11 Pro Tips for Choosing Payroll Services for Small Business

Posted at October 5, 2020 » By : » Categories : Accounting, Payroll, & Taxes »
payroll services for small business

As a small business owner, you juggle a thousand things a day. From tax compliance, inventory, and point of sale systems to customer care and loyalty programs, you have to wear a dozen different hats every day. And one of the biggest chores on your list each month is likely managing payroll. Getting the right payroll services for small business can help slim down your to-do list and allow you to focus on the parts of running your business that you love.

Read on to discover some tips for finding the right payroll services for your small business.

Get Referrals on Payroll Services for Small Business

When you start shopping for payroll services for small business, one of the first things you should do is look for referrals. If you google “payroll service provider,” you’re going to get thousands of results that will take forever to sift through. It’s much better to start with services you trust and build from those connections.

If you work with a point of sale system provider, ask them if they have any payroll services they partner with. Also, check with other small businesses in your area and ask which providers they use. Talk to people who work in your industry and start building your list based on the referrals you get.

Research Their Reputation

Once you have a shortlist of potential payroll service companies, it’s time to start doing some research on your own. Reputation certainly isn’t everything, but it can help you rule out companies you don’t want to work with. You want to work with a company that has a solid reputation for both service and effectiveness in your industry.

Take a look at previous customer reviews, looking for patterns in both positive and negative reviews. Research lists of top payroll service companies and see if any of the ones on your list turn up. Also, talk to people in your industry or area who have worked with that company and ask what their experience was like.

Ask About Their Database and Online Payroll Services for Small Business

Once you’ve narrowed your list down to three or four companies, it’s time to start getting in touch and asking questions. One of the first things you should ask a potential payroll service about is what kind of database they have running. The right database can make it easy for you to manage payroll, attendance, and HR documents all at once.

You want to make sure the company you choose has a centralized database that encompasses core HR and attendance. This can help you reduce payroll errors and decrease your labor costs all at once. It also gives you better flexibility, as well as a better view into company trends.

Take a Look at Integration Capabilities

While your payroll service should be able to incorporate your HR and attendance systems, it should also be able to integrate with other areas of your business. Your point of sale system, benefits packages, and general financial records all tie into your payroll. The payroll service you choose should make that integration intuitive and seamless.

A payroll service with good integration capabilities can help you eliminate redundant paperwork. This can also help you avoid entering the same information over and over again into different systems. All of this helps your system to work more efficiently and with fewer mistakes.

Check on Tax Compliance Management

As a small business owner, tax compliance is a part of your daily work. You have to make sure your company is following all the proper regulations and paying the appropriate taxes. A good payroll service can help make that task easier for you and allow you to focus more on running your business.

Make sure the payroll service you choose updates their tax compliance systems each year. Their tax compliance department should update your tax tables when the new compliance guidelines come through. Ideally, they should also review your existing data to make sure you haven’t made any errors in the past and keep you on the right path moving forward.

Look into Customer Support to Help Payroll Services for Small Business

Of course, customer support is a critical factor to consider when shopping for a payroll service. A service can have all the best databases and tax compliance systems in the world. But if you can’t get them to answer the phone or reply to an email when you’re having a problem, none of that will do you any good.

Ask what kind of customer support your shortlist of payroll services provides. Check on the certifications and experience their customer support team has and ask if you’ll have a dedicated team assigned to handling your account. Find out what their average response time is and what methods you’ll have to get in touch with them if needed.

Check Out the Bonus Features

In addition to the basic features, good payroll services should go above and beyond when providing you with the functionality you need.

You may need to handle direct deposit and online pay stubs to make sure your employees have easy access to their payroll. You may also need team expansion options that allow you to add new employees without caps or penalties as your company grows.

Ask what sort of features make your payroll service stand apart from their competitors. Make a list of the functionality your business needs to meet your particular business model and check if they offer those services. And check if any of these bonus features will cost extra or if they’re included in the base service cost.

Ask the Right Questions When Searching for Payroll Services for Small Business

There are a few additional questions you should ask payroll services when you’ve narrowed your list down to the final two candidates. Start by checking who’s liable for mistakes if they make any in your payroll documentation. You should also ask how long it takes to fix those mistakes and how often you’ll receive reports.

Check on whether the annual fees you’re paying will increase after the first year and if there are extra charges for changing an employee’s payroll.

If you’ll be filing taxes in multiple states, ask if there will be additional fees for that. You should also check on if you’ll be able to review data before it goes to payroll and how often you can expect to hear from the service during normal operation.

Price It Out

Once you’ve asked all your questions about service details, it’s time to turn to price considerations. You need to make sure you get a plan that makes sense both for your needs and your budget. Most of the time, hiring a payroll service will save you money, but you should make sure you won’t be paying more than you would, if you were to handle things in-house.

Compare the different pricing plans each of your two finalists offers. Compare functionality and decide which features are most important for you to have. Even if one service is a little more expensive, if it has a critical feature for your business, it may be worth the extra investment in the long run.

Test It Out

When you’ve decided which service you probably want to use, take it for a test drive. If all goes well, you’ll be working with this payroll company a lot in the coming years. You want to make sure their service delivers everything they promise and integrates well with your existing business systems.

Most reputable payroll services will offer a trial program where you can experience their system in action for yourself. Arrange for all relevant members of your team to work with the new service during this trial period. If everything works the way you expected and your team is satisfied with the new system, you can sign on, confident you made the right choice for your business.

Pick Your Timing

While getting a payroll service on board can be a great idea, you want to pick your timing pretty carefully. Implementing your new payroll system will change how your business handles taxes and finances going forward. You don’t want to jump in on that in the middle of a year if you can help it.

If possible, aim to implement your new payroll system at the end of a financial year. It’s a good idea to begin this transition in October so you’ll have time to get everything done before the end of the year. If you do have to do a mid-year conversion, aim for implementation at the end of Quarter 2 if possible.

Find the Best Payroll Services for Small Business

For small businesses, handling payroll can be a serious chore that takes time away from actually running your business. Getting a good payroll service can save you time, money, and hassle. Make sure you do your homework, get plenty of referrals, and keep your company’s specific needs at the forefront of all your decisions.

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