Choose the right payroll service provider with this basic framework


When it comes to running payroll, timeliness and accuracy are of the utmost importance. If you have an employee who receives her pay late or finds mistakes in her paystub, you can bet your bottom dollar that you’ll hear about it and have to work quickly to resolve the issue. Late or incorrect tax forms aren’t much fun to deal with either.

According to Business News Daily, one way to minimize risk and error is by using software to help you process payroll, calculate and file payroll taxes, generate payroll tax statements, and more. But with so many players in the space, choosing the right payroll service provider can be overwhelming. It can be made simpler with some basic considerations, including:

  • Price: For most companies, price is an important consideration when choosing any sort of outside vendor or software. Payroll systems can be very complicated, and pricing often depends on how many features or add-ons your team will use. Researching payroll service provider websites is a great place to start, but some large providers may require a sales call in order to better understand your needs and provide a quote.
  • Support: According to the U.S. Chamber of Commerce, customer support for a payroll service can be even more important than for software! Choosing a vendor with positive customer support reviews can help to save you and your IT team future hassles.
  • Security: Your payroll service provider will have access to your employees’ most sensitive personal information, including their bank account details and other personally identifiable information. It pays in the long run to pick a provider that encrypts information and safeguards it against bad actors. Carlos Rodriguez, president and chief executive officer of ADP, has said that ADP has a focus on “delivering market-leading, cyber resilient HCM solutions to clients who view [ADP] as a partner they can trust (source).”
  • Compliance: When it comes to running payroll, compliance is a top priority. In fact, the IRS recently reminded businesses to carefully choose their payroll service providers following continuing concerns that some disreputable organizations fail to deposit employment taxes, leaving businesses vulnerable to unpaid bills.
  • Experience: While every company is unique, choosing a vendor that has worked with similar companies to yours can help to ensure that they’re equipped to meet your business needs. Ask your potential payroll provider if the company serves similar clients to your business and check out reviews online to see how well they’ve serviced comparable organizations, or ask to speak with a reference!
  • Fit-Gap Analysis: Does the application have the right attributes to fit with what your organization needs done in payroll? Identify necessary tasks within your organization and ensure that the provider can fit the bill.

Add-ons, integrations and partnerships (oh my!)

While the considerations above provide a basic framework for evaluating payroll software companies, there are other features you should keep in mind if you want to ensure you’re getting the most innovation from your payroll provider:

  • Integrations and add-ons: Some companies will see real benefits from using specific payroll features or add-ons. The U.S. Chamber of Commerce suggests asking yourself: Do you have an existing suite of programs that demands careful integration? Does your company work in a heavily regulated vertical that might require sophisticated software? Selecting a payroll provider that can seamlessly integrate can save you time and money if this is the case.
  • Partnerships: Another way service providers scale out to include more services in their offerings is by partnering with other outside vendors who have been vetted as best-in-breed for particular applications, such as on-demand pay. These partners generally are included because they have a higher level of expertise and application experience in that particular service than the main payroll service provider can offer itself. Ensure these partner tools are compatible with any service provider software, allowing the additional application to be portable in the event a client chooses to make a change in their HCM or payroll processing vendor .

The bottom line

At the end of the day, every company is unique. The “right” payroll vendor for one company might not make any sense for another. Choosing a provider that has experience working with companies like yours, at a reasonable price point and with a commitment to compliance will help to ensure that you have a positive experience with your vendor.

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