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How to Choose a Payroll Service That's Right for Your Business


Enlisting a payroll service is a tactic being adopted by an increasing number of small businesses across the U.S. That's because of the many compelling reasons to outsource your small business payroll, including:

  • Potentially significant savings in time and labor
  • Reduction or elimination of expensive payroll processing errors
  • Greater compliance with government regulatory and tax requirements

But opting to outsource payroll is just the first step a small business must take. Next comes selecting the right payroll service provider for your specific needs. Where to start?

Enthusiastic Referrals and References

A common first step is asking fellow business owners for referrals (particularly in businesses similar to yours). Once you get a few names, conduct your due diligence. Read online reviews and customer testimonials. Contact various providers and request a list of satisfied client references. Any company that's slow to comply or doesn't follow through at all should be eliminated from consideration.

With all of this information in hand, you can look more closely at a short list of qualified candidates. Here's a checklist of "must-haves" such a provider should offer:

  • Experience
    Choosing a newly established payroll service provider because it offers discount pricing or some other incentive is probably not a good idea. Making sure your employees are paid promptly and without error is a top priority, and best not left to providers with little or no experience. Any established provider will be able to demonstrate a record of accuracy and reliability, and offer additional resources beyond just payroll.
  • A Personalized Approach
    Not all small businesses are created equal, and any quality outsourced provider must be equipped to match their services to a company's specific needs. That means scrutinizing your business structure and customizing their approach, avoiding a generic, one-size-fits-all strategy.

    Strong customer service should be an essential element of this personalized approach. This includes round-the-clock support (not just on days when your company payroll is being processed). It should also include a single point of contact: a highly trained, dedicated payroll specialist who can address a wide range of payroll and tax needs, and, most importantly, understands your small business and the larger industry in which you operate.
  • Advanced Technology
    A top-tier payroll service provider should offer advanced online payroll software, complete website functionality, and a proven track record of incorporating technological advancements to make their services even better. Find out if the provider offers you and your employees access to information on an integrated platform accessible through a Web browser, mobile app for smartphone or tablet, etc.) and if that platform resides in the cloud. Request a trial run of the provider's payroll software to determine for yourself if it's easy to use. Try accessing data from a smartphone or other mobile device. Beware of providers who rely upon outmoded technology to process their clients' payrolls.
  • Special Services
    What other services can the provider offer? Leading payroll service providers administer employee benefits and retirement plans, assistance with payroll taxes, sales tax payments, workers' compensation, time and attendance solutions, accounting, employee hiring, screening, and retention. Many small business owners are opting for such full-service providers, since it enables them to focus more of their time and effort on growing their business.
  • Up-front, Transparent Pricing
    Some providers charge additional fees when new employees are hired, or for allowing employees to change to direct deposit. To avoid the unpleasant surprise of hidden fees, make sure the provider's pricing structure is clearly explained beforehand, specifying any supplemental charges and processing fees. See if the provider is willing to disclose the possibility of pricing changes in the near future.

Selecting a qualified payroll service provider is one of the most important decisions you can make as a business owner. It's worth taking time to review your choices and ask the right questions before choosing the provider that's right for you.


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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