Even with the known benefits of outsourcing payroll such as cost reduction, efficiency and increased productivity, government compliance and reduced liability concerns, savvy service buyers are still actively looking for tips on hiring a payroll service provider; hence, the need for a concrete action plan.
Step # 1 Assess payroll system condition.
The truth is, not every single business will benefit from outsourcing payroll services. Some, especially those which are operating on a large scale and across multiple countries, might benefit from an in-house payroll system. Small and medium business may be able to full advantage of outsourcing though, with the exception of those whose needs will command a lot of customization, in which case, it is better to look for an alternative, like partial outsourcing. For example, if you mostly hire part-timers, you’d need constant employee information updates. You may end up paying a lot for the data entry aspect so you may want to take care of it yourself and just outsource tax administration to the payroll service provider.
Step # 2 Assess In-house outsourcing costs.
The true indication that you really need to get the services of a payroll company is when the cost of in-house payroll administration is more than the cost of outsourcing. Do not just rely on what you pay your payroll officer annually. Get information about non-payroll labor such as time information collection and support system maintenance costs (i.e. what you pay the IT officer) and company overhead such as the equipment and technology you will be using for in-house outsourcing, and the time your staff will have to pay depositing checks and filing taxes.
Step # 3 Make a list of payroll tasks you aren’t good at.
Alright, this is understandably difficult, considering that the very reason which makes payroll tasks undo-able is its mundane nature. There are however some aspects which need more than fortitude; and that is tax administration, which requires knowledge of state and federal laws. The truth is, most companies outsource payroll tasks in its latest stages, starting from tax administration, until check or salary distribution because payroll companies can easily establish direct deposit systems.
Step # 4 Shop around.
Having made a list of services you really need, it is time to get quotes from various companies. The good news is that the times when payroll companies mostly cherry-pick their clients are over. Payroll companies now have competitively priced packages and they want your business, small, medium, or otherwise. You can get quotes by visiting the websites of various payroll companies or by using the services of yet another 3rd party offering “matching” services.
Step # 5 Evaluate companies.
After choosing the companies offering competitive prices, it is time to learn more about them. Consider these tips on hiring a payroll service provider; get references and client feedback, ask questions about how good the company is at customer support and how responsive are they to queries and concerns and find out about details such as payment delivery turnaround time and how they will take care of tax penalties, should tax issues arise.