10 Tips for Choosing the Best Payroll Service Company That Won’t Rob You

There are dozens of companies out there that will gladly take over all of your company’s payroll services functions. On the surface, this sounds like a win-win situation. But too often, business owners don’t realize they are being robbed blind by these providers – either through additional fees or via lost productivity from dealing with payroll-related problems.

Before you outsource this important task, here are ten suggestions to help you choose the right payroll services provider.

Do your research.

Simply Googling a bunch of payroll service companies isn’t enough. You have to do more than just peruse their websites; you have to get a sense of the reputation of each individual provider. That means seeking out word-of-mouth advice from people in your industry and trying to find references for as many payroll service firms as you can.

A good place to start is by looking at various online review sites. Most of these reviews will be unfiltered and written by people who have nothing to gain or lose by expressing their opinion.

Figure out compatibility issues.

An attractive payroll outsourcing package may not be worth much if you aren’t able to integrate it with your existing infrastructure. So figure out what your accounting platforms and requirements are, then ask each company about compatibility. If you have to purchase and/or install a bunch of new software just to be able to support the new payroll service, your costs could skyrocket quickly.

Look beyond the sticker price.

Certainly, the overall price of the payroll service is important, but it’s not the only cost-related consideration. You need to drill down into the product’s fee structure to see if any hidden costs might trip you up. Examples include weekly processing fees, charges for adding employees to the payroll or changing their benefit information, a hike in annual usage fees after the first year, or an extra cost when adding one or more employees to direct deposit.

Find out who you will be working with.

Don’t assume the payroll service provider’s CEO or sales rep will be your liaison with the company. Make sure to ask whether you will be working with a dedicated account manager or just a revolving door of customer service personnel depending on which day you call.

Once you figure out the point person, be sure you are comfortable with him or her. If you don’t feel that you can ask questions and receive clear-cut answers, problems could arise down the road.

Determine what services your company will need.

Payroll service providers offer a wide array of services. You’ll probably want check printing and delivery, salary and tax computations for each individual worker, and periodic reports. But many firms can provide you with other services like direct deposit, vacation and time off monitoring, 401(k) retirement plans, pre-tax deductions for childcare and/or medical benefits, and other human resources-related functions.

Make sure to flesh out the additional costs associated with each “add-on” service in order to prevent paying for functions you don’t need or want.

Determine how often you will receive reports and what will be on them.

Will you be getting payroll reports every quarter, every time checks are printed, or somewhere in between? And what exactly will be included in these reports? Ideally, you want something more than information you can easily obtain on your own, but you don’t want a sea of data that makes the report cumbersome and hard to decipher.

Find out how accessible the program is for both you and your employees.

In most cases, you shouldn’t settle for anything less than a dedicated, secure website from which you can access any and all payroll information. You should also have the capability of entering additional data and/or payroll-related changes instead of having to submit them to your provider through a slower channel like email or over the phone.

In addition, employees should have simple, limited access to their payroll accounts so they can examine their vacation, benefits, salary, and other pertinent information.

Check out their customer service offerings.

Figure out precisely when and how you will be able to reach a customer service agent, technician, or IT professional. Do they operate only during business hours, or 24/7? Can you reach them by email or live chat, or only by phone? Response timeliness, hold times, accuracy of information, and helpfulness are key factors in the success or failure of any payroll service provider. After all, you don’t want to be left high and dry when your workers are clamoring for their paychecks.

Know who will ultimately liable for mistakes.

Errors sometimes do happen, so it’s essential that you know how they will be handled. If a check gets printed for an incorrect amount, it’s imperative that the mistake is rectified quickly so an employee isn’t stuck without his or her money for a long time. Also, since payroll services are responsible for paying and reporting taxes to the government, any mistake on that front should be the responsibility of the provider, not you. Be sure this point is spelled out in writing.

If you need to switch providers, wait until the right time.

Unfortunately, sometimes you can do all kinds of research before signing on the dotted line and still have a substandard outsourcing experience. So when it becomes apparent that you must seek another company to handle your payroll, try to time the switch and the end of the fiscal year (or at least the conclusion of the quarter) so you start with a clean slate with the new company.

Freeing yourself up from handling day-to-day payroll accounting can result in a huge boost in productivity. But if you choose the wrong payroll services provider, you may spend more time fighting fires and calming angry employees than you would have had you kept the process in-house. So be sure you’ve got the right partner before making the switch.


Chris Martin is a freelance writer about topics ranging from payroll outsourcing to entrepreneurship to business marketing.

One thought on “10 Tips for Choosing the Best Payroll Service Company That Won’t Rob You

  1. I would like to share my opinion with your readers, I personally believe Paychex is the best payroll service, plus they actually offer you a free month of payroll to test their service which takes 50% of the headache out of the way. They are now handling payroll for 500,000+ U.S. business so they have to be doing somthing right. You can contact Paychex at 877-625-7109 probably they best place to start if your looking for a reliable payroll service.

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