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Now Is the Time to Re-Evaluate Your Payroll Service or Start Using One

December 11, 2017

Year end is the perfect time to plan for a change in payroll services.  Transitioning services can be a headache with all the paperwork and information you have to collect and provide to your new payroll company.  Wage history is based on the calendar year so it resets on January 1st.  Thus, transitioning to a new service is a little easier at the first of the year because you don't have to provide all your employee pay stubs. 

 

However, account set up takes the longest at year end because of the holidays and the volume of new accounts coming in.  If you plan to make a change with your first payroll of 2018, do it now to ensure your payroll isn't delayed.

 

If you're currently processing payroll in house, now is the time to stop.  On the surface, payroll may seem easy.  However like most tax law, it is vastly complex and you may not realize you're in over your head until it's too late.  Ask yourself the following questions to determine if it's better to outsource.

 

Can you afford it?  Probably, but if you get several quotes and find that they're just beyond your budget, ask if they are running any specials.  Most payroll companies will discount their service to gain your business.  The discounts typically last one year, by which point you will likely gain enough business during the time you used to spend processing payroll to cover the cost of the service.

 

Does it cost less than what you (or the employee assigned to the the task) earn doing something else?  When you consider the time spent issuing checks, reporting new hires, making tax payments, preparing and filing tax returns, not to mention fielding employee questions about their checks, payroll most likely takes up a disproportionate amount of your time compared to other tasks.  If your normal job function is to bring in revenue for your company, the cost of your time spent on payroll is not just the wage you're paid but also the income you're not bringing in during that time.

 

Does your inexperience mean a pro could complete the task in less time or for less money?  Unless you worked at a payroll company for several years, the answer is yes.  To that same extent, your accountant is not a good choice for processing your payroll either.  There are precisely zero questions about payroll on the CPA test.

 

Do you have to invest in extra supplies to accomplish it?  The answer to this question is always yes.  You have to buy software to calculate checks and taxes, check stock and envelopes, and W-2 paper and envelopes at the end of the year.

 

If you're currently working with a payroll service, how do you decide if you should switch service companies?  The key aspects to consider are accuracy, customer service, and price.  Review your service over the past year and determine how accurate your payrolls were.  Errors are inevitable with any service because humans are doing the majority of the work, however that is not an excuse for frequent or habitual errors.  Also consider the severity of the errors and the inconvenience caused to you or your employees.

 

When evaluating customer service, think back to the errors you just evaluated and how your payroll service resolved them.  Were you provided options for resolution?  What was the turn around time for resolution?  Also consider the turn around time for regular interactions, such as processing payroll or answering your questions.  Do you receive a response within an hour, or was it several days before you heard back from them? 

 

Finally, consider price.  Is the cost still within your budget?  Does another company offer better service at the same or a lower price?  If you're satisfied with your service but the price is no longer in your budget, ask for a discount.  Most payroll companies authorize their specialists to issue up to a 10% discount to clients who indicate they may be shopping for a better price.

 

 

 

 

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