Choosing a new payroll provider sounds like an easy task. They all do the same thing, right?
Unfortunately, it’s not quite that simple. Today’s small business owners have a lot of payroll options to choose from and picking the right provider can mean the difference between financial success and a call from the CRA. That’s because payroll isn’t just about making sure your employees get paid—although that’s pretty important. Payroll is also about finding the right balance of control and flexibility to make sure that your time and money are properly managed.
In other words, choosing the right payroll provider is more complicated than it might seem. To help make that process a little less overwhelming, we’ve outlined what to look for when choosing a new payroll provider, including some of the less obvious considerations to keep in mind. Of course, no two companies will have the same payroll needs, but with this handy guide, you can whittle down your list of options to make your decision that much easier.
Before you even begin to look at specific payroll features, it’s important to think about how much control you want over the payroll process itself. In other words, you need to think about how hands-on you want to be in the payroll process, and whether you need the support of outside experts.
One option is to outsource your payroll directly to a payroll provider. This is often known as concierge services and it means that the payroll provider will fully manage payroll for you. Unsurprisingly, opting for concierge services means that you will need to pay a little bit more. However, the benefit is that you have experienced payroll professionals working to ensure that your payroll is not only accurate, but also compliant with the latest rules and regulations. Outsourcing your payroll directly to a provider also saves you time on back-office administration, giving you more time to focus on growing your business. If outsourcing is the route you choose, you will need to search for a payroll provider that specifically offers this kind of concierge service.
On the other hand, some small business owners prefer to run payroll in-house. This is often because business owners like to have greater control over when and how payroll is run, so that they have a more intimate understanding of their financial picture. Of course, going this route does mean you will need to spend more time on payroll and be careful with your calculations. In this case, it is best to choose a payroll provider that will automate as much of the process as possible. For instance, not all payroll providers offer automated remittances, therefore if you choose to take payroll in-house, you’ll want to look for a provider who automates the remittance process, and takes care of filing important documents such as T4s and ROEs on your behalf.
While it may not seem as important as some other payroll features, the employee onboarding process should be a key consideration when choosing a new payroll software, especially if your company has a significant number of employees.
When it comes to employee onboarding, many payroll platforms require administrators to manually input all employee information. If you only have a handful of employees, this likely won’t seem like a big deal. However, the more employees you have, the more time-consuming this process becomes. It also means that when employees need to change information such as their address or banking details, they’ll have to go through the administrator in order to make those changes. This is something to take into consideration when considering a payroll provider that requires manual employee onboarding.
On the other hand, some payroll providers offer an employee self-onboarding feature. This means that employees have the ability to enter and update all their key information when they join the team. Not only does this save you from the time-consuming process of manual data entry, but it also helps to keep mistakes to a minimum. For many small business owners, choosing a payroll provider that offers employee self-onboarding can be an ongoing time-saver.
For some small business owners, cost is the deciding factor when it comes to choosing a new payroll provider. However, not all providers structure their plans in the same way, which is why it’s important to do a little bit of math when looking at each provider’s pricing.
One of the most popular ways that payroll providers structure their plans is by charging per payroll. For companies that run bi-weekly or semi-monthly payrolls, this pricing is fairly straightforward. However, for businesses running weekly payroll or business that frequently run off-cycle payrolls, these costs can be higher than a provider’s pricing might suggest. Therefore, if a provider charges per pay run, it’s important to look at how many times you actually run payroll each month to see what your total costs will be—it could be a lot more than you think.
On the other hand, some payroll providers simply charge a monthly base fee with an added cost per employee. This pricing structure makes it easy to determine your monthly costs simply by looking at how many employees you have. In this case, you don’t have to worry about off-cycle pay runs causing your monthly payroll bill to rise.
On top of a company’s pricing plan, it’s also important to find out if there are any extra fees associated with running payroll with a certain provider. For instance, most payroll providers charge a one-time setup fee. However, some providers also charge ongoing fees, such as a fee for direct deposit or even fees related to customer support. It’s important to ask about these fees upfront, so that you can properly estimate how much payroll will cost with each provider.
In many cases, small business owners don’t think about customer support until they really need it. This means that some business owners only find out that a provider offers inadequate support after all their data has been moved over. As a result, it’s important to look into the quality of a provider’s customer support upfront.
One of the most important things to look for in a payroll support team is the level of experience. Any company can hire someone to man the phones, but when it comes to payroll, you need to trust that the person on the other end knows what they’re talking about. When looking for a new payroll provider, ask whether the customer support team includes trained payroll specialists or licensed accountants. If having local representatives is important to you, you can also ask where the support team is based.
Beyond the experience of the support team, availability is another major concern. Payroll is one of the most time-sensitive aspects of running a business, which means you need to be able to get a hold of support as soon as an issue arises. When choosing a new payroll provider, inquire about the support hours to find out whether there is 24/7 support or whether it is limited to business hours—keeping time zones in mind as well. It’s also important to find out how you can contact support when an issue arises. For some business owners, email is the preferred form of communication, while others prefer to pick up the phone.
When choosing a new payroll provider, it can be easy to simply concentrate on the payroll features alone. However, you want to choose a provider that can grow with you and meet the future needs of your business, which is why it’s important to think beyond payroll.
Today, most payroll providers offer additional features such as HR, benefits management, performance management, time-tracking, and more. Though you may not have a need for extra features such as HR or recruitment at the time, you may need them in the coming years as your company begins to expand. Therefore, it’s a good idea to think about your long-term business goals upfront and assess whether you might need some additional features down the line. By doing your homework in advance, you can make sure you invest in a provider that can do-it-all down the line and avoid the need to store information on multiple different platforms.
As mentioned, there’s no one-size-fits-all solution when it comes to payroll. However, the above gives you the basic criteria of what to look for when choosing a new payroll provider. To narrow down your list even further and better understand your payroll needs, ask the accounting experts at Duford & Company CPA.