Ultimate Guide:

Payroll services for small businesses.

Payroll is more complex than ever before. 

Rules, regulations, Workers’ Compensation, multi-state taxes, and more can take payroll for even the smallest business and turn it from a routine process into a waking nightmare. You're not alone if you’re struggling to keep your head above water with your payroll. But how can you stop wasting hours and hours of your precious time and gain peace of mind?

Enter: Payroll services for small businesses.

To keep your payroll compliant and your business flourishing, you need to understand payroll services and the problems they solve. What are your options, what will it cost, and why should you care? We’ll cover all this and more in this all-in-one guide to payroll services for small businesses. 


Payroll Services for Small Businesses 

When discussing payroll services for small businesses, you first must understand the different types of payroll services. What types of payroll services exist, what are their features, pros, and cons, and which type of payroll services are best for small businesses?

Let’s look at seven types of payroll services in more detail:

  • In-house payroll:
    If you have a large team, you may have the resources and funds to handle payroll in-house. Generally, only larger enterprises have fully in-house payroll. 
  • Bookkeepers and CPAs:
    You may be able to hire a bookkeeper or accounting firm to handle payroll for your small business. Many firms outsource payroll on your behalf rather than processing it themselves. 
  • DIY payroll services:
    If you have the staff you need to process payroll and simply need tools, you can use DIY payrolling services. These software solutions can help you process payroll in-house without having a full team of payroll experts on staff. 

Related Read: Best Payroll Software for Small Businesses 

  • Small payroll bureaus:
    Small businesses can work with a personalized payroll bureau. These services have small teams and limited client lists, but some lack the necessary resources to solve complex tax situations, workers’ compensation, and more. 
  • Small business payroll specialists:
    Small businesses looking for advanced technology and support in their payroll may choose a small business payroll specialist. ConnectPay fits into this category. We have the technology, expertise, and staff capable of managing complex payroll. Still, we maintain the personalized, reliable touch of a smaller organization to help your team get the payroll support you need. 
  • Mid-sized providers:
    If your business is scaling, you may work with a mid-sized payroll provider. The challenge with mid-sized providers is navigating bundled payroll offerings to ensure you only get the features you need rather than paying for functionality you don’t. 
  • Big-box providers:
    If you’re reading this page, you likely don’t need a big-box provider. These solutions are designed for larger enterprises. These solutions are feature-rich but generally siloed and pricier than those geared toward smaller businesses. 

Effective payroll processes are vital to the success of your business. Without payroll management services, your workers may not receive on-time payments, or you may fall into noncompliance with tax, payroll, or workers’ compensation requirements. Noncompliance in these areas can result in fines, fees, and other penalties. 


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Benefits of Using Payroll Services

Your business can enjoy several benefits when you utilize payroll services. Doing payroll in-house is a headache most small businesses can’t afford to spend their time and effort on each pay cycle. 

By partnering with a payroll service, you’ll skip out on some worries and tap into a knowledge base of experienced payroll professionals. Let’s take a closer look at the pros of using payroll services.


Enjoy Time Savings

The average small business owner spends over five hours on payroll each pay period. When you partner with a payroll service and allow them to manage your payroll, you’ll save valuable time you can spend growing your business or attending to other vital tasks. 


Maintain Compliance

State and federal tax laws are constantly changing. You must take steps to ensure your business remains compliant with new laws by staying up-to-date on all the details of every change. 

Maintaining payroll compliance is a full-time job. When you manage it yourself, you will spend time you don’t have on less effective processes than the ones an outsourced payroll service can provide. 


Leverage Expertise

If your payroll is smooth sailing, you may be able to manage it on your own for a few cycles. However, to whom will you turn when a complication or problem arises? 

When you work with a payroll service for small businesses, you always have an expert prepared to manage questions related to taxes, regulations, workers’ compensation, PPP loan forgiveness, and more. 


Maximize Efficiency

If you’re struggling with cobbled-together payroll solutions, you are not working as efficiently as possible. Without the right systems, processes, and experts, you may be reinventing the wheel every time you run payroll.

Additionally, you may face challenges related to payroll reporting. If you aren’t following consistent processes, you may be unable to quickly and accurately access your payroll reports. In this case, you may struggle facing an IRS audit. 

Without the help of a payroll service, you are also likely unable to offer modernized payroll solutions like digital paystubs and mobile access to time tracking. 


Utilize Connections

Taxes vary by state and locality. Things get even more complicated when you have office locations or remote workers in multiple states. Workers’ compensation laws can be similarly challenging to manage on your own.

When you partner with a payroll service like ConnectPay you can take advantage of connections with experts in local taxes and regulations, ensuring that your business always maintains compliance. 


Gain Peace of Mind

All these advantages boil down to this final benefit: Peace of mind.

Rather than stressing about finding the time to process payroll and wondering whether you’ve done enough to maintain compliance and follow all the ever-changing laws and regulations, you can rest easy knowing your payroll service has your back. 

Essential Small Business Payroll Features

The benefits of working with a payroll service are undeniable. Still, you’ll only experience those benefits if you partner with a payroll service that provides the features you need to manage your processes adequately. 

Every business and industry has unique needs and requirements from its payroll service. However, you may consider a payroll service provider capable of offering the following features at a minimum.

Related Read: Construction Payroll Services: Essential Features and Top Providers


Time and attendance tracking

Time clock tracking is essential for any business. If you have hourly workers, you’ll need to be able to track their arrival and departure each work day. Even if your entire employee base comprises salaried employees, your time and attendance tracking system will allow you to track used sick or vacation time, holidays, and more.

Your payroll service may provide these features in their software or offer integrations with other software solutions. For example, ConnectPay offers basic time and attendance tracking features but also integrates with more advanced software like OnTheClock, which has geofencing features to allow for automatic time-clocking. 


Connections with local tax experts

As discussed in the “benefits” section, one of the chief benefits of working with payroll services is having access to tax experts and other local professionals. If your payroll service provider doesn’t offer those connections, you will miss out on this vital benefit. 

ConnectPay has an in-house tax team and local partners in workers’ comp and accounting services. We leverage both of these teams to ensure our clients can always get an accurate and speedy answer to their pressing payroll questions. 


Attentive customer service

How many times have you called a customer service line only to get stuck in a neverending loop of hold music and “your call is very important to us”? Or worse: your call goes to voicemail, and you’re left wondering if you’ve left a message in the abyss or if a rep will return your call soon.

These situations can be particularly maddening if you’re trying to manage a payroll crisis.

As a result, another essential feature of any payroll service worth its salt is attentive, supportive customer service. It’s ConnectPay’s policy that calls never go to voicemail during business hours. You’ll always be able to get a Connected Service Rep on the phone to answer your question during the work day. 


Pay-as-you-go workers’ compensation

Workers’ compensation is notoriously complex. The calculations are challenging, and it’s easy to overpay when you pay your workers’ comp upfront in a single lump sum. Lump sum payments can also result in more surprise audits, leading to more fees, fines, and payments down the line.

Look for a payroll service that offers pay-as-you-go workers’ comp. This solution allows you to calculate the exact amount you owe every pay period, meaning you only ever pay for what you actually use. This method saves you time, money, and headaches. 


Consistent pricing

If you look at the pricing information for some payroll services for small businesses, you’ll find that many solutions offer complicated bundles or require pricing upon request only. 

You need consistent, transparent pricing for all your services as a small business owner. Payroll is no exception.

ConnectPay offers payroll services starting at the simple price of $30 per payroll. We keep things simple and easy to plan for—just like they should be. 

Cost of Small Business Payroll Services

We talked a bit about pricing in the previous section, but let’s dive deeper into cost and pricing. How much do payroll services cost?

The true but perhaps frustrating answer is: It depends.

The price of your payroll services will vary depending on three elements:

  1. Features: Premium or specialty features will cost more than a “bare bones” payroll service option. 
  2. Service: How much customer support will you receive? You may pay less upfront for a company offering poor service, but remember, you’ll likely “pay” for that discount on the back end with wasted time chasing down a service rep when you have a challenge. 
  3. Business size: Many payroll service providers charge a fee per employee in addition to their monthly fees. As your business grows, so will your payroll costs. 

Related Read: Answered: How Much Does Workers’ Comp Cost for Small Business?


Cost of Poor Payroll Processes

Are payroll services worth the price? You may have guessed our answer is a resounding “yes.” But why?

The fact is poor payroll processes are far pricier than the cost of a solid payroll service for your small business. When you do not have proper payroll processes, you will suffer the consequences of inefficient, ineffective payroll.

First, you will waste more time than you can afford. You must consider the operational cost of paying yourself or an employee to manage your payroll in-house and the opportunity cost of doing so. 

If you or a key employee is spending time on payroll, you’re not spending that time elsewhere that may be more valuable to your growing business.

Additionally, poor payroll processes often result in noncompliance with one or more payroll, tax, or other regulatory requirements. Noncompliance in these areas can result in fees, fines, and penalties that far outweigh the cost of proper payroll processing. 

Related Read: Employment Tax Compliance: 5 Actions You Need to Take Now


Word of Caution

When exploring payroll service options, consider the following challenges:

  • Over-packaging: Some payroll services purposely over-bundle their offerings, charging more than you want to pay simply because they have included features you don’t need and won’t use in the bundle. 
  • New Customer Discounts: Occasionally, payroll service providers will lure customers in with a “new customer” discount. In these situations, the “normal” price is often far higher than what you may pay elsewhere, in an effort to offset the costs from the unsustainable “new customer” pricing. 


Though the price does vary, if you are a small business owner with ten employees, you can expect to pay in the realm of two thousand dollars per year on payroll services. 


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How To Choose the Right Solution for Your Small Business

Do you know you need a payroll service for your small business, but you’re unsure of where to go from here? Have no fear: we have you covered. 

You can follow our five-step process to determine the right payroll service for your business.

  1. Consider Necessary Services and Features:
    We discussed the features that every small business likely needs from their payroll solution earlier. However, your business may require features not included in this list. Do you have a large population of remote workers? If so, you will likely need mobile time-clocking features. If you need cost and accounting tracking, you’ll need the ability to track that within your payroll solution. This list of essential features will help you whittle down your list of providers to include only the ones that offer everything you need.
  2. Consider Software Needs:
    Do you have a tech-savvy employee base? If not, you will need to take special care to choose a payroll service that offers an easy-to-use software solution. Even if your staff is filled with IT professionals accustomed to technical challenges, you likely want to ensure you’re choosing a solution with user-friendly software. After all, no one wants to feel like they need to solve a Rubik’s Cube just to submit their hours and attendance.

  3. Determine Desired Payment Structure:
    Do you want to pay for your payroll service monthly? Annually? Per payroll run? You can find payroll service providers that offer payment structures in these categories and more. Ensure that you choose a provider that offers the structure you need for your business.

  4. Examine Solutions with Industry Experience:
    Has the payroll service you’re considering worked with businesses in your industry before? If not, you may need to switch gears and try a different solution. Your industry may have specific needs, regulations, or other requirements. Working with a payroll service that has succeeded in your industry before gives you the peace of mind that they can be trusted to handle the nitty-gritty details of your payroll with ease.

  5. Consider Support Needs:
    We don’t want to enter a business relationship anticipating challenges and issues. However, if we don’t do so, we may not be adequately prepared to handle those challenges should they arise. Does the payroll provider you’re considering offer strong customer support in the event of an urgent challenge or payroll emergency? If not, you may want to consider another option. 

Getting the Most from Payroll Services for Small Businesses

Whether you’re starting a new small business, scaling up, or just looking to switch up your payroll service provider, you need to understand your needs and options when it comes to small business payroll. 

To fully understand your needs and opportunities regarding payroll, you may need expert advice. Reach out to ConnectPay today for an expert business review!

This review will identify gaps and opportunities in your payroll processes. We can then discuss the connections and optimizations you need to get the most from your payroll with the least amount of time and effort. 

If it sounds like a match made in heaven, we can then begin our partnership with a seven-day premium onboarding with ConnectPay. Get started today to kiss your payroll headaches goodbye for good! 


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