Using a payroll provider to pay employees and file payroll taxes is a smart move for your business. Consider asking your peers, accountants and others for a recommendation or the payroll provider they use. Then, answer the following questions to help you make the right provider choice.

What services are included?
With the variety of payroll providers currently on the market, you cannot assume too much when it comes to the list of services they provide. It is likely safe to assume that a payroll company will pay employees and file payroll taxes. Inquire about what else is included in the cost they are quoting you, including things such as: taking deductions for healthcare, retirement and other deductions; tracking employee time off; handling deductions of bonuses and other payments; and creation of year-end documents such as W2s and 1099 forms.

Who is liable for mistakes?
Learn how the payroll provider handles errors and how quickly it can re-run payroll if there is a mistake. Mistakes aside, you should also ask how easily the company can accommodate changes to submitted information for the inevitable times you will need to make changes after you have submitted it.

How is information submitted?
You will need to regularly provide payroll information to your provider, so the mechanism for this should fit your preferences and schedule. Some companies require you to call information in, others allow you to email payroll amounts for each pay period or enter them via a website. Also ask about what reports you will receive on your payroll and how they will be delivered to you.

What is the price and what does the price include?
Some payroll companies charge a set monthly fee and a charge per person. Others charge a set fee per pay period and a per employee fee. One isn’t necessarily better than the other, but you should be clear about what time period the fee covers so that you can compare pricing across services.

How does the provider safeguard information?
Ask how the payroll provider will keep your data safe since you are entrusting the company with a hefty amount of confidential information on you and your team. Ask about safeguards in place for screening employees and any third parties they work with to complete payroll processing and reporting.

How is payroll delivered?
Most providers can do direct deposit and paper checks. Ask about postage costs for mailing checks and any fees that may be associated with direct deposit. Some people recommend asking the provider for a sample check stub to determine how easy it is to decipher.

What flexibility does the provider have?
If you have employees who telecommute from other states, ask about the provider’s ability to handle payroll for out-of-state employees. Also, if you currently use a software package for bookkeeping, ask about the provider’s ability to integrate with your bookkeeping software.


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