5 Critical Questions to Answer Before Outsourcing Payroll

Posted by on March 27, 2013 in Business Management [ 0 Comments ]

outsourcing payrollWhen looking into hiring an outside service provider to manage your business’s payroll, there are a few things to take into account before making your choice. Some questions to start with:

  • How do you see your business growing the next few years?
  • Does performing payroll tasks myself put my business at risk for error?
  • Could my business benefit from the extra time potentially saved by outsourcing?

Whether your business is large or small, hiring a payroll provider can help ease the stress of accounting and help your employees receive their fair salary. Before deciding on a specific provider to cover your payroll duties, here are some things to consider.

Related: Ready to outsource? Find a high-quality payroll provider at Resource Nation

1. How Complex is Your Payroll?

It is essential that you have a strong understanding of the ins and outs of your payroll obligations before simply hiring someone else to do the work. This will allow you to have a firmer grasp of your business processes and prevent you from getting tied up in unnecessary expenses.

  • How many employees do you have on payroll? Is there a limit or a minimum as to how many employees the provider’s service can cover?
  • Understand which of your employees have special benefits or pay different taxes (if they are out-of-state)
  • If you industry has different payroll requirements (construction, for example) be sure that your provider can address these needs. Most companies can provide coverage, but some have more experience with specialized industries than others.

2. Does it need to Be Integrated?

Does your payroll service provider operate solely through an online platform, where employees enter their own hours and payments are made by direct deposit? Or does communication rely on email or phone calls, followed up by printed paychecks?

These are questions to answer before deciding on a company, as they will likely affect how easy the payroll system will be to integrate into your business. If you will be utilizing payroll software from the service provider, be sure it will fit seamlessly with your existing system.

Related: Purchase payroll software, now

3. How often are Updates?

Payroll service providers are often kept up to date with changing tax and benefit regulations. This can be a deciding factor for you on whether or not to hire a provider; it could save you from suffering from tax mistakes that could be potentially harmful to your business.

  • Be sure to ask if they can handle payment of employees who work out of state, and make sure they are aware of these states’ regulations. This is especially important as virtual employment becomes more popular.

4. What Do They Offer for Customer Service?

It’s important that you have open lines of communication with your payroll service provider. If an error were to occur, you would want to solve the problem as quickly as possible, and more than likely you will need human interaction to achieve this.

Usually, the lower the cost of the provider, the more customers they will have, and the quality of their customer service will naturally be lower. Be sure to ask if they use online customer service methods like live chat or forums to post questions as soon as they arise. Also be sure you have a dedicated rep to contact, making an emergency situation much less stressful.

Related: Tax Season Tips: 5 Fool-Proof Tax Tips for Small Business Filers

5. Can You Adjust According to Budget?

The great thing about payroll service providers is that you can usually tailor their services to fit to your budget. Many companies offer more extensive coverage of HR duties like time and attendance tracking or hiring and recruitment. If it fits in your budget, taking advantage of these extra services could greatly benefits your business, and if it doesn’t, you can always select which services you’d like to cover yourself.

Payroll service providers usually charge a fee from $0.80 to $2.00 per paycheck calculated, according to Entrepreneur.com. More extensive services like direct deposit will likely cost you a bit more. Depending on the size and complexity of your business, as well as how limited you may be in terms of payroll-trained employees, hiring an outside service provider might prove to be an economically wise business decision.




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