Small business owners have lots on their plate to accomplish on a daily basis.
With that being the case, outsourcing your payroll needs can remove the stress of having to pay employees on time, not to mention worry about whether or not all the necessary deductions are properly covered.
Before your notion is to turn to a payroll provider, however, what are some of the things you should look for and expect from such a company?
1. Reliability – Have you ever had to deal with employees who not only do not get paid on time, but also are incorrectly compensated? Such issues can lead to morale problems in the office, not to mention headaches with the IRS (see more below). By outsourcing your payroll needs, you can lessen the chances of there being errors, especially since the person who may have been handling payroll for you can now focus their time on the other responsibilities they have with your company. That being said, reliability is key when searching for a payroll provider. Check them out from head to toe, including their track record in customer service. Going to a site like the Better Business Bureau (BBB) for starters is a great way to get information on providers, especially if they have had customer complaint issues in the past;
2. Someone who knows their stuff – While doing payroll does not involve having countless college degrees, it does take things like knowing math, attention to detail, and being up to speed on matters such as health benefits, 401k’s and any other work-sponsored benefits. Your payroll provider needs to be able to know the right amount of deductions for each employees per pay period, leaving you void of a big financial mess at the end of the year. In the event the taxes are not properly deducted, your company could end up with an IRS penalty. According to a BusinessWeek report, around 40 percent of small businesses end up paying the IRS on a yearly basis for incorrect filings on their year-end payroll taxes. Always check with each provider you consider outsourcing to to see if they cover such errors;
3. Customer service second to none – Even though every business wants to get the best customer service when they outsource some of their needs, most realize that is not always going to happen. Given the importance of payroll, make sure that the provider you consider going with is available on a regular basis to answer and deal with any questions you have. If an employee or employees are late receiving their payments, what will the payroll provider do about it? This is where checking their background and looking for a trail of customer complaints comes into importance. Since many providers work with direct deposit, make sure the dates you tell employees they can expect to receive their money is accurate;
4. Security needs to be a priority – Finally, properly securing the personal data of employees is critical. Your payroll provider needs to be able to easily and correctly cover personal information such as Social Security numbers, how much an employee is making, and their home address etc. A breach in security could not only cost you an employee or two, but it could end up as a legal matter. If you are transmitting employee payroll information to a provider, make sure there is a secure means of doing it on both your end and that of the provider.
Depending on the size of your small business and employee workload, outsourcing to a payroll provider may or may not be your best solution.
Chances are, however, it definitely pays to look into it.