How to Choose a Payroll Service: 7-Step Evaluation Checklist

Partnering with a payroll service is a big decision. Get it right, and you’ll have a trusted partner to help you navigate through the complexities of payroll, taxes, and benefits.

Get it wrong, and you’ll be frustrated by the challenges of getting in touch with anyone in customer service and spending altogether too much money.

Some providers promise the moon and only deliver half a rocket, so to speak. But those are usually easy to spot.

For the most part, small business payroll service providers are beneficial business partners for companies of all sizes. The hard part is finding the right fit for your business and a partner you can trust.

How can you tell if a payroll provider is right for you? This article gives you the seven questions you need to ask before signing on the dotted line.

The best providers will have solid answers and make you feel like you can trust that they’ll deliver.

How to Choose a Payroll Service: They’re not all cut From the Same Cloth

Most modern payroll services look similar from the outside. And they perform the same basic payroll functions

Payroll calculations
Making payments, most likely by direct deposit
Tax withholding and benefit deductions
PTO management
Mobile access
Employee self-service
Filing and paying taxes

But the truth is, each payroll provider specializes in a particular type or size of business.

And for small businesses, what sets the best payroll providers apart is the level of personal attention they provide, how customizable their solution is, and that they’re willing to go the extra mile to help small businesses win.

When you outsource payroll to a local provider:

You’ll get access to local experts who have knowledge of local laws and regulations
Develop a relationship with your provider and lean on them when you have questions or concerns
Connect with other local advisors who help you navigate 401(k)s, Workers’ Comp, and more.

Here are 7 questions that will help you determine which payroll provider is a good fit for your business before investing too much time or money.

Do You Work Well With Companies our Size?
How Much Does Payroll Processing Cost?
Will I Have a Dedicated Payroll Service Representative?
What Happens When I Have a Tax Issue?
Will You Work With my Bookkeeper or CPA?
Is Onboarding Easy?
Is my Information Secure?

1. Do You Work Well With Companies our Size?

Why do you need to ask this question?

Without naming names, there’s a payroll service that specializes in larger, enterprise-level companies. Yet, in their marketing, they promote their small business offerings.

We have a first-hand account that this payroll provider reported 54 weeks of payroll (52 weeks in a year) for their small business. The business was never able to get someone to correct the error!

It wasn’t because the provider was bad.

They just didn’t provide the level of service a small business needs. Rather, their service was geared toward serving large enterprises.

Everything was great until a problem arose. Then, the lack of small business support was glaringly apparent.

Obviously, if you’re a small business, you don’t want that kind of experience. And conversely, if you’re a larger business, you don’t want to hire a payroll service that won’t be able to provide the level of service you require either.

Do You Work With Companies in Our Industry?

As well as working with small or large companies, you want to know that your provider works with other companies similar to yours, or at least in a similar industry.

Experience is telling. And you’ll get answers to your questions more efficiently from a provider with industry knowledge and expertise.

If the payroll provider doesn’t have experience in your industry, are they at least well-positioned to connect you with other local experts who can help?

2. How Much Does Payroll Processing Cost?

Although figuring out how much you can expect to pay is difficult, you need to know the true cost of working with a given provider. The only way to find out is to ask. You want a provider who is transparent.

For example, at ConnectPay, we discover the services you need, and build a tailored package. ConnectPay offers competitive market pricing, contact us today for a quote that suits your small business's needs.

And we don’t build packages that include services you won’t need or use. Sound fair?

Contrast that with packages marketed as being a good fit for businesses of a certain size, yet including services you won’t use. What are you paying for?

Do your due diligence here and find out what you can expect to pay.

3. Will I Have a Dedicated Payroll Service Representative?

For larger companies, this is rarely a need. But for small businesses, it can be absolutely critical.

Small businesses operate on tight margins, and the time spent on employee issues is important.

A small business owner just doesn’t have time to wait, hold or re-explain their problem to a new person every time they call for help.

4. What Happens When I Have a Tax Issue?

Here’s the honest truth: tax issues will happen.

Tax codes shift and change all the time, as do pertinent laws and regulations. If you’re in business long enough, you will have tax issues arise. Whether or not an issue will arise is the wrong question to ask.

The right question is, “what happens when tax issues arise?”

Some payroll services will protect their clients and handle payroll tax issues. Others won’t provide that kind of support.

So, it’s important to double-check before hiring if tax help is something important to your company.

At ConnectPay, for example, we specialize in payroll services for small businesses specifically. We know small businesses need help when it comes to taxes.

So, we keep an expert tax team in-house that helps deal with payroll tax issues quickly.

On the other hand, larger providers are often siloed, and the customer must interface between tax departments and payroll or workers comp departments, even if they buy all three from the same provider.

5. Will You Work With My Bookkeeper or CPA?

This is an important question to ask for small businesses.

There is so much interaction required between payroll and accounting. Small business payroll specialists will work directly with your CPA to ensure everything is done right and on time.

At ConnectPay, we partner with many bookkeeping companies and accounting firms.

“I was quickly impressed with the pricing, the ease of the online interface, and the personalized service.” - Lisa Tugal, Founder, Bellwether Bookkeeping

6. Is Onboarding Easy?

Getting up to speed with a new payroll provider involves many moving parts.

If your company has no balances and needs a new payroll provider, it’s quite easy. And, you can onboard at any time. If you do have balances, though, and are coming from another provider, timing is crucial.

Starting with a clean slate is the best choice. The ideal time to switch payroll providers is at the start of the new year. If that’s not an option, we encourage our new clients to begin at the start of a new quarter.

That way, there will be a clear cut-off for the reporting agent.

Of course, if need be, starting on the first of the month is doable. But, to keep things as simple as possible, we recommend starting with a new year or a new quarter.

How Long Does it Take?

For our clients, especially those that start at the beginning of a new year or quarter, the typical timeline for a complete conversion is 7-10 days.

If you have a specific timeline in mind, discuss it with a potential payroll provider before hiring them. It’s important for both the provider and the client to have a realistic timeline in mind to get started on the right foot.

7. Is my Information Secure?

This is getting more important with every passing year.

Cybersecurity is a huge deal, and the threats to information security are only increasing.

If security is important to your company and your employees, definitely inquire about security measures your potential provider embraces.

At ConnectPay, we have a bonded and secure enterprise-level security system. We also require background checks for all employees and use a secure online portal to transfer sensitive information.

How to Choose a Payroll Service: Go Into Any Call With Confidence

Checking websites and reviews is a great way to narrow down your search for a payroll service provider.

However, you can tell only so much by reading marketing material. The best way to evaluate a provider is to ask them these questions in person.

We always recommend potential customers schedule a meeting with us as a first step.

As small business specialists, we like to get to know you and get a firm understanding of your company and your payroll needs. Then, we’ll be able to tailor the right service for your needs.

This way, you won’t be oversold or undersold on payroll service.

If you’re ready to solve payroll for good, schedule a meeting with one of our payroll representatives. We look forward to the chance to win your business.