How to Pick the Correct Payroll Company

One of the biggest expenses that a business has is paying its employees’ salaries. This makes having a payroll service, that can track these costs properly, very important. Many small companies struggle with in-house payroll management, which can be both time consuming and costly. A good choice that small businesses have nowadays is to hire a professional payroll company that will handle calculating the salaries, cutting checks, and taking care of employee taxes and forms.

Benefits of a Good Payroll Company

A professional payroll company will save you and your business time and money. In order to handle payroll internally, you would need to invest in hardware, software and training. Add to this a few employees that could otherwise concentrate on other business aspects, such as customer service or bringing in new customers, and you will realize that hiring a payroll company is a much better option. By doing that, you can free up time and resources and concentrate on more important parts of your business.

Another way that a good payroll company will benefit your business is through eliminating payroll errors that can get very costly. The IRS penalizes around 40 percent of every business in the U.S. for these errors. A payroll company will make sure that both the checks for the IRS and your employees are error free and sent on time. Reputable payroll companies even offer to pay the penalties in case there are errors in the paperwork.

What to Look at When Considering a Payroll Company

The company that handles your payroll will have a big impact on your business. Selecting a professional and trustworthy payroll company is very important, because they will have access to your financial information, your employees’ financial information, and your staff’s social security numbers. A few things that you should carefully look at before hiring a payroll company are:

  • Reputation – Hiring based on recommendations from people or companies that you trust is always a good idea. Always make sure you inquire about the quality of their customer service and if they guarantee their work by paying penalties for late and erroneous filings. Finding out how many times they had to pay penalties in the last year is also a good way of determining the quality of their work. Also, a good source for payroll service provider recommendations are certified accountants and lawyers. Once you narrow down your search to a few companies, ask them if they can provide a few references from other clients, preferably from companies that operate in domains similar to yours. If you are unable to get any recommendations, you can always check with your local Better Business Bureau (BBB) to see if the payroll company that you consider hiring has any outstanding complaints.
  • Price – Once you have decided that hiring a company to handle your payroll is cheaper than managing your payroll in-house, it’s time to carefully look at what fees the company will charge you for their services. Many payroll companies charge a flat fee and an additional fee based on the frequency with which you choose to pay your employees. Check your bill very carefully for any fees that were undisclosed by the payroll company. Also, make sure you ask if any of the fees that you were originally quoted are subject to change in the future.
  • Services – A reputable payroll outsourcing company should have a large service selection, such as direct deposit, customized reports, or the administration of employee benefits and retirement plans. Some payroll companies can even develop customized software based on your needs. Before choosing any service, make sure that you actually need it, and always make sure that the services that you require are not bundled up in a package with a bunch of other services that you won’t need but will be charged for.
  • Responsibility – You wouldn’t want to find yourself in the position of wasting valuable time because the payroll company that you hired isn’t doing its job properly. Dealing with a company that doesn’t offer top customer service can be very frustrating, time consuming, and can even cost you money. While mistakes can happen even if you choose the best payroll company available, the important thing is how they handle the error and if they take full responsibility for it. Before signing a contract, make sure you find out how long it takes them to resolve errors, reissue checks, and if they will take care of any penalties that might result from their negligence.


Spend some time analyzing payrolls from previous years before hiring a payroll company. The most important thing is to save time and money so, before you start searching for a payroll company, make sure that you can benefit from hiring one. If you have reached the conclusion that employing a professional is the best choice for your business, then carefully research all candidates before settling on one.

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