You started your company and it’s now thriving. As it grows, will you be adding add human resources staff to manage your payroll and other HR responsibilities? How about hiring legal teams to withstand errors or stand up against litigation you might face? Or have you considering outsourcing your payroll needs to free-up your employees to handle new challenges and provide more value to your customers? If so, how you choose the right company to handle your payroll?
As a small business, while it’s a common myth that you’ll save money by handling your payroll inhouse, in actuality, a payroll company can have your back, while it partners with you. Payroll professionals are like realtors. They’re professionals in their field and that’s all they do. It’s imperative that they keep up-to-date on all changes, irrespective of when they’re issued. Too, think of them like your tax accountant. Everyone needs one and they have the resources to guide and direct you, as regulations change and your small business grows.
Do you have the time to read up on all changes that come about, let alone have the time to implement them? And, if you overlook a regulation, are you prepared to handle the penalties associated with it? Can you juggle a cadre of tools related to payroll, and keep up with the technology and equipment involved with operating it? Wouldn’t you rather focus on serving your customers and growing your business, considering that’s your expertise and the reason you started your small business?
Selecting the Right Payroll Service for Your Business
Irrespective of what kind of business you have, think long-term. Look for a payroll provider that understands your business and will be there to support your company as it stretches and grows. When it comes to payroll, consider your payroll service provider as a trusted advisor. And, of course, do your research. Look for a payroll service that has a solid reputation for quality and service.
Because the technology related to handling payroll gets more complicated each year, choose a payroll service that will advise you on how their technology can best meet your needs now and into the future. Is the payroll provider up on which states don’t have income taxes and which ones don’t tax wages? Will the company be able to step up its services and meet your needs as your small business grows? Does it handle critical details, such as keeping up with tax tables? Ultimately, how simple or complicated is the software that you’ll be using at your end? And, be sure to ask for one or two software demonstrations during a sales presentation to make sure you’re comfortable with operating it. Is the software user-friendly; does it contain all the features that you need? Does the provider take the time to answer all of your questions thoughtfully?
One aspect of growing your business is the onboarding process. Complying with the Fair Labor Standards Act, which addresses minimum wage, child labor laws, and record-keeping requirements, is critical for the success of your business. When handled properly, it’s a win/win, because it sets your company and your new employees up to succeed. It helps to assure the new employees gets acclimated to your company quicker with minimal glitches. Plus, it’s critical that the new employee’s data be recorded accurately, such as completing their W-9s or I-9s and comparable state documents, SSN verification, and recording other necessary data so that they’re paid accurately without you incurring any penalties.
As your business evolves, is your payroll service prepared to assist you with handling human-resource responsibilities, such as:
- Applicant tracking
- Background screening
- Employee onboarding
- Electronic benefits enrollment
- Time and attendance
- HR Information Systems
- Benefits tracking, accrual and leave tracking
- Document management
To make it easier at your end, can the technology related to these services be handled from a single portal?
Features Unique to Your Industry
Does your industry require special considerations, such as job costing, paid time-off accrual tracking, multiple pay options, benefits administration, custom reports, mobile time punch tracking with GPS location verification? When your payroll service understands your industry, it can become a trusted advisor that understands the nuances of your business and offers solutions.
It’s no fun being dinged for non-compliance. Make sure the partner you select has your back when it comes to payroll and tax penalties, wage and hour, employee relations, ACA, and other evolving legislative changes. Your vendor should understand the ongoing complexity of compliance related to your small business/industry and accurately calculate payroll taxes across municipalities, keeping in mind local, state, and federal guidelines.
Then, there’s configuring all the different categories for your employees, such as: full-time, full-time exempt, full-time non-exempt, part-time, contract, contemporary, statutory, and non-statutory statuses. Each category has an impact on how your payroll is configured. Are you taxing these employees properly and delivering their benefits accurately? You can’t afford not to.
And, just as certain generations are phasing out of the work force, today’s younger generations are demanding simpler, faster ways to be paid. What would be the impact on employee morale if you missed paying your employees by one week? Falling behind on payroll tasks and delaying paying your employees can have cascading implications for your small business, as your employees are left to handle the fallout of delayed wages. Too, today’s employees expect to have their paychecks “direct deposited” into their accounts. More so, they expect employers to provide options in terms of how they’re paid. This can also mean using payroll debit cards. Therefore, it’s important to select a payroll service that provides options and is flexible when it comes to how your employees are paid.
Empower Your Employees
The bottom line is that your employees expect to be paid on time. They have no comprehension of all the behind-the-scenes data collection that’s is involved in making this happen, such as:
- Collecting and verifying time-worked data
- Handling new hires’ input data and paperwork
- Entering detailed payroll data into the system
- Conducting self-audits to ensure accuracy
- Dealing with essential record-keeping tasks
- All the different ways employees are paid
- Managing tax deductions
- Tracking employees’ insurance, garnishments, etc.
When selecting a payroll service, if you select a partner that offers Employee Self Service (ESS) functionality, you’re empowering your HR and payroll staff, because the ESS feature allows employees to view their pay stubs, timesheets, time off and accrual balances, withholdings, and more on an as-needed basis.
Then, too, it’s important to distinguish between gross and taxable wages. Some employees want to take more of their salary home each week, while others prefer a bigger tax refund at the end of the year. It’s critical to make sure these deductions are handled accurately with each pay period. Voluntary deductions can make your head spin. Are you prepared to handle:
- the 401k
- health and dental insurance
- group term life insurance
- disability insurance
- when appropriate, union dues
- charitable contributions
These types of deductions can vary from paycheck to paycheck. Then, there’s Social Security and Medicare deductions. The calculations for these deductions differ for higher income earners. Plus, you could have employees who are exempt from federal and state income tax deductions. How about handling child support or garnishments. The calculations for all of these types of deductions must be handled accurately, with all factors being taken into account. Do you or your staff have the time to manually configure or create equations that will handle all of this?
Then, too, if you decide to outsource, it should be cost-effective. What does a payroll service cover when unexpected regulatory challenges arise? How quickly can they respond? Is it something your small business should handle? At what cost? Will you have to pay extra for a payroll service to cover these services, when needed? Make sure you’re absolutely clear about the lines of responsibility you and your payroll service provide. Never assume. And don’t wait for a crisis to occur to discuss these with them.
In addition, a payroll service may require you to sign on for services you’re currently not using, but as your business grows, you’ll be glad you had. Are you prepared to absorb these costs now? Or should you get a quote today for the services you’ll need later on, with the option of adding them as you need them?
Make Technology Work for You
As documented above, there’s a plethora of considerations that come into play related to payroll. It’s no longer tracking an employee’s time and writing a check weekly or bi-weekly. As a small business owner, you must carefully track large, complex data sets to ensure every paycheck your employees receive is accurate. Human capital management systems provide specific competencies and are implemented in three categories: workforce acquisition, workforce management and workforce optimization. They can track all of the fields specific to your employees’ payroll needs and automatically feed the correct data through the system, streamlining your pay processes and ensuring accuracy in paycheck configurations.
Now that you better understand the value of a payroll provider, do you choose a national or local company to partner with when it comes to your payroll needs? Of course, there are pros and cons to both. A national partner can offer more services and bells and whistles. Do you really need them? Are higher costs connected with using a national company?
Of course, we all know that a local company is often more accessible, and often provides more personalized service at an affordable price; however, can it keep up with the latest technology?
The bottom line is you know your small business best and only you can decide. If you choose an outsourced payroll provider, ASAP Payroll Service would be glad to help you think through the process to see if they’re a good fit. Just email them at: Kyle.email@example.com or call: 317-887-2727, or visit their website at: www.asappayroll.com.