6 Questions to Ask When Selecting Your Payroll Provider

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What every small business owner should know before partnering with a payroll specialist

Payroll plays a vital role in the success of any business. Employers must respond to tight deadlines and ensure that detailed employee information is always accurate. As a small business owner, you face additional pressure if you do not have the resources to employ a full payroll team and must manage payroll yourself. Selecting the right provider can mean the difference between seamless payroll runs and happy employees…or headaches, confusion and runaround.

Partnering with a professional payroll services company is smart move for many small businesses. It can alleviate you from the time-consuming burden of managing payroll yourself, and their expertise can ensure that you always report correctly and follow all compliance regulations.

However, not all payroll providers are created equal. Selecting the wrong payroll company can cause even more added more stress. Here are the six most important questions you should ask a payroll provider before committing to use their services.

Are they licensed, bonded and insured?

When you outsource to a payroll partner, you are trusting them to control a significant sum of your money. A small business owner’s worst nightmare is that their payroll provider walks away with their deposit, leaving employees high and dry and management scrambling to cut emergency checks. While this is a rare occurrence, small businesses are the most likely to experience extreme financial damage from this loss. Conduct a thorough check to discover whether your potential payroll service provider is bonded, carries adequate insurance coverage and is an approved service provider recognized by the Internal Revenue Service and the States in which they operate. Ask to see copies of their insurance certificates to confirm that your payroll funds are always protected.

How will they ensure data security and safety?

Payroll information contains a trove of sensitive information about your employees. It is your responsibility to protect it. Your payroll provider should take this security as seriously as you do. Ask your potential payroll partner to walk you through the details of their data storage system and pay close attention to where data is housed and how it is protected. Look for encrypted off-site or cloud storage systems with multiple redundancies to ensure that your data is always backed up in case of hardware failure other unforeseen circumstances.

Do they guarantee their work?

Payroll experts are in the business of helping you avoid errors that can result in costly penalties. However, even payroll services with the best reputations slip up and make an occasional mistake. Luckily, all errors can be corrected and your payroll provider should have the professionalism to make things right immediately. Honesty, open communication and timely response are the cornerstone of the relationship between a business and their payroll service. Ask your potential payroll provider about the biggest mistake their company has made and how they were able to correct it. Take special note if they guarantee their services by offering to cover the costs of penalties if a mistake is due to their error. Beware of companies that are hesitant to share details or unwilling to identify a time that their company was less than perfect.

How flexible are their services?

Your payroll provider should conform to you, not the other way around. Look for a payroll partner who takes the time to understand your business culture and seeks specifics about your current processes and what your employees expect. Do you prefer to issue paper checks over direct deposit? Does your business have an unconventional compensation structure? Do you need to respond to employee wage garnishment mandates? Your payroll provider should supply solutions for your business’ specific needs.

How easily will you be able to access your data?

When outsourcing your payroll to an administrative services organization (ASO), you should be able to access your data as quickly as if you managed your payroll internally. Your use of a payroll company should not slow your business down or obstruct your access to information. Look for providers whose systems enable 24/7 access by you and your management team, without having to install special software at your location. Many payroll providers use a secure, web-based system that allows you to approve payroll, generate reports and make changes from your computer, laptop or other web-enabled device.

How quickly do they respond to your questions?

Beware of payroll providers who present you with an automated solution then dodge your calls – or leave you stuck in phone tree purgatory. These “do-it-yourself” systems can handle day-to-day payroll needs but cannot provide expertise and guidance when you receive a tax or compliance notice. A reputable payroll partner should not only streamline your process through automated software solutions, they should also provide direction and advocacy when you are facing challenging or unfamiliar situations. Before you decide to engage with a payroll service, evaluate how quickly they respond to your emails and phone calls and whether they offer stock replies or thoughtful, specific responses to your questions.

Selecting the right payroll provider is not a decision that should be made in haste. Take the time to conduct due diligence before committing to a particular service. The effort spent up front will repay you tenfold in a lasting relationship with a trustworthy partner who can serve your business for the long haul.

If you are deciding whether to outsource your small business payroll or have questions about your current payroll provider, contact us at (480) 558-4336 and we will gladly discuss your options and help you find a solution that will best benefit your business.