Now that you’ve decided to outsource payroll management, it’s time to assess your business needs, locate the best providers and learn how to manage the process.

Selecting a Payroll Service Provider

One of the most important things to consider is the level of interaction you want from your payroll service provider. It may seem like payroll is a “set it and forget it” component to running a business, but the truth is that a number of issues can arise as part of the normal course of running your company.

It is critical to understand the level of involvement and customer service your provider is going to give you. Make the wrong selection for your business, and you could end up throwing your own resources at these unforeseen items that need resolution. Your people and time should be focused more on your company’s core competencies. A good customer service team will work with you to save you time, money and frustration, should issues arise.

It is also vital to consider the industry in which your business operates and consider any specific needs that need to be factored into payroll. For instance, restaurants have some unique reporting needs such as tipping that some payroll companies handle better than others. The trades (construction, electrician, etc.) also have specific needs like job costing, certified payroll and others.

While most payroll companies will claim to have the expertise to handle these requirements, there are definitely some that are better than others. Find out if they have direct experience by asking who their clients are in specific industries.

8 Questions to Ask Your Potential Payroll Services Company

Once you have determined your payroll needs and vetted some options through conversations with business peers, it is time to go ahead and evaluate payroll service providers.

It’s time to hire your first employee (or five, twenty or more).

When you start a business, hiring employees can be a rite of passage; a sign that the business is really getting off the ground. But before you add an employee to your startup’s payroll, it is important to think about what that payroll is going to look like.

Should I Manage Payroll or Outsource It?

It used to be that anyone starting or running a small business had two choices when it came to paying employees: manage the process in-house, using over-the-counter payroll software, or outsourcing the task to a payroll services provider.

Today, successful entrepreneurs realize that dedicating time and resources to in-house payroll management can be cumbersome. Ultimately, it can detract valuable energy you’re your company’s core focus. Instead, it is far more common nowadays to partner with a payroll services provider to handle this task.

Assess your Business Needs

When you’re ready to set-up payroll, selecting the right payroll services provider for your company is vital. While it may seem a bit of a nuisance, taking the right measures now will save a lifetime of headaches in the future.

There are a few key determinations that need to be made when figuring out the right fit for your small business:

1. How many employees will need to be paid?
2. How complicated or simple is my payroll?
3. Do I need a scalable solution to accommodate rapid growth or seasonal staffing?
4. In how many states do we have employees?
5. How technologically-sophisticated is our workforce and will they use the system to view their payroll and human resources information?
6. Do we need to integrate the payroll system with other applications?

You can easily search online for a payroll service, or use a website to seek out competitive bids. As a small business owner you might find the cheapest deal this way, but could easily end up using an out-of-state provider that is not familiar with specific state regulations.

Going with the cheapest option may also mean you sacrifice customer service, or worse, accuracy in processing.

Finding the Best Payroll Service Provider

The best way to find payroll services is through referrals from other businesses or from business partners (accountant, banker, etc.). Through referrals, you can be confident you are meeting with reputable businesses that will take good care of their customers.

Some questions to ask anyone providing a referral include:

1. Overall, how satisfied are you with your current payroll service provider?
2. Who else have you used and why did you switch?
3. How responsive are they when you have a question or need help?
4. Are there any services that they don’t offer that you wish they did?
5. How flexible are they to accommodate any unique requirements?
6. How will I be billed for services?

Once you have developed your list of potential payroll companies, a number of factors should be evaluated prior to vetting each of them individually.

Find out more later this week, as I share how to vet your new payroll services provider, the types of questions you should ask and what to do once you’ve found the perfect fit for your business.

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Photo Credit: STJ Leather Gifts

Jason Maxwell

Jason Maxwell is founder and president of MassPay Payroll Services, based in Beverly, MA. Founded in 2004, MassPay offers small- and mid-sized business owners a full suite of services to support their payroll, insurance and human resources needs, including web-based and paperless payroll; workers’ compensation; group health, dental and property and casualty insurance; human resources services; and time and attendance administration. Learn more at www.masspay.net.