

Right off the bat, you have a few options in terms of how you would like to submit your payroll to the service. The most common options are online, via phone and via fax. Be alert if you are opting to submit payroll online. Many payroll solutions who utilize online payroll with seemingly be the most affordable. Often time this is because your entire payroll processing experience is self-service and completed online. While this isn’t necessarily a bad thing, it is something to certainly be aware of if that is not what you are looking for.

If you begin pursuing an online / self-service payroll solution be certain to discuss with the company just what support is in place in the event that you need it. Many of these solutions are offered as 100% self-serve, leaving you on your own if you have any questions or serious concerns. The upside to this type of solution is if you know what you are doing with managing payroll and simply need a system to process it for you, this will end up being the most affordable solution by a landslide. However, keep in mind that when you need support or have a question, it might not be there. If you are still unsure of yourself, it may be worth it to pay the additional premium of working with someone over the phone.

Payroll services that allow you to handle your payroll over the phone will often (but not always) have access to more dedicated customer support. Services that utilize the phone tend to be a lot more hands off for you than any one that makes you enter the times for the week over the internet. How phone payroll services tend to work, is your payroll rep will call you at the end of each week asking how many hours each employee worked. From there, they will handle sending the checks (or direct deposits) to your employees no the correct payroll day.

Once they are made aware of how many hours each employee on the payroll worked, they will proceed to do the following:

-Pay the employee via check or direct deposit.
-Calculate how much you owe in payroll taxes and pay that to the IRS on your behalf each payroll.
-Calculate how much you will need to pay into each respective employee’s disability and social security fund. Then make the appropriate payments on your behalf.
-Handle filing all workers compensation information and all appropriate disbursements.

One crucial factor you will want to discuss with any payroll service that you consider working with is if their payments are bonded and insured. What makes this so important is you are designating the payroll service to pay taxes on your behalf. If you are not working with a bonded agency, and anything happens to the tax money before they pay it to the IRS for you, you will still be held responsible.

As with any business decision, don’t shy away from conducting due diligence. Call up numerous vendors and ask them flat out what makes them better than their competition. This will help you make the most informed decision possible, minimizing the chance that you will make a decision you later regret.