How to Shop for Payroll Services
Taking care of payroll can be tricky and time-consuming. You have to make sure that you pay your workers in a timely fashion, and you also have to keep updated on changes to payroll taxes, Social Security contributions and Medicare premiums. To ensure that everything is done accurately and efficiently, you may want to hire someone to provide payroll services. While narrowing in on the right professional, keep the following tips in mind:
Steps to Shopping for Payroll Services
- Identify Your Payroll Priorities
- Compare Payroll Providers
- Shop for Payroll by Price
- Shop for Payroll by Product Quality
- Shop for Payroll by Service Flexibility
- Payroll Taxes
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1. Identify Your Payroll Priorities
To ensure you select the right company for your payroll needs, take some time to identify your payroll priorities. List the challenges that require extra assistance and decide which tasks you are okay completing on your own. For instance, some small business owners just want help writing out paychecks and calculating taxes every pay period. Others want help with every aspect of the payroll process, from filling out paperwork while onboarding employees, to paying employees to issuing tax reports at the end of the year.
Ideally, you should identify your payroll priorities over a few days. Start the list. Then, add to it the next time you do payroll. By making your list slowly, you help to ensure that you don't miss anything, and you increase the chances that you will find a payroll services provider who can meet all your needs.
2. Compare Payroll Providers
Once you know what you want, you can start to compare payroll providers. To ensure you're comparing apples with apples, you may want to make a list of the services offered by each provider. Then, you won't accidentally end up thinking that one provider is better simply because they have lower prices, even though they don't offer as many services.
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3. Shop for Payroll by Price
Although you shouldn't select your payroll provider on price alone, you should certainly pay attention to pricing when comparing different options. To shop for payroll by price, contact a number of companies, and ask for their a la carte pricing. Then, you can compare the price of specific tasks such as processing W-4 forms, calculating payments, issuing paychecks, generating W-2 forms and taking care of other payroll essentials.
Additionally, you should ask prospective payroll services providers about their package offers. Give them a list of the services you want and see what everything costs. Don't forget to think about your future needs, and if possible, talk about how adding additional services may affect pricing in the future.
4. Shop for Payroll by Product Quality
Your employees are arguably your business's greatest assets. They deserve to get paid correctly and in a timely fashion. To ensure that happens, you also need to shop for payroll by product quality. If possible, read reviews of potential payroll services providers or ask companies you are considering if they have any testimonials from clients. You may even want to speak to a few clients to hear more about their experiences with the payroll service provider.
Take some time to ask the company about their protocol. How do they handle payroll? What steps do they take to retrieve information from you about worked hours or accrued vacation time? Can they guarantee a certain amount of accuracy? What happens if they make a mistake? In addition to asking questions like that, find about about their customer support services. You need to know how to reach them and how long they take to respond to most questions or concerns.
5. Shop for Payroll by Service Flexibility
When you own a business, you almost always want to be growing and expanding. To get to the next level of success with a minimum of hassles, you should shop for payroll by service flexibility. As indicated above, you need a company with a list of services that can meet your current needs and your future needs.
At the same time, however, you also need a company that can be flexible in other ways. For instance, if you need to bring on a new employee quickly or hire temporary help, you probably want a payroll services provider who can handle the onboarding paperwork quickly. If you need to make changes to a paycheck such as altering the number of hours worked, you also need a company that can be nimble in its response times.
6. Payroll Taxes
Payroll taxes can be incredibly complicated. As an employer, you are required to withhold Social Security contributions and Medicare premiums from your employees' paychecks. Then, you must remit those funds to the government along with your matching amount. These payments are a certain percentage of your employees' wages up to a set threshold, and although the numbers stay relatively consistent from year to year, they are subject to change. Staying on top of these figures can be challenging, but a payroll services provider can handle that for you.
At the same time, you also must withhold some income tax from most of your employees' paychecks. This amount varies depending on your employees' marital status, number of dependents, whether or not they have additional income, and several other factors. To figure out how much you need to withhold, your employees need to fill out a W-4 form. Then, at the end of the year, you need to issue a W-2 form, letting your employees know how much they earned and how much you withheld. A payroll services provider can handle as many or as few of these tasks as you need. If you live in a state with income tax, you also have to handle all of this at the state level as well.
It's important to note that the government is very serious about collecting payroll taxes. The Internal Revenue Service (IRS) refers to the amounts you withhold from your employees' paychecks as trust fund payments. If you fail to make these payments, the government can assess a trust fund recovery penalty. This is one of the largest penalties the IRS assesses, and the agency can hold the owner of the business as well as the chief executive officers (CEOs), chief financial officers (CFOs) directors, accountants, bookkeepers and even the outside payroll service providers responsible for these payments and penalties. Because of that fact, it's essential to select a payroll services provider who will be diligent about calculating and remitting payroll taxes accurately and in a timely fashion.
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