Payroll Services: What They Offer and When to Consider One

Payroll is perhaps the most important part of your business...at least your employees think so. It can be extremely time consuming and with little room for error, it takes a skilled person to execute it correctly each week. Some businesses employ a payroll company to take care of it for them but is it worth the costs associated with such a service? Here, we explore payroll services and whether they're right for your company.

Payroll service companies all offer similar services including calculating payroll, tax obligations, printing and delivering checks, and providing management reports. These companies ensure:

• Taxes are paid on time as to avoid penalties.
• Your employees have their checks on time (as long as you report your payroll on time).

Of course, these services aren't free. In some cases, they charge a percentage of your payroll or they may charge a per check fee, or a combination of the two. According to AllBusiness.com, companies like ADP and Paychex typically charge around $3 per check for their services. Every company will have a list of fees, but the bottom line is these services specialize in keeping track of all of your payroll needs, freeing up your time to focus on other tasks.

When considering a payroll service, it's important to assess your current in-house payroll costs. Naturally, because your payroll is done by an employee within the company, you might believe that it's cheaper to leave it that way. But, consider these issues:

• Time associated with training a person to do the payroll (teaching payroll software and applicable laws)
• Penalties incurred by late tax payments
• Mistakes on employee checks

These human errors can be very costly when the penalties are absorbed by the employer.

Benefits of a payroll service:

Privacy

Hiring a payroll service company ensures that your records are safe from the eyes of other employees that might have access to that information.

Convenience

Payroll services are simple in that you can call your payroll representative and give them the number of hours worked by each employee, their salary rate, and any deductions that need to be withheld. In some cases, the payroll service will have a web application for you to report on, making it even easier.

Accuracy

You can count on a payroll service to be accurate with your payroll without training them yourself. They will also keep up with tax laws related to employee payroll to make sure you are in compliance.

Compliance

With payroll comes a multitude of state and federal taxes. These are confusing and time consuming and with stiff penalties involved for late filings, it's a burden most business owners are happy to be rid of.

When to consider a payroll service:

• When you're looking to unload the burden of potential state and federal penalties
• When you have hourly employees or frequent changes to payroll information
• When you have payroll taxes for multiple states
• When you're paying someone internally to do it and their time could be better utilized

As with any service, it's important to know what to ask or request from a payroll company you're considering using.

• Be sure that the service is clearly customer oriented. You won't be dealing with a sales representative when you report your payroll, so it's important to be sure you'll have the one-on-one attention of a service agent.
• Request client references.
• Thoroughly review their services to be sure they are in line with your needs.
• Find a service that is in close proximity to your office just in case you need to pick the checks up yourself.
• Be sure to ask their policy on tax liability and penalties associate with late payments.
• Payrollfinders.com suggests you ask the company if they "impound" tax payments. This simply means that the company will deduct the payroll and tax payments from your business account prior to their due dates.
• Ask the company how quickly they can reprint checks in the event a mistake is made.

It's worth it to get quotes from multiple companies before making a decision. In many cases, these quotes can be negotiated, so be sure to do the math. Calculate all your costs associated with doing payroll in-house and weigh them against the cost of outsourcing. A payroll service isn't always what is best for a company, so doing your homework will be key to limiting expenses and effort with doing payroll.

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