Outsourcing Payroll Service-The Basic Steps
These days there is a lot of information available on the internet regarding payroll service outsourcing. You will find countless websites giving out so called ‘secrets’ to achieving business success by outsourcing your payroll services.
What nobody talks about, however, is what the small business, or the buyer, outsourcing the service should look out for in this buying – selling situation. Here are a small business owner’s basic steps for payroll service outsourcing.
Choose a trustworthy service provider
Although there are many payroll companies out there, they are all different from each other. Yet there are things they have in common. When you outsource your payroll services for small business set up, you actually outsource the processing of the payroll function. The functions that are common to all payroll processing entities providing payroll service outsourcing include:
- Collection of information about hours worked
- Calculation of tax for employees, and
- Moving funds to various bank accounts
This translates into the ability to not only write checks, but to deposit salaries for your small company payroll into employees’ bank accounts, as well as preparing and distributing statutoryforms. The ability to carry out the first two tasks alone makes the decision of selecting a payroll service provider a huge one.
The payroll companies not only have access to employee information that is confidential to your business but also have access to your assets. Make sure that the payroll services provider you choose has a good reputation in the market and great feedback from their existing customers.
How to check for the reputation of a payroll services provider?
Also check their reviews. Check on the internet, using their name + reviews. Talk to their customers. Find out whether they have a history of paying fines. Not to mention that you must read the contract thoroughly before signing it. Is there an agreement that you won’t go to one of their competitors if you leave them?
Services offered by payroll companies
The range of services your payroll service provider offers is very important. Evaluate the services they offer carefully. An important aspect is that they should be offering the desired services for a price that suits your budget. This doesn’t mean that you should decide on a payroll services provider based on budget alone, but to compare prices of different providers with each other.
Decide on the standard operating procedures
If you are going to get a third party do part of your work for a fee, and for which you will be responsible to your employees at the end of the day, better decide the standard operating procedures with your payroll services supplier. Before you outsource your payroll processing, you must find out and evaluate how the process will work at the provider’s end. Also, find out what will be your role in the process. Know about the timeline the payroll services processing takes, and what will happen in the case of a delay or a ‘what if’ situation, plus how you can access the payroll information they have. Document everything.
Although the payroll processing provider might agree to pay any fines to the government for late filing or making payroll direct deposits late, it is YOUR reputation and credit rating that gets tarnished. A disgruntled employee doesn’t care who pays the payroll tax fines if they don’t get their salary on time.
Be as vigilant as you are when hiring for an extremely crucial position within your company. Although it will be the payroll services provider who will be doing your business payroll processing, you are the one who has to take the responsibility!
In other words, although I believe outsourcing your payroll processing can be fantastic for a small business, I recommend you proceed with caution. Investigate before taking action!