Finding The Right Payroll Services For Your Small Business

Whether you're a new business hiring first-time employees or an established company looking for a better fit, choosing a payroll service means sifting through online research, accountant recommendations, and word of mouth from other small businesses. All of that is helpful starting out, but overwhelming to sort through. You need a solution customized to how your business actually operates, since only you know that.

Where We Come In

After servicing small businesses for over ten years, we've curated the top ten criteria that matter most in choosing a payroll service. Our goal is to reframe your thinking from finding the "best payroll service" (which doesn't exist) to finding the right one for your business. We score providers against these criteria below, so you're comparing apples to apples instead of guessing.

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1. Prioritize Stability
   Boiled down to its core, a payroll company is really an organization you entrust to move funds and report data to the government on behalf of your business. When you do this, you relieve yourself of the burden of dealing with the rigors of payroll, and free up more time to run your business. Payroll service firms and online payroll software are responsible and capable of taking care of millions of dollars in client payroll funds. When navigating the crowded sea of payroll services, it's important to look for this number one criterion, which is stability.

You want to make sure the firm has the proper financial controls and the back end systems to remit and file taxes with the IRS and state agencies…and of course, pay your employees on time!

Larger, publicly traded payroll companies have a "moat" around this because being a public company comes with added transparency and financial controls. Make sure the payroll company is stable and insured, just as you would with your bank.

2. The Payroll Set Up or Conversion Process
   Setting up payroll for the first time, or changing payroll services, requires time, employee data, and other variables. As a small business owner with limited time before you enter into any new agreements or contracts, you want to ask your payroll service what the payroll setup process or conversion timetable will look like.

After sales, the first impression a payroll service makes with a new client is implementation. This should be a smooth process for both you as the business owner and for your employees. For example, when the payroll service does change over, employees should be told ahead of time about changes in their normal payroll routine. If they are used to logging into a certain payroll system to retrieve their pay stubs or request time off, any change in their routine should be explained ahead of time. Changing payroll services anytime other than January 1st requires proper communication with both your current and new payroll service to ensure accurate handling of tax liabilities.

A good payroll representative will explain this thoroughly, and walk you through exactly how their payroll setup process works, and any short term impact on your cash flow.

3. Location
   Location, location, location can also apply to payroll services. Many small businesses prefer to work with a trusted representative in their town, or a locally owned payroll service for familiarity and additional accountability. If developing a 1:1 relationship with your payroll service is important to you, then proximity might be a high-ranking factor in your decision-making.
4. Customer Service
   Small business owners wear many hats and need to get in contact fast. They also expect their vendors to have their back and be responsive when they have questions or needs. A payroll service company is no exception. As the payroll company scales, maintaining fast and quality customer service is a challenge due to the complex nature of payroll. The industry is fast-paced and ever-changing, employee retention fluctuates, and laws and regulations change. As a growing small business, you'll understand this, but still need to be serviced promptly and efficiently. Look for reliable customer service when vetting payroll providers.
5. Easy, Reliable Software
   As a small business, you're most likely logging into an online payroll portal each pay cycle to process payroll and view reports. Employee self service makes everyone's life easier as well, with mobile apps being a real plus. When you make the switch, look for software that's consistently easy to use and is updated often.
6. Industry Capabilities
   If your business is in a certain industry that requires extra reporting, or added technical capabilities based on how the physical business operates, there are other additional items to consider. Here are two examples:

Construction Company: A construction company may need detailed reporting across different job sites, such as job costing and labor distribution, or certified payroll for government jobs. Finding a payroll service that can accommodate this advanced reporting may be a top priority.

Restaurant or Bar: At busy restaurants or bars, there are various point-of-sale stations where staff place kitchen orders and settle customer tabs. They may also clock in and out on these devices, onboard new employees, and disperse tips. The online payroll system is often part of this hardware, and should be a top consideration based on the daily flow of business operations. Changing this operational flow might not be worth it just to save money or other trivial factors.

7. Integrations for Accounting, Insurance, etc.
   Payroll data feeds into many other areas of a small business such as accounting and insurance. Since labor is a big part of a small business's profit & loss (P/L), when an online payroll system integrates easily into an accounting ledger like with Intuit QuickBooks you save time on administrative tasks.

If your state requires worker's compensation insurance, the insurance premium cost is also tied to the payroll data. Retirement contributions and health insurance deductions are also tracked each payroll cycle. Integrations make things easy!

8. HR Support
   It's no secret that the pandemic dramatically shifted how people live and work. It accelerated an already unstoppable trend of remote and alternative working arrangements. Every small business should at least have a basic HR foundation. Key documents such as handbooks, codes of conduct, job descriptions, employee records, and other policies are vital to protect the business interests. The standard of HR in a company influences employee retention and the company's reputation. If your employees feel like there is no structure and they are just tossed into a work environment, that will translate into how they perform and view their job.

Once your business gets to a certain scale, choosing a payroll service that can help support your people can go a long way.

9. Price Transparency
   Knowing what things cost is important to every small business. With inflation on the rise in the past few years, consumers are more aware than ever of increasing costs. Like most commodities, there is a red ocean of competition revolving around payroll pricing. Almost every payroll service will offer some sort of introductory offer (especially at year-end) to win your business and make a financial case to switch to them. If you're having major cost issues with your current payroll provider, then price transparency may be the top item on your list.

However, despite the lure of lower prices, don't skimp on payroll services! Paying your staff on time and dealing with government obligations is no joke. It's an investment in the structure of your business, employee retention and satisfaction, and the legality of your operations.

It also costs money to build and maintain good software and other reporting tools mentioned above. Know your costs, but don't let price solely influence your decision making.

10. Recruiting and Retention Efforts
    As mentioned above, the pandemic accelerated many labor market shifts. Organizations are struggling to recruit and retain talent. Many payroll firms are capitalizing on this by helping their clients find talent via recruiting platforms, and also retaining workers with added benefits and employee wellness programs. If you're seeking new employees or trying to retain the ones you have, finding a payroll firm that helps with this process is a good idea.

Overall
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Quality payroll services for small businesses are crucial for smooth operations. As a small business, few things are as frustrating as changing payroll services and having unexpected delays, poor communication, or issues with an employee's paycheck.

Ask about which factors are most important to you ahead of time, and weigh the cost of switching not only from a monetary standpoint but also your time. We've spent a great deal of time at PayrollSetup.com on this process and are still refining it by carefully listening to small businesses on Main Street and supporting the payroll services in our network. We'll help find the right payroll provider for you.

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