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Payroll Processing

The Who, What, When, Why, and How of Efficient Payroll Processing

Introduction

Payroll processing refers to the administration of employees’ financial records including salaries, wages, bonuses, deductions, and net pay.

Payroll might seem like a simple, straightforward process. You just need to calculate your employees’ hours and send out their paychecks, right?

In reality, there’s a lot more to it. From payroll taxes and wage policies to remitting to the IRS, the process is not as simple as it seems. Things can quickly get complicated. To ensure accuracy, the payroll process can’t be rushed.

 

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66% of Americans would experience financial difficulty if their paychecks were delayed by one week.

(National Payroll Week)

36.5% of U.S. private businesses pay their employees biweekly, making it the most common pay period.

(Bureau of Labor Statistics)

54% of employers state there is room for improvement in their current payroll policies and practices.

(Ernst & Young)

1. What Is Payroll Processing?

Payroll is the total amount of wages paid by a company to its employees and other workers (freelancers and contractors).

Payroll processing is an important function for any business—no matter how small. It’s likely your company’s largest expense, and the most time-consuming HR work performed each month. Payroll can be processed weekly, biweekly, semi-monthly, or monthly, while the most common pay length period is every two weeks.

“Payroll processing is an important function for any business—no matter how small.”

While the process varies from company to company, payroll is indisputably complicated. It requires an organized system, knowledge of current regulations and taxes, and careful planning.

New businesses unfamiliar with the process will likely find it challenging because of everything that’s involved.

So what exactly are the steps involved?

Before Processing Payroll

Set up New Employees

Before processing payroll, you and your employees have to fill out some paperwork. The documents you’ll need to obtain include those related to health insurance plans, retirement plans, and income tax withholdings. Your payroll department should set aside copies of each of these forms to have on record.

Before you get started, it’s important to note the differentiation between freelancers and employees—nothing is deducted from freelancers’ paychecks as they are responsible for their own benefits and for paying their taxes.

Collect and Verify Timecard Information

Salaried employees like managers and office staff won’t require a change in wages each pay period. But for hourly employees, employers must collect and analyze information about hours worked.

Your employees might scan their badges in a digital time clock or manually sign in. No matter how you collect this data, managers must verify that employees have entered the accurate amount of time they worked for your payroll staff. Otherwise, you’ll be overspending on payroll.

Processing Payroll

When processing payroll, you need to know how much each employee costs your business—beyond their salary.

The first step in processing payroll is to prepare a paycheck for each employee.

To do so, here are four important factors you need to consider:

1. Gross Wages

This is the total amount your company pays each employee before any deductions, based on whether the employee is salaried or hourly. Deductions from employee pay can include insurance premiums, retirement plan contributions, benefits, and tax withholdings.

The amount of money your employees actually receive in their paychecks is called net pay.

2. Benefits

While businesses generally cover the cost of benefits, a portion of the total amount may come from your employees’ gross wages.

3. Social Security and Medicare

You need to deduct Social Security and Medicare payments from your employees’ gross wages.

4. Tax Withholdings

Your company must withhold each employee’s share of federal and state income taxes from payroll. You need to calculate income taxes and forward payments to the appropriate government agency on a semi-weekly or monthly basis.

Companies are also required to regularly submit payroll tax reports, including a quarterly report to the IRS and an annual unemployment tax report.

Issuing Paychecks

Once all the payroll reports have been analyzed and are free of errors, it’s time to process payments to employees.

Manually sending out paychecks adds unnecessary work and is prone to error. Thus, most companies today take advantage of direct deposit—benefiting both the business and its employees.

Why Is Payroll Processing Important?

Processing payroll accurately and consistently is necessary for a number of reasons. First and foremost, you’re legally obligated to pay your employees. Failing to pay them on time will damage your company’s reputation, and you’ll face the legal repercussions.

Paying employees consistently and on time demonstrates your company’s financial stability. It also impacts employee morale, safeguarding their trust in your business.

“Paying employees consistently and on time demonstrates your company’s financial stability.”

Accurate payroll processing is also crucial to remain compliant with federal and state laws. Legislative changes can be complex. You need to mitigate risks like lawsuits, fines, and penalties by maintaining compliance.

Is your business dealing with payroll processing problems? If so, it’s time to do some investigation.

If you’re issuing paychecks riddled with errors, for example, your employees will find them! Be proactive—dig deeper into all transaction errors and plan how you will mitigate future mistakes.

If you’re struggling to get payroll done on time every pay period and your staff isn’t qualified for the job, it’s time to alter your procedures.

Staying Organized

To keep track of all employee information and organize your payroll tasks, you need to create and maintain a payroll register. This is a spreadsheet that lists total gross pay, total deductions, and total net pay for each payroll. You’ll also need to back up all your payroll data.

Most online accounting systems have a payroll register along with other functions like an employee earnings record. Having this information is crucial to complete year-end payroll totals and reports, and to complete payroll tax tasks.

Setting up a yearly tax calendar is also a good idea. Doing so will ensure you keep track of all the payroll tax dates throughout the year.

 

what-is-payroll-processing-and-why-is-it-important

2. How to Simplify Your Organization’s Current Payroll Process

You know you need to get payroll done accurately and on time every pay period—without fail. It’s not something you can neglect.

But this can be particularly challenging for small companies experiencing rapid growth. Especially if you manage payroll in house, the process can quickly become overwhelming.

Properly managing payroll takes time, patience, organization, and ongoing communication. No matter how effectively you’re running your business, issues can always arise.

“Properly managing payroll takes time, patience, organization, and ongoing communication.”

The good news is there are ways you can simplify the process. Here are 10 ways to streamline your company’s current payroll process.

1. Set a Clear Payroll Policy

Review your current payroll policy to ensure it’s clear and concise. Your policy should outline how employees are paid, as well as commission, expense reimbursements, sick days, and more.

Make sure your policy is properly explained so your employees can easily understand it. You should also make it easily accessible by adding it to an online payroll portal.

2. Create a Budget

Creating a payroll budget helps you plan for future growth and avoid unwanted surprises. Your employees’ salaries will, of course, take up a large portion of your budget. But you should also plan ahead for expenses like taxes and benefits, and make sure you consistently stick to your budget.

By carefully analyzing your budget, you may be able to find areas that are over- or under-staffed, and adjust as needed. Doing so will help you avoid unnecessary labor costs.

3. Classify Your Workers

Correctly classifying your employees (as full-time, part-time, or temporary employees, or contractors) is crucial. Failing to do so could seriously harm your business. To avoid serious legal and financial consequences due to misclassification, ensure you’re properly classifying your workers from the get-go.

4. Establish a Consistent Payment Schedule

Whether your employees are hourly or salaried, pay everyone the same way and on the same day. Using the same pay structure and process makes things easier to manage. Once you decide how often to pay your employees and stick to that timeline, the process will run much more smoothly.

Paying salaried employees is, of course, easier since you don’t have to calculate the amount they’re owed each pay period. But even if you have hourly employees, the payment process doesn’t have to be stressful. Having an efficient and consistent system in place will keep things in order.

5. Provide Payroll Information Online

Your employees will likely want to access their pay information from previous periods and they may have questions about your payroll policy. Answering all their questions, however, can take up a lot of time.

To simplify the process and save time, make payroll information available online and encourage employees to check these resources.

6. Use Direct Deposit

Setting up direct deposit is a no-brainer to boost payroll efficiency. The majority of banks and account programs today support direct deposit. It’s faster and more convenient than cutting checks for all your employees. It also saves time and labor costs—there’s no need to spend money on printed checks, envelopes, printer ink, or stamps.

Plus, your employees will appreciate knowing when exactly to expect their pay in their accounts.

You can go completely paper-free and allow your employees to access their pay information through an online portal. Your employees will never have to search for payroll information and will be able to access it at any time.

7. Consolidate All Payroll Information

Keep all your payroll records and documents in one centralized location. Some federal and state laws require employers to hold on to records for a specific amount of time. Knowing where all your data is will give you peace of mind.

When you consolidate all your information and can easily access it, you’ll never be left scrambling at the last minute.

8. Automate Time Tracking

Manually entering time is an outdated practice. Verifying your employees’ entered hours takes up both your managers’ and your payroll staff’s time. What’s the solution? Automate time tracking.

Even if you own a small business, using automated time tracking software can save you ample time and reduce errors.

9. Set up Reminders

You simply can’t be forgetful when processing payroll. There are several key dates you need to remember, and keeping track of them all can be overwhelming. For example, you need to send payroll tax reports to the appropriate jurisdictions, send quarterly and annual income tax withholding reports, and more. Forget to submit these reports and you’ll face costly penalties.

Setting up reminders in a payroll system or in your own calendar will ensure you remember these important dates. It can take the pressure off your memory.

10. Outsource Payroll

In many companies, an unqualified employee is unfairly left to handle payroll. Outsourcing payroll, however, frees up your employees’ time and is the best way to ensure payroll gets processed accurately and on time.

Plus, the right payroll provider should have specialized software that will automate tedious processes. This means there’s no need for you to invest in this software and spend time and money training your staff to use it.

3. Why Your Business Needs Payroll Software

Processing payroll on your own takes time away from the important tasks that go into managing your business.

How can you make the process more manageable?

Using payroll software to streamline payroll allows you to get back to the work that matters—running your business.

Here’s why using payroll software is a smart business decision—no matter the size of your company.

Save Time

Companies spend way too much time every month processing payroll and taxes. In fact, small businesses spend between one and ten hours processing payroll a month. Not surprisingly, many business owners say bookkeeping and taxes are the worst part of owning a business.

From employee claims and leave requests to overtime submissions, payroll tasks pile up quickly. These repetitive duties are an inefficient use of your employees’ time.

“Not surprisingly, many business owners say bookkeeping and taxes are the worst part of owning a business.”

This time would be much better spent focusing on strategy and growing your business. That’s why payroll software is a must for every company. By reducing the time your employees spend on tedious administrative tasks, you’ll significantly boost productivity.

Easily Generate Reports

A robust payroll system with custom reporting will help you better understand your business and your employees. When all employee information is housed in one centralized place, you can easily keep track of everything.

And when you have the tools at hand to generate insightful payroll reports, you’ll be equipped to make informed decisions about employee compensation. For example, data about employee turnover can reveal issues like low employee engagement before it gets out of control.

Simplify Operations

Simply put, payroll software makes your employees’ lives easier. Preparing employees’ paychecks will become a much simpler process that can be accomplished in a few easy steps. It automates the process of calculating taxes and deductions and eliminates administrative headaches.

Reduce Errors

Manually processing payroll is not only time-consuming but also prone to human error. When you have to account for overtime, vacation, benefits, tax withholdings, and salary structures, payroll processing gets complicated. Fixing mistakes can be time-consuming, costly, and stressful.

Invest in payroll software to prevent errors before they happen. You’ll avoid displeasing tax authorities and your employees, as they will notice errors in their paychecks. You’ll save costs as well since the penalties for payroll errors are often more expensive than the cost of payroll software.

Maintain Compliance

Payroll software can ease your compliance worries. Keeping up with legislative updates is a difficult but crucial part of the payroll process. You can’t let anything relating to compliance slip, or you’ll risk facing severe fines and penalties.

Automation and real-time calculations help you maintain payroll compliance. You’ll enjoy peace of mind knowing you’re always paying your workers and taxes accurately and on time.

What Should You Look for in Payroll Software?

Before you start considering your payroll software options, examine your company needs. Are you looking for only the most basic payroll functions? What additional features might you need? Is your business quickly growing?

“Before you start considering your payroll software options, examine your company needs.”

To help you get started on your search, here are six important factors you should look for in payroll software.

Cloud-Based

Since you don’t have to invest in hardware, cloud-based solutions are extremely cost-effective. Plus, upgrades are done automatically, so you don’t need to worry about staying up to date.

Security Standards

Be sure to ask your potential payroll provider about its security standards. Payroll information is sensitive by nature, making it crucial for businesses to keep accurate and secure employee records.

Onboarding

Find out how your business will need to prepare to start using your new payroll software. Keep in mind you’ll have to spend some time gathering and inputting all the necessary information before you’ll be ready to go.

Ask about the onboarding process, and find out if you’ll get any help setting up.

User Friendly

There’s always a learning curve when you begin using new software. That being said, your employees should want to use the software and see the benefits it brings. You don’t want an old clunky system your staff will resent. And you don’t want them spending months trying to learn all the platform intricacies.

To promote a smooth transition and use payroll software to its full potential, the technology should be simple to use and built for today’s employers and employees.

Does the software have an employee portal option? These portals give your employees anytime, anywhere access to their pay and benefits records. By promoting a culture of transparency and giving your employees control over their work lives, you’ll improve their morale.

Customizable

Payroll software shouldn’t be one size fits all. Payroll varies from company to company—processes are too diverse to fit into one pre-set software model. To make it worth the investment, payroll software should be customizable to your needs.

Consider whether the software will support functions like your payroll schedules and reporting requirements. Additionally, find out if you can connect your payroll software to other tools like time tracking and scheduling apps. When you can consolidate all your HR functions in one platform, you’ll be well on your way to streamlining your operations.

“To make it worth the investment, payroll software should be customizable to your needs.”

Remember—as you grow and your needs change, the software should adapt with you. Choose software that can fit your unique needs both now and in the future.

Customer Service

No matter how user friendly your payroll software is, you’ll need help at some point down the line.

Before you choose payroll software, consider the level of customer service and technical support the provider offers. You want to work with a company that has your back.

If an issue comes up or you have a question you need answered quickly, you don’t want to be stuck on hold for hours. You need fast and dependable support.

4. When Does It Make Sense to Outsource Payroll?

Outsourcing non-core business functions is a sure-fire way to increase operational efficiency. In fact, more and more companies today are outsourcing services to external parties.

Core business functions are the essential tasks that are most critical to your company’s revenue stream. Non-core business functions are necessary, but they’re generic and of the lowest value to your business. While administrative and back-office functions like payroll processing are essential, they don’t differentiate your company from competitors.

Very few businesses wouldn’t benefit from outsourcing payroll. With high volumes of paychecks to issue, employee turnover, and all the paperwork involved in handling payroll, most businesses are better off outsourcing this function to the experts.

As a growing company, you have a lot going on. How do you know when it’s the right time to outsource payroll?

Consider your reasons for outsourcing. Your goals should include:

  • Gain more time and resources to focus on core business activities
  • Lower costs and business risks
  • Streamline payroll processing as your business grows

Here are five signs it’s time to outsource this non-core business function.

Payroll Is Costing You Too Much

While you may think you’re saving money by managing payroll in house, the opposite is likely true.

Calculate how much time your employees are devoting to payroll activities—it’s probably a lot more than you think. Compare how much you’re currently spending to the plans payroll providers offer. The amount you’ll save by outsourcing will likely surprise you.

“While you may think you’re saving money by managing payroll in house, the opposite is likely true.”

You’re Making Too Many Mistakes

Sure, everyone makes mistakes. But when it comes to payroll, your business simply can’t afford to make them.

Payroll mistakes come at a high cost. These errors can cause problems with your employees as well as government agencies.

When you outsource payroll, however, you’ll gain access to a team of experts with the right technology to manage this complex function. The right payroll provider is a lot less likely to make grave errors, providing you with much-needed peace of mind.

It Takes Too Much Time

Payroll management eats up a lot of company time. As a growing business, your payroll staff members likely take on several roles. They’re probably struggling to manage payroll on top of everyday tasks and aren’t completing any functions as efficiently as possible. When complicated situations come up, they’re not properly equipped to get the job done.

Plus, managers need to closely supervise payroll to ensure employee time and attendance are entered accurately. Especially when you lack the technologies that can automatically spot payroll manipulation and fraud, a lot of time and energy goes into the process.

And when unexpected errors occur, your employees will have to spend even more time managing payroll.

Payroll service providers, however, specialize in complex payroll systems. It’s their area of expertise, meaning they accomplish this task more productively and effectively than your staff can. With plenty of experience and the right technological resources, they can quickly process even the most complicated payroll.

When you leave payroll to the experts, you take the burden off your employees’ shoulders so they can give full attention to their core responsibilities. You also won’t have to worry about training new hires on your company’s payroll system.

Compliance Is Overwhelming

Are your current payroll employees up to date on compliance issues?

“When you partner with a payroll provider, you can say goodbye to compliance headaches.”

State and federal governments regularly come out with new labor and payroll laws. The Affordable Care Act (ACA), Medicare tax, and Social Security tax, for example, require companies to complete a ton of paperwork. Keeping up with payroll compliance is truly a job in itself.

When you partner with a payroll provider, you can say goodbye to compliance headaches.

You can rest assured your payroll provider will be knowledgeable and fully up to date with employee and payroll compliance. They’ll know the most recent tax laws on the federal, state, and local levels. And they’ll know which of these laws apply to your business.

When your employees don’t have to spend time and effort staying abreast of all these regulatory mandates, they’ll be much more productive in their current roles.

Your Processes Aren’t Consistent

Paying your employees and tax authorities on time is not an option. It’s an absolute must. While your in-house payroll staff may come and go, payroll can never take a break. Payroll and payroll taxes are inflexible business functions. While other accounting tasks can wait, you can simply never miss a payroll period.

When you outsource payroll, you don’t have to stress about making payments on time. You’ll never have to worry about covering workers who get sick, go on vacation, or leave the company.

By ensuring a consistent, streamlined payroll process, you’re able to focus on running a profitable business. No more headaches and hassles.

5. Who Can Help Improve Your Payroll Processing?

Once you realize you need help with payroll processing, it’s time to consider your options. With so many companies to choose from, how can you narrow down your choices? What type of provider should you work with?

Decide how involved you want to be in the payroll process by opting for either:

Fully Outsourced Payroll: Your provider manages all aspects of your payroll, from entering employee data to filing tax forms.

or

Hybrid Outsourced Payroll: You outsource some key payroll tasks but continue to take on some of the responsibilities of managing payroll.

A Full-Service Payroll Provider

While you might think you should still maintain some control over your payroll, a full-service provider is actually a more efficient option. Why?

When you send out individual payroll tasks while keeping your HR team involved, you’re causing headaches for both parties involved. Your HR team might struggle to complete tasks by a provider’s deadline, and information can get lost from one party to another.

A full-service payroll provider is truly your best option to streamline payroll processing.

They’ll assume full control of your payroll services, managing the process from end to end. Your HR team won’t need to get involved and can focus on strategy instead.

The Problem with Big Payroll Companies

In researching payroll providers, you’ve likely come across the big companies like ADP and Paychex, or you might already be partnered with one of these companies. While they might seem like the ideal solution, here are some issues that might arise with these bigger players.

Hidden Costs

Do you know exactly what payroll services you’re paying for? Big companies have a tendency to bundle services together, meaning you might be paying for services you neither need nor use.

When it comes to fees, no one likes surprises. If you’ve been with your provider for a while now, they might have raised your rates. While your rate might have been reasonable when you started, there are likely better-priced options out there now.

Paying high fees for additional services will negatively impact your bottom line. Don’t stay with a provider that is overcharging you—switch to a more economical company.

Poor Customer Service

When you have payroll questions or when issues arise, you need to be able to speak with someone. Many business owners who rely on big payroll companies, however, struggle to get someone on the phone when they need help.

“You deserve high-quality customer service from your payroll provider—don’t settle for anything less.”

You don’t have time to chase your provider, continue calling until someone picks up, or stay on hold for hours. As a busy business owner, you need support right away when you have a problem.

What’s worse, some big companies don’t offer any phone support. To handle your issues and concerns, however, you should be able to reach out to your provider.

You deserve high-quality customer service from your payroll provider—don’t settle for anything less. Knowledgeable reps should prioritize your needs and ensure they help you solve your problems in a timely manner.

Upselling

In big companies, a sales provider will likely try to sell you services or products you don’t need—on top of what you’re already paying. You might even get bombarded with calls from them soon after you sign up.

When you contact your provider for help, they shouldn’t always try to upsell you on other services. Your payroll provider’s priority should be your satisfaction—not making additional sales.

Complicated Payroll System

Your employees shouldn’t have to stress out trying to understand how a payroll system works. While large companies often claim getting started with their solutions will be a breeze, this is rarely the case.

Many customers have complained about the difficulty of setting up payroll for their businesses with bigger providers like ADP. Issues at this implementation phase make the process way more complicated than it needs to be. Errors in payments due to technical issues could mean your employees are paid incorrectly.

With a simple-to-use, user-friendly system, you can handle payroll easily and without stress.

Partner with an iSolved® Payroll Company

When searching for a new payroll provider, it’s important to consider the technology they use. Technology plays a big role in how efficiently you’ll be able to process payroll.

Top payroll companies use iSolved, a leading human capital management (HCM) solution. It’s designed to support all your HR functions—from pre-hire to retire.

Partnering with an iSolved payroll company can be a total game changer.

A Scalable, All-in-One Platform

The iSolved software processes payroll easily and efficiently. It makes payroll simple again by connecting all the separate payroll tasks into one central location.

When all your payroll data is fully integrated, you save time and reduce stress. By seeing the big picture of your workforce (in real time), you’re able to make smarter business decisions.

iSolved is entirely cloud-based, meaning employees can access the software whenever they need to, no matter where they are.

Plus, you can set different levels of access to different employees so your workers only see what they need to.

The Best of Both Worlds

Companies used to have to make some compromises when choosing payroll providers. If they went with a big provider, they’d get state-of-the-art technology but sub-par customer service. With smaller companies, they’d get personalized attention but technology with limited functionality.

Fortunately, businesses no longer have to make this tough choice. Both technology and customer service are equally important.

Since iSolved is a large company, the technology is advanced and intuitive. When you work with an independent company that’s partnered with iSolved, you also get the personal service you’ve been looking for. It’s truly the best of both worlds!

6. 9 Payroll Services You Don’t Want to Miss Out On

Why struggle with all the complexities of payroll when you can get help from the experts?

You don’t want to miss out on these nine payroll services—they’ll make your work life a whole lot easier.

1. The Basics

When you partner with a payroll provider, some services are a given. Your provider should calculate how much employees should be paid each period, taking into account shift differentials, overtime, holiday pay, and tax and benefit deductions. This is the bare minimum a payroll provider should offer.

2. Direct Deposit

If you’re still paying your employees with checks, it’s time to upgrade your processes. This practice is time-consuming and costly, and your employees probably don’t appreciate it. Today’s workforce wants immediate payroll processing and anytime access to their payroll information.

Plus, you lower the risk of errors, fraud, and lost checks when funds go straight into your employees’ bank accounts. Improve the process for both you and your staff by switching to direct deposit.

3. Time Management

Employee time management affects payroll—the two go hand in hand. To take full advantage of payroll services, get an integrated solution for time management.

If you’re scheduling employees and tracking time in one program and managing payroll in another, it’s time to streamline your processes.

4. Benefits Administration

Benefits administration doesn’t affect payroll as much as time management does—but there is still some crossover. Your employees might pay for some of their benefit premiums, so combining these two services will improve your operations.

5. Compliance

You need to maintain compliance with local, state, and federal laws when it comes to wages, holiday pay, taxes, and more. Your provider will adjust your payroll as needed to ensure you stay compliant. Non-compliance can result in hefty fines and penalties—which your provider will help you avoid.

6. Payroll Tax Management

One in three small businesses spends 80 hours each year on federal taxes, including payroll taxes!

Payroll tax management is one of the more complex payroll tasks. Especially as your business grows, keeping all your tax papers in order can be difficult. There are several payroll taxes to manage including income tax, Social Security, and Medicare.

Let your payroll provider take this burden off your shoulders. They’ll deduct and report the tax amounts, then pay the funds to the appropriate federal, state, and local tax authorities.

7. Reporting

Having access to different types of reports makes it easier to evaluate your payroll. The right provider will make it easy to pull reports, so you’ll never have to go hunting for information again. You should also be able to customize reports to pull only the information you need.

If you’re trying to decide what benefits to offer, for example, you can run a report to see how many employees are making claims. Alternatively, knowing how many payroll errors you’ve made in the last year will help you identify areas for improvement.

8. Expert Advice

Getting advice from a team of experts is one of the most important payroll services. You want answers to your payroll questions and help to better manage your processes.

You don’t want to miss out on gaining access to expert guidance and advice. When you can quickly find clear, accurate answers to your payroll and HR questions, you’ll be able to manage your payroll much more effectively.

“Getting advice from a team of experts is one of the most important payroll services.”

9. A Holistic Solution

Another one of the best services a payroll provider can offer is a holistic HR solution. When your provider can look after time management, benefits administration, and compliance management, you can manage your payroll and HR activities better than ever before.

For both the HR and payroll functions to run smoothly, there must be collaboration between the two. Having one central system to house all your HR data takes the pain, time, and errors away from workforce management.

No more logging into separate systems, duplicating data entry, and searching for employee information. Get a completely consolidated HR solution.

7. How to Choose the Right Payroll Provider for Your Needs

You know you’ll benefit from a full-service payroll provider, but how can you choose the right one?

Understanding Your Company Needs

Before you start seriously considering payroll providers, take a thorough look at your company needs.

Outline a list of services you think your company will need over the course of a year. This list will lay the groundwork for your must-have payroll services. Find out what services prospective providers offer, and match their options to your list.

Also consider how many employees you’ll have on payroll throughout the year and how much you plan on growing. You’ll want your provider to be able to handle all the different types of employees you have, whether that’s full-time, part-time, or contract.

A few other questions to ask yourself include:

  • Do you want HR services in addition to payroll?
  • What’s your budget?
  • What industry-specific needs does your business have?

Key Factors to Consider

Services and Pricing

Especially as your business grows, you need affordable payroll services. Hidden fees are unfortunately common in the payroll industry, so make sure you always read the fine print.

Your provider’s pricing structure should be simple and transparent so you understand exactly what services you’re paying for. You should also find out if there are extra costs when you bring on new workers.

Since costs increase as you add more services, full-service payroll providers give you the best value. A full-service payroll provider will offer more than basic payroll—they’ll also take care of payroll taxes, reporting, employee reimbursement, and much more. Find out what other HR services they offer, like time management, benefits administration, onboarding, and more.

Technology

What technology does your potential payroll provider use?

If they work on a cloud system, you’ll be able to access payroll information anytime and anywhere. Online software also allows you to access your payroll records on any device, whether desktop, tablet, or mobile. Just make sure the user experience doesn’t suffer on mobile devices.

You’ll also want your provider to use an integrated system so you can manage your entire workforce in one place.

Security

Your payroll provider will handle a lot of confidential information like social security numbers, pay rates, and bank accounts. Asking about security is thus crucial when shopping for cloud-based software.

Find out how they guarantee your HR data will be secure. Ask about the provider’s encryption standards, authentication steps, and data protection certifications. Note that 256-bit Advanced Encryption Standard encryption is one of the highest standards available, which helps protect you from login and password theft.

Payroll information should also be continually backed up to multiple secure locations to avoid disastrous data loss.

Scalability

You want a payroll system with the capabilities to support your business expansion. Getting payroll software that will be irrelevant in a year or two is a waste of time and money. You don’t want to go through the process of finding a new provider all over again.

Ensure your payroll provider is flexible and can meet your unique needs as your business grows.

Customer Support

You never know when a payroll problem might arise. That’s why your provider should have a helpline and online portal you can use for immediate assistance.

The best payroll providers will have dedicated staff for each account. That means you’ll always talk to the same people when you call with questions or concerns. Since they’ll become familiar with you and your business, you won’t need to waste time explaining who you are and what your business does every time you get in touch.

Your provider should also use your preferred communication method. Whether you want to call or email them, they should accommodate your needs.

Ultimately, if you don’t feel welcome when talking with a potential provider, they’re not worth the investment.

Credentials and Experience

How many years of industry experience does your potential provider have? What makes them qualified to manage your payroll?

Since you’ll be relying on them for continual support, make sure your provider’s CPAs have the necessary skill sets and education to deal with your unique payroll challenges and requirements.

Additional questions to ask your provider include:

Who is liable for payroll mistakes? What industries do you specialize in? How do you manage software implementation?

Switching Providers

Are you currently frustrated by your current provider’s services?

Fortunately, switching payroll providers doesn’t have to be a complicated task. Follow these easy steps, and your new system will be up and running in no time!

Check Your Current Contract

Your contract will tell you how much notice you need to give your current payroll provider and what the penalties are—if any—for canceling early.

Sign up with a New Provider

Make sure to get the full list of services the provider will deliver in a written contract. After signing the contract, you’ll complete all the necessary paperwork to get started with your new provider.

Set up Your Company Details

You’ll need to set up all your company details including your business name, address, banking information, and employee and contractor information in the new system. If you have any difficulty, your new provider may be able to help.

Transfer Payroll Data into the New System

You may need to transfer data from one system to the other depending on the time of year when you switch providers. Reach out to your new provider if you need any guidance.

Close Your Old Payroll Provider Account

Make sure to follow the cancellation procedures outlined in your contract to avoid any penalties.

Additional Resources

Conclusion

Payroll processing can take up a lot of company time if you let it. What may seem like a simple business function is actually quite complex and multi-faceted. Trying to do everything on your own could spell disaster.

If you want to streamline the process, partnering with an iSolved payroll provider is a guaranteed path to success. Stop struggling with payroll—switch to a holistic HR software solution and manage your processes more effectively.

 

 

 

Don’t just take our word for it—see for yourself!

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