Tags: , , , , ,

4 Questions to Ask When Selecting a Payroll Service


Hana Dickman

Trusting your payroll to a third party is an important decision — not only are you forking over control of your workers’ livelihoods, but you’re handing over the keys to your own financial kingdom too. Asking the right questions before you join forces with a provider helps you vet potential services to ensure they offer secure products that meet the needs of your company and your staff. Here are four questions for potential payroll service providers that you should ask before making your choice.

What types of payment and processing do you cover?

If your payroll provider won’t process all of your worker-related payments, then you’re left cutting some checks yourself. Splitting the payment duties leaves you holding the bag for some of the work and creates extra opportunities for mistakes. Choose a provider that is willing to issue payments to full-time, part-time, and contract staff. Your payroll provider should also be able to accommodate all types of pay, including hourly, salary, commission, and bonus pay. Bonus points go to payroll services that help you track paid time off and accurately deduct benefits from worker paychecks.

Are you a full-service provider?

Not all payroll services are created equal. Some services simply cut checks based on wage and time information you provide; other services provide the software that captures time card information and calculates pay. Full-service providers handle payroll from start to finish, often providing the most value and peace of mind for small and mid-sized businesses. A full-service payroll provider usually offers:

  • Payment via direct deposit, paper checks, or debit card systems.
  • Benefits tracking, particularly with regard to paid time off (PTO) accruals for sick leave and vacation.
  • Deduction of healthcare, life insurance, and 401k benefits.
  • Payroll tax services, including filing and paying employer payroll taxes and sending appropriate W2s and 1099s each year.
  • Reporting so you can review and manage your payroll.

How do you ensure security?

Because most payroll service providers today deal at least partly with cloud-based software environments, security is essential. Types of data you and your employees might share with a provider include sensitive information such as account numbers, social security numbers, and other personally identifying information. Ensure that the provider you select secures transactions and data with high-level technology such as 256-bit Advanced Encryption. Find out what the password requirements for payroll systems are and how you and your employees can work with the provider to safeguard information.

Software security and access points are not the only security measures you should question. Information regarding your payroll has to reside somewhere—some service providers might work with you to house that information on in-house servers, but it’s more likely that your data will be stored in a data center. In many cases, the data center storing your information is a separate provider. Find out what data center providers your payroll service company works with and how those providers plan to secure your data.

Do you offer portal access to data?

One reason to use a payroll service provider is to reduce the daily work of managing employee paychecks. If your provider offers paycheck services but doesn’t include a way for workers to view and manage their payroll data online, you’ll still be fielding change requests and payroll questions on a regular basis. A service provider that offers portal access to you and your workers makes it possible for employees to manage some payroll functions on their own. Employees might be able to request vacation pay, change or manage benefits, or print paycheck stubs for documentation. Find out what access is offered through a service provider portal to determine if that provider can meet the needs of your workers.

Doing your homework regarding potential payroll service providers reduces the work you do later. Making an educated choice about providers also helps you secure information about your business and protect your employees.