Choosing a Payroll Service for Your Small Business

There are three many types of payroll services. Learn how to choose the right type of payroll service, and pick a high quality provider, for your small business.

Selecting a payroll service can sometimes be confusing and time-consuming, especially for a small business. There are three general types of payroll outsourcing companies: Professional Employer Organizations, Business Process Outsourcing and online payroll services

Professional Employer Organizations (PEO) such as Paychex, ADP and Oasis Outsourcing can not only handle payroll processing, but can also serve as your small business's entire Human Resources Department. This includes the responsibilities of payroll services, benefits, and other HR tasks. This can sometimes be a cost-efficient method for a small business because you can save money by having these services bundled. Plus, because these responsibilities are inter-connected, there is less room for error and more synergy in your company's Human Resources area.

Business Process Outsourcing (BPO) refers to companies in all areas of out-sourcing (IT, human resources, etc.), not just payroll outsourcing. BPOs are usually correlated with updated technology. The positive aspect of BPOs is the fact that it is a one-stop shop for your small business' outsourcing needs. A negative point of BPOs is that you are not necessarily getting a company that is specifically dedicated to payroll services.

Online Payroll Services offer Web-based administration of your payroll processing. Relying exclusively on technology, these services are often much cheaper and can be great for smaller companies, but you may need to do significant data entry yourself and customer support can be spotty at some companies.

There is such a wide array of choices that depending on what your small business is looking for in a payroll outsourcing company, you can choose exactly the services that you are looking for.

So how do you choose a specific company within these different types of payroll services? First, is to make sure that the payroll service company is bonded and insured. You want to make sure that your small business will not be negatively affected by their payroll outsourcing errors, especially costly IRS mistakes. You can refer to your local Better Business Bureau (BBB) to find out the record of certain payroll service providers and if they are officially BBB certified.

Secondly, makes sure that the payroll service's processing schedule and customer support meets your needs. You might want to ask for a personal account representative or team that will be handling your small business' payroll service personally. You do not want to have a problem and call the company, and then later speak to another representative who doesn't know what your payroll service problem is. Many companies also offer limited or no employee support, so make sure your payroll service handles that task, if needed.

Thirdly, your small business wants to make sure that your payroll service is easy to use and easily accessible. By hiring a payroll processor, you want your payroll service to seem as if you had an in-house payroll department. Discuss with the payroll service provider what your small business is looking for and what services they can provide to support those needs.

Lastly, your small business should look into their efficiency and accuracy. Checking the company's references is recommended to ensure that you get a quality payroll service. A current or former client who used their payroll outsourcing service would be an excellent resource for this. Be sure to ask them about their needs, experiences with the company, and the pros and cons of their provider. Companies rarely switch payroll services, so a high level of client defections is an ominous sign.

One thing to also note is where the company is located. In some cases, small businesses have used regional or local payroll service providers so that they could get paychecks or payroll information in emergency situations. This is something to note, but not necessarily something you should use as a "make or break" factor in selecting your payroll service.

In the end, as a small business, your small business should be looking for a reliable company that best fits what your small business needs with regards to payroll services.