“Payroll” no longer means you have to be hunched over a desk on Friday evenings frantically punching numbers into a calculator and scribbling on checks. In fact, payroll service systems can make things much easier for you. Send them information, and they will send your employees their payment. Some systems can even offer additional accounting services. Beyond a payroll management service, you may get 401K administration or have your taxes largely taken care over. But there are many different payroll services available, and it is important to find the right one for you and your business. Here’s a look at the right questions to ask when you’re trying to find the perfect fit.
When the service says “fees,” what does that mean?
While a payroll service system can be a huge weight off your back, you don’t want to wind up paying ten times more than it would otherwise cost to do it yourself. Make sure you know how you’re going to be charged and what sort of fees you can expect. Additionally, be very clear as to whether you are signing up for a contract. You don't want to be forced into paying extra fees when you realize you can't get what you need most from the service.
Good questions include things like:
- Is there a contract?
- Is the cost for services based on headcount?
- What all is involved in “service fees”?
- Is direct deposit more or less expensive than paper checks?
Whose schedule does the service work around?
If you have been paying your employees on a regular schedule (and you should have been), it can put a real wrench into people’s expectations to suddenly manipulate that schedule. Find out if you are still in charge of scheduling your employees pay or if that becomes the service's decision. Remember, that means the payroll service would ultimately be deciding when to deduct from your business account. It’s also important to know when the service will be expecting its payment from your business. Other scheduling aspects to consider include how quickly you or your employees will need to provide information to the company for accurate payments and how large of a gap there is between employees' paychecks and the week they worked.
Good questions include things like:
- Could my company specify the payroll schedule, or does the payroll service? If the latter, is it weekly, bi-monthly, monthly, etc?
- When do funds for payroll deduct from our business account?
- What is the timeframe that payroll has to be submitted so that employees are paid on the pay date?
- Are paychecks for the immediate work week?
- When are paychecks mailed or direct deposits made, particularly compared to when submissions are required?
Exactly what is this payroll system going to do for me?
One of the most important questions for any service rendered is "What are you getting and what are you not?" If you are doing payroll yourself, you are probably also keeping track of sick time, vacation hours, and all manner of other reports. Every holiday, you probably have to refigure that. Many of these things are still important for both you and your employees to know or access. It is also important to ask how your employees' retirement funds will figure into this. Furthermore, many payroll services share joint responsibility with the companies they service for payroll tax services and other tax filing necessities.
Good questions include things like:
- What are the reporting capabilities of the payroll system?
- Do you offer a 401K administration?
- What are your tax services like, and what kind of responsibility do you accept for filing taxes?
- Can we manage vacation/sick time via the payroll so accurate accrued hours show up on check stubs for employees?
- Can we preset the holidays for our company each year so we don’t manually have to enter them on payroll periods?
What will I (or my employees) have to do for this to work?
If you’re looking for a payroll service that is virtually hands-off for you, make sure that’s what you are indeed receiving. Be sure to clearly understand what your responsibilities are, as well as how difficult it is going to be for your employees to report their time. Additionally, many experts recommend against mixing your payroll management service with a 401K administration. If you prefer to keep things separated, find out how the services are going to work in conjunction with one another—and how much effort that’s going to require from you.
Good questions include things like:
- How difficult is it for employees to access their check stubs through direct deposit?
- For hourly employees, could they get access to enter their time in the system directly or does the payroll specialist have to do this?
- How do you work with 401K administrations?
If I have questions, is someone going to be able to help me?
For some services, your company may be assigned a payroll agent to help you with any questions you might have. This can be a great benefit because it means there is one person who is intimately acquainted with you, your business, and how those things interact with the payroll service. It also means you don’t get the run around every time you call for help.
Good questions include things like:
- Would we have a payroll contact to handle our specific account?
- Is that person going to be available every time payroll is due?
- If my company does not have a specific contact, how much will they know about my company to be able to help?
