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5 Questions to Ask Prospective Payroll-HR Providers


Enlisting the services of a third party to outsource HR services or payroll can give an enormous boost to your business. Offloading these important, but time-consuming, tasks to an outsourcing provider frees you up to focus on more strategic activities — such as improving your product/service, acquiring new customers, and planning for the future.

When you’re ready to start evaluating potential HR or payroll providers, it’s important to ask sales reps questions that will help you determine if theirs is the right solution for your business. Here are five questions to ask a rep before signing on the dotted line:

1. What services do you provide? 

Before beginning your search, it's good to have an idea of the business needs you will have in the coming year. Estimate the number of full- and part-time employees you expect to hire. Decide if you want the payroll provider to take care of various state and federal tax obligations. And, of course, determine what level of services you can afford to pay for.

When you have your list of needs ready, compare it with the services offered by the outsource provider. Basic services should include individual tax and salary calculations; check printing, delivery, and direct deposit; and payroll tax payment and filing. Ask about ancillary products — like 401(k) administration — the provider offers as well, even if you aren’t looking to buy them immediately because it’s good to have the ability to add services as your business grows.

2. How much experience does your company have? 

In general, it’s a good idea to avoid up-and-comers, at least until they’ve proven themselves financially — after all, you’re entrusting your payroll and tax funds with them. Being in business for many years can indicate financial stability.

The ideal outsourcing provider should also have a track record of offering services that meet the specific requirements of your industry. You shouldn’t have to educate them about your unique payroll and tax situation; for example, if you’re a restaurant owner, the provider should be expected to be well-versed in laws pertaining to the restaurant industry.

3. Is your technology current and accessible? 

A qualified payroll or HR services provider should offer easy-to-use technology that’s accessible 24/7. Ask to "test-run" the provider's online payroll software to assess how user-friendly it is. See if you can access the information you need from your smartphone, tablet, or other portable devices. Inquire about the ability for your employees to access their personal HR, payroll, and benefits information on their own.

4. What customer support services are offered? 

The best payroll service providers understand the importance of making a live person available to answer any questions their clients have. Make sure there's a reliable point of contact available at any time.

5. What is the pricing structure? 

Transparent pricing is important, especially to small businesses with tight cash flow. Avoid the scenario of signing up with an HR provider thinking that the price will be a certain amount, only to be shocked by a much higher number, inflated by hidden charges, on the first invoice. Ask to have the pricing structure fully explained up front, including any supplemental charges for adding new employees, switching employees to direct deposit, or weekly or monthly processing fees. Also inquire about the likelihood of future pricing changes.

Reps’ responses to these questions will help you make the right choice of service providers.  Choosing a payroll or HR partner may be one of the most important decisions you make for your business, so choose carefully!


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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