A few decades ago, companies could manage their employee payrolls with a manual payroll system. Today, these systems are growing increasingly redundant because of they are prone to human error, repetitive, and complicated. Most businesses, including the small ones, prefer to hire outside payroll services or cloud-based payroll solutions. If you are on the lookout for a reliable payroll service, here are five important things you have to consider before hiring one.
1. The specific payroll services provided
Dozens of payroll services are coming up on and off the internet, but they are not all the same. You need to choose a company that fits the needs of the company, and to do so you have to identify what the specific payroll requirements for your company. Once you know this, you have to look for a payroll service that delivers on every count.
If you are confused about what a payroll service should provide, here is a look at some commonly seen services:
i. Payment of hourly or monthly salary, or contractual amount to employees through direct deposit; some offer the option of printing paycheck on site, or mailing the paychecks to you
ii. Handling of new employee reporting
iii. Tracking the accrual and use off paid time off, including sick and vacation leaves
iv. Filing of accurate and error-free payroll taxes
v. Deducting health, insurance, and other benefits
vi. Deducting the FSA, IRA, HAS, 401K, and other contributions from the employee paychecks
Handling other deductions and additions to the employee paychecks, like commissions, tips, bonuses, reimbursements, etc.
2. Payment structure
Payroll services do not come for free, so make sure that the service provider you choose offers maximum value for money and charges an amount within your monthly or annual budget. Most payroll providers charge on a monthly and per employee basis. If you have a small firm of 20 or fewer employees, you may have to pay a few hundred dollars every month for a really good payroll service provider.
3. How the service is set up
The next thing you have to see when choosing the payroll service is how it is set up. The setup process should be simple, and ideally you should be able to view data on your employee payroll whenever you want from your office. If you want to be able to view your company payroll from any internet-connected device like your laptop or even your phone, make sure the provider has that kind of setup.
4. How the company handles payroll taxes
The payroll service you choose should be able to handle your entire payroll tax compliance procedure on time and with 100 percent accuracy. It should cover everything, from federal and state income tax to state unemployment insurance and unemployment tax. All necessary forms, including the W-2 and 1099 forms, have to be processed properly. More importantly, the provider should do the tax filing and payments without any explicit reminder from your end.
5. Data security
A company’s payroll data is very sensitive and confidential information, and you should be able to trust the payroll service provider with it. You have to make sure that the provider has adequate safety measures in place, including high-security encryption for digital data and restrictions on access, expect for authorized personnel.
Brad is a guest blogger interested in writing finance related articles. He is passion about his writings and has written hundreds of finance related articles for several blogs.