Choosing a Payroll Service

The payroll services vendor you choose is a big decision.  Vendors have access to your most valuable assets- employee and financial information.  In many cases, they have direct access to your business bank account.  Choosing a trusted vendor is of utmost importance. 

Beyond security and customer service concerns, here are a few things to look for in a payroll vendor:

Reputation
A good payroll outsourcing company has a reputation for accuracy and trustworthiness.  Most payroll processing companies will guarantee their work by offering to pay any charges that they incur by way of late filings or erroneous preparations.  Ask a vendor how many times they’ve had to pay out fines in the past year.  Read the contract very thoroughly and make sure you have recourse if employees are paid late, taxes are calculated incorrectly, or distribution to accounts is incorrect.  In most states, you as a business owner (or your corporation, if you are incorporated) are liable to employees and government agencies for payment irrespective of the actions of a third party payroll company.

Services
Make sure the vendor offers the services you need at a price that is within your budget.  These can include industry specific such as increased insurance amounts, long-term care or medical savings accounts, or catastrophic loss insurance that can be associated with high-risk professions like oil drilling and movie stunt work.  Ask the vendor if they have experience in your industry, and make sure you get all of the services you need. 

Operating Procedures
The main reason businesses switch from one payroll company to another is user interface.  The way you “call in” payroll can make a big difference, and so can the turnaround time for payment.  You want the shortest turnaround time possible (i.e. Calling on Friday for a Monday payment).  The shorter the turnaround, the easier it is to make sure that payments are accurate and free of any last minute changes to hours worked, types of hours, or other payment adjustments. 

It’s also important that you’re able to access your account easily.  Some vendors let you “call in” over the phone, others require you to enter information over a secure website.  How long do the procedures take?  Will you be reminded if you forget?  What’s the procedure if you’re unable to provide information on time?  Make sure you ask these important questions. 

All in all, shopping for a payroll vendor shouldn’t be difficult.  Make sure you consider the above, and don’t just go with the cheapest company.