What type of payroll service is right for your small business?

How to find the right provider

Running your business is challenging. And if you’re a small business owner, you know how many roles you have to fill to keep your business moving. From hiring and training employees to developing processes that can streamline your business, you’ve got a lot to think about. One of these key responsibilities is running payroll. While it’s a necessary function, your business doesn’t have to do it alone. That’s because there are a variety of small business payroll service providers that can help you run payroll. So in this article, we’ll talk about the key factors to consider when choosing a payroll service. But first, let’s take a step back to talk about payroll.

What is payroll?

At the basic level, payroll is the whole process of compensating the people who work for you—your employees. Most often, a business runs payroll for a specific period, usually every two weeks. When your business runs payroll, you’re calculating and distributing employees’ wages.

Payroll isn’t just paying employees on payday. It also encompasses the entire payroll process, from paying employees to payroll tax filing to calculating and taking out deductions for local, state, and federal taxes, Social Security, Medicare, unemployment insurance, and any voluntary employee deductions. It also encompasses bookkeeping and supplying employees with their pay stubs. When it comes to payroll, it’s also important to maintain records of each transaction your business makes.

As you can see, processing payroll yourself can be a complicated process. That’s especially true as your business grows. So what options do you have as a small business owner to run payroll? There are a few options:

• In-house payroll: This option involves a payroll process that an owner or employee must complete manually every pay period.
• Full-time accountant: This option outsources payroll to a single accountant who has the financial expertise to run your payroll and even provides advice and insights to you. Your business could either hire this person for an internal role or outsource it to a contractor who would handle your payroll for you.
• Payroll service: This option utilizes a third-party company to run payroll. While some businesses elect to hire a person to handle payroll internally or use payroll software to automate the process, others find it easier to outsource payroll to third-party, full-service payroll partners. These payroll companies can help manage part or all of your payroll and provide the expertise you may not have. Payroll services can also save business owners time and money by freeing you up to do other things to run your business.

Next, let’s look at some of the payroll responsibilities a payroll service provider deals with.

What do payroll service providers do?

Besides dealing with the normal payroll calculations, payroll service providers can offer your company various services. Here are a few services they typically offer:

• Automatic payroll processing: Help you pay employees by calculating wages and automating paychecks. The provider may offer a physical paycheck, direct deposit or other payment options.
• Tax withholding and wage garnishment: Ensure that taxes, garnishments, and any other deductions are withheld from employee paychecks while ensuring they are paid on time.
• Tax filing services: Provide service in filing federal, state, and local taxes on behalf of your business. In addition to filing taxes, some also offer other bookkeeping services like reporting and preparing your business’s tax forms, such as Forms W-2 and 1099-NEC.
• Expert compliance: Check and confirm that your business is up-to-date with , all regulatory requirements that may impact your business, especially changes to wage and tax laws.
• Payroll reporting: Report on all areas of payroll operations, from wages paid, taxes withheld, total hours worked and more.
• Employee self-service: Empower employees to perform tasks like reviewing pay statements, withholdings, or changing their address without any managerial oversight.

How does payroll integrate with other business processes?

Payroll is a complicated process and it interacts with so many other aspects of a business. These other areas can integrate with your payroll services, helping to streamline and integrate related functions of your business. Some of the most common integrations with payroll features include:

• Employee benefits: Deduct health insurance premiums and retirement plan contributions using the payroll system.
• Human resources: Some policies and processes that may affect payroll can be updated in real-time, including onboarding new employees.
• Workers' compensation: If you make premium payments, these payments can be more accurate based on actual payroll amounts.
• Time tracking and attendance: Integrating payroll and time and attendance software can ensure correct wage calculations based on employee hours.
• Expenses and budgeting: Integrating payroll into an accounting software makes it easy to see how much revenue is dedicated to payroll.
• Business management: If your business uses workflows, you’ll be able to better track payroll costs for specific projects.

Let’s say you decide that hiring a payroll services provider is right for your business. There are a few things you’ll want to keep in mind. Let’s look at the most prevalent considerations in choosing a payroll provider.

What to look for in payroll service

When it comes to looking for the best payroll service provider for your small business, these are a few of the most significant considerations for your company:

The features offered: Many payroll service providers offer similar services, so it’s important to check which services your provider offers. For example, if you do business in multiple states, finding a partner who allows you to run multi-state payroll may be important.. Or, maybe you need unlimited payroll runs. Or perhaps you have to manage and pay contractors frequently. It’s essential to investigate the offerings to determine which payroll plan makes the most sense for you and your business. And you’ll also want to discover which services are add-ons and cost more than just the base price. For example, HR solution integrations or running payroll for employees over a certain number may cost a monthly fee.

Ease of use: Another important factor to consider is how easy payroll services are to use.Having a payroll solution that allows small business owners to be more hands-off makes a lot of sense, as it’s one less thing to worry about. But if you do need to get involved with payroll to some degree, you’ll want to make sure the program is straightforward and intuitive. That way, you can spend your time working on the payroll and not figuring out how to use the payroll tools.

Fits your budget: As a small business, you might have less funds to dedicate to managing your payroll than larger businesses. So when it comes to a budget, sticking to what you can afford is critical. That’s why when you’re evaluating your options for payroll service providers, you’re factoring in the costs of their services against your budget. Again, this is where you’ll want to consider product offerings to figure out which company provides the best features your business needs within your price range.

You now know what to look for in a payroll service provider and your business is ready to take the next step. That’s great, but what should you do next?

Choosing a payroll provider

To help your small business decide when considering multiple payroll options, you can implement a few steps to make the process easier.

• Make a list of current payroll challenges: Knowing your struggles as a business can be vital to finding the right partner.
• Confirm integration capabilities: Check with providers on their payroll solutions integrations to ensure that data is transferred correctly and effectively.
• Inquire about customer support: Dependability is the biggest part of customer support. Ensure that the provider has support hours that fit your business.
• Explore a start date: Make sure that their timeline fits with your business’s goals. If you can’t wait until year end, make sure the provider can accommodate your business’s need to switch on your timeline.
• Estimate costs: Once your business decides on the features you need, ask providers to provide you with a cost estimate and the features that estimate includes. That way, you’ll be able to compare pricing fairly.
• Research a provider’s track record: If you need help determining which provider to go with, check out customer reviews to understand better what you can expect as a customer.

Running your small business can be challenging. And while there are a number of different ways to run payroll at your business, a payroll service provider can be a great partner. As we’ve discussed, payroll service providers can ease the burden of running payroll for you while also integrating and increasing productivity at your company. So when you’re ready to stop being not only the business owner but also the payroll manager, turn to a payroll service provider for help.

Ready to work with a partner who can help you run payroll?

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us.