Free Checklist: How to Find the Right Payroll Provider

October 23, 2015 Leena Thampan

You’ll need to figure out how to pay your employees, even if you only have one employee to pay. 

You might think that the manual method of cutting checks to your employee(s) and the government makes the most sense, because you have so few employees on payroll. But, if you lay the right groundwork for your business from the start, you’ll have a stronger foundation in place for when your business grows and you have more employees to pay.

Picking the right payroll provider will result in happier employees, easier HR administration and overall compliance with payroll regulations. 

There are five qualifications you need to account for in your payroll provider. If your current or potential payroll service company meets these five qualifications, you have found the right payroll solution for your small business. 

The Five Qualifications to Consider When Picking Your Payroll Provider

1. Practicality

This first qualification is pretty straightforward - does the payroll provider service your specific location? 

As the payroll requirements can vary by state, your payroll solution should be able to account for the state-specific nuances in order to ensure your compliance as a business. If it’s a local provider that only works in your state, you’ll be limited to hiring employees only in that state unless you want to find a second payroll provider. 

2. Integrations

Depending on your business requirements, you will most likely be using other tools like time tracking software, expense management software, etc. in conjunction with your payroll. But one integration requirement that all businesses have in common is their accounting and payroll integration. 

Most payroll providers offer reports that cover payroll expenses, government tax reporting, etc., but how you migrate that information into your accounting software is the part you’ll want to get clarified. 

3. Features

All payroll providers have to offer some basic features just to be considered a payroll company, but not all payroll providers are created equal. These basic features should cover:

  • Payments to your employees and/or independent contractors either via checks, direct deposit or a combination of both
  • Federal Tax filing and reporting
  • Year-end W2 and/or 1099 reporting
  • Employee access to pay stubs either via mail or online

Some payroll service companies can also handle state and local tax filing and reporting as well as new hire reporting, wage detail reports, etc. But it might come at an additional cost, so you’ll want to make sure you know exactly what you are paying for when you pick a provider. 

4. Cost

If you are looking for a full-service payroll solution i.e. where the payroll company processes your payroll, you might have to pay a sizeable amount each month. 

The good thing is that you can now find cloud-based payroll solutions that are fully-automated to handle direct deposits to your employees, file taxes with the government on your behalf and even automatically generate W2 / 1099 reports at year-end. 

Cloud-based payroll software can be a great way to manage costs by paying a monthly subscription fee and still get all the benefits of full-service payroll.

Transparent pricing is another thing you should look out for - if you need to get in touch with a payroll company’s sales department to work out the math, there’s a chance you’ll be paying a lot in payroll processing fees.

5. Service

The kind of customer service you can expect from your payroll company is something most businesses overlook in the initial consideration phase. But it’s a really important qualification you want to account for in your payroll provider. 

Payroll is a time-sensitive and critical function that can also be quite complicated to handle, so it helps to work with a payroll company that will be on hand when you need them. 

Complete the form below to get the comprehensive list of questions you should ask your potential payroll provider emailed directly to your inbox!

Picking a provider can be easy if you know what questions to ask, so hopefully this comprehensive checklist will help you narrow down your choices and eventually pick the payroll solution that is right for your business. 

About the Author

Leena Thampan

Leena worked for some of the big guns in the media industry before deciding her true calling was to be the ultimate curator of our brand - this is our version of the story, of course. She spends her days cooking culinary masterpieces from all over the world. And if you are not really careful, she might just offer it to you.

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