Several companies, big and small, outsource some or all of their payroll needs to a third-party service for various reasons. These include accessing expertise & technology, saving time and costs, and avoiding risks.
However, payroll outsourcing also comes with a host of risks that you must consider before handing over your payroll process to a third party. This article discusses the pros and cons of different payroll services so that you can make an informed decision.
Cost
One of the most important factors when deciding on a payroll service is how much it will cost your business. The cost will depend on the type of payroll you require, the number of employees, and the state you operate in.
Most payroll companies offer pricing plans that include a base fee and an additional per-employee monthly charge. These charges vary, but the average cost is around $20 to $60 per pay cycle.
You can also save money by using a service that processes your payroll less frequently, such as semi-monthly or bi-weekly. This will reduce your expenses by avoiding paying for each payroll run and allowing you to pay employees more regularly.
Another way to save on payroll services is by choosing a provider that offers an array of services in a bundle. This will simplify your payments and reduce the chances of overlapping fees or errors.
In addition to the base fee, many payroll companies charge for additional services such as year-end Form W-2 preparation and delivery. These costs can add up quickly, so it is essential to consider them carefully before committing to a company.
Payroll outsourcing services also handle the tax calculations involved in payroll processing. This can help to avoid a costly tax penalty due to errors or missing deadlines.
Security
The security of your payroll data can affect how effectively you handle it, and a data breach can have significant consequences for your company. Luckily, a few measures can help you keep your payroll and employee data secure.
First, you should establish clear and strict access protocols for requesting payroll information. This will minimize the likelihood of hackers gaining access to your data.
In addition, you should make sure your employees understand the importance of keeping their personal and payroll information confidential and away from unauthorized parties. This includes ensuring they never disclose their passwords or social security numbers to outsiders and avoiding phishing emails and scams.
Another important security measure is to separate payroll duties so that someone is responsible for every process step. This creates a sense of accountability, which can effectively deter potential fraud or mistakes.
Lastly, you should ensure that your payroll software and servers are regularly updated. This can prevent many problems, including malware and other security threats.
It’s also a good idea to schedule additional training sessions whenever new software or procedures are introduced and to monitor employees closely for any practices that might undermine payroll security. Payroll security is a top priority for any company, and it’s worth the extra time and effort to protect it.
Ease of Use
Ease of use is one of the essential factors that you need to consider when comparing payroll services. You want to avoid sacrificing if you are trying to find a solution that is best for your company.
An excellent payroll service should be easy to understand, especially for a new user. They should also offer a strong customer service team and respond quickly when a problem arises.
For example, a good payroll service should be able to directly deposit wages into employees’ bank accounts, calculate taxes, and schedule paydays. They should also offer employees self-onboarding and access to their payroll documents so that employees can quickly review their information and sign up for benefits like PTO.
Another good feature is integration with accounting software and time-tracking tools. These things can help you run your business more efficiently and ensure labor and tax laws compliance.
Choosing a payroll service that is right for your needs is often difficult. Evaluating your budget before choosing a service is important, as most payroll services have different pricing structures for companies of varying sizes.
Reputation
The company’s reputation is an essential component of the success of any business. A recent study from Harvard showed that higher Yelp star ratings are linked to higher revenue. A good reputation can shave off months or even years of headache-inducing time and money from a bad customer service experience. Fortunately, there are many ways to enhance your online presence and ensure that the company you work for is always seen as the best and most professional in their field.
It’s no secret that most consumers research and purchase products or services before handing over their hard-earned cash. If your reputation could be better, keeping up with the competition will be easy. The best way to ensure a positive reputation is to do all you can to ensure customer satisfaction.
