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14 Questions to Ask When Choosing a Payroll Provider for Your Business


Additional Resources

This is a sponsored post on behalf of QuickBooks Payroll.

If your business pays employees or contractors – even if it’s a sole proprietorship or microbusiness with no traditional employees other than you – it’s time to look into a small-business payroll provider. You need a professional payroll partner if you:

  • Elect to tax your pass-through LLC as a corporation – this is known as S-corp election, a common legal business structure that may offer tax benefits for solopreneurs and small-business owners; or
  • Outsource regular tasks, projects, or business services to independent contractors whom you pay directly; and
  • Don’t want to manage the time- and detail-intensive process of calculating payroll expenses, executing payroll runs, and maintaining compliance with state and federal tax and reporting requirements.

With dozens of reputable payroll providers open for business, choosing one is no small task. And because this is a decision you only want to make once, the stakes aren’t trivial. Choose wisely, or you’ll be back in the payroll provider market prematurely.

Key Considerations for Choosing a Small-Business Payroll Provider

As you evaluate the many small-business payroll processing options out there, look into the following important factors to ensure you make the best choice for your business and its employees.

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1. Does It Have a Good Reputation?

Payroll providers with good reputations tend to deliver on their promises. Despite its apparent simplicity, running payroll is a complex endeavor with lots of moving parts behind the scenes. The September 2019 failure of MyPayrollHR, a cloud-based processor that abruptly closed after one final round of employer withdrawals, is a cautionary tale for employers convinced payroll providers are interchangeable.

Incumbents like QuickBooks Payroll have added and refined payroll and HR features for many years and cultivated fiercely loyal followings in the process. If you’re not comfortable entrusting what’s arguably your company’s most crucial noncore business function to an upstart that may or may not make good on its claims, look into an established player instead.

2. Does It Handle Payroll Tax Calculation & Payment?

Payroll tax management is a time-consuming, detail-oriented prospect that drives countless business owners who’d otherwise do their own payroll into the arms of payroll providers. Why pay for payroll processing that doesn’t include automated payroll tax calculation, filing, and payment?

If your preferred payroll provider doesn’t offer comprehensive tax management at all price points, think carefully before you proceed. At the very least, spring for a plan that does include tax management.

3. Is It Mobile-Friendly & Mobile-Functional?

Rare is the cloud app that doesn’t tout its “mobile-friendliness.” Mobile-friendly apps have clean, larger-front text and crisp icons that appear legible and distinct on small-screen devices like smartphones. It’s an essential consideration for any business owner or payroll lead who wants the flexibility to manage and execute payroll on the go.

But mobile-friendliness isn’t the only consideration for frequent mobile users. If you expect to do any significant payroll work from your smartphone or tablet or you plan to hire a human resources professional to do the same, choose a payroll provider with excellent mobile functionality too – not one whose mobile app or site is a pale imitation of its full-feature desktop product.

4. Does It Earn High Marks From Users?

Not all payroll providers enjoy the luxury of incumbency or the benefits of household-name status. Most don’t. In considering only those processors with many years of consistent results, you may miss quality upstarts that do things differently and better than complacent incumbents.

Begin your search for reliable information about newer payroll processors by combing through reputable technology and business publications, including Money Crashers, for impartial reviews. Supplement expert reviews with feedback left by actual users on platforms like Capterra. And check for patterns of complaints with state attorneys general and private arbiters like the Better Business Bureau.

5. Does It Offer Integrated Time Tracking?

Integrated time tracking isn’t usually a deal breaker for small businesses with uniformly salaried employees who are exempt from overtime pay or for those exclusively reliant on contract labor.

But it’s critical for employers with hourly employees, and doubly so when those employees work different hours every pay period. Restaurants and cafes, property maintenance providers, and seasonal businesses of all types have extensive timekeeping needs that call for close payroll integration.

6. Once Set Up, Does It Run Payroll Automatically?

Manual payroll is a significant time drain for enterprises with multiple employees and contractors. Rather than resign yourself to spending hours making sure you’re ready to run payroll, choose a payroll provider that automates the process after the initial setup. For example, all QuickBooks Payroll price points offer automatic payroll for salaried employees on direct deposit, always with the option to prereview the run and the ability to add special compensation like bonuses and commissions as needed.

7. Does It Allow Same-Day Direct Deposit?

Everything else moves faster these days. Why not your payroll provider’s direct deposit processing?

The two-day direct deposit standard is nearly as antiquated as the paper check. With unemployment near historic lows, talented workers are looking for any excuse to move on. For already disaffected employees, slow payroll processing is frequently the proverbial straw that breaks the camel’s back. There’s no reason to tempt fate.

Depending on the plan, leading payroll processing platforms like QuickBooks Payroll offer next-day and same-day direct deposit, reducing or eliminating the gap between payroll withdrawal and deposit. It’s a feature that allows you to sell speedy payment as one of the many employee-friendly benefits you offer new hires.

8. Is It Easy for Nonprofessionals to Use?

Even if you have the resources to hire a part- or full-time bookkeeper, a payroll platform designed with people who aren’t accountants in mind will serve you better. Payroll is easy to overcomplicate. But it’s not rocket science, so there’s no reason to rely on a subordinate or outside vendor to navigate your payroll suite’s interface or interpret its reports.

Before purchasing a payroll plan, spend some time sifting through the provider’s help content. Look for extensive archives, tutorial videos, expert-written articles in plain English, and user-generated content. Watch and read this content to get a feel for the platform’s interface and capabilities, then ask yourself: Can I use this software to run payroll without making a costly, time-consuming calculation error?

9. Is It Priced Appropriately?

Payroll is one area in which paying more for a higher-quality product usually pays off. In other words, you get what you pay for here.

But don’t pay for features and capabilities you don’t need or pay more than they’re worth for the ones you do. Find a payroll provider that offers multiple plan options spanning a range of price points, the better to scale as you add employees and welcome more complex HR challenges.

As you evaluate potential payroll providers, pay close attention to the quantity and quality of the corresponding plans’ features. When you compare entry-level plans offered by two given providers, look for any glaring omissions or welcome inclusions. Then, compare their pricing to determine which is a better value.

10. Do New Users Get Special Pricing?

Many payroll providers offer special pricing for new accounts. Free trial periods, most often stretching 30 days – and sometimes longer – are quite common. So are lengthier discounts. For example, QuickBooks Payroll offers 50% off for three months, the equivalent of 45 days free, to new users who waive the 30-day free trial period.

11. Does It Help With New Hire Reporting?

State labor regulators require businesses to report new hires shortly after they occur. No payroll providers file new hire reports on your behalf. But many provide the forms you need to do so accurately and expeditiously.

12. Does It Guarantee Payroll Tax Results?

QuickBooks Payroll isn’t the only payroll provider that automatically calculates, files, and pays payroll taxes with minimal input required from users. But it does deserve praise for a customer-friendly tax feature. Its Tax Penalty Free Guarantee promises to reimburse IRS penalty fees and interest up to $25,000 per year when you forward your IRS tax notice within 15 days of receipt.

Fine print notwithstanding, QuickBooks Payroll’s Tax Penalty Free Guarantee provides ample peace of mind for business owners worried about their payroll processor’s carelessness coming back to bite them. It’s a gesture few payroll tax providers replicate.

13. Does It Accommodate a Variety of Pay Structures & Worker Classifications?

Your payroll provider should have no trouble accommodating your enterprise’s payroll needs, no matter how complex or changeable. Look for providers that make it easy to change things like employees’ hourly rates, overtime allowances, special pay rates, exempt status, and bonus eligibility. You need a payroll provider that grows with your business as you add and promote contractors and employees.

14. Does It Integrate With or Offer Direct Access to Other HR Products?

Payroll processing isn’t the only human resources service businesses need as they grow. Stay one step ahead of your plans and avoid unwelcome incompatibilities between present and future HR functions by choosing a payroll processing suite that integrates seamlessly with other core HR and bookkeeping products, like benefits administration and workers’ compensation management. Look for incentives to purchase multiple services simultaneously. QuickBooks Payroll customers get 50% off for three months when they sign up for QuickBooks Accounting, for instance.

Final Word

Your payroll provider selection will have a tangible effect on your small business. The ideal payroll vendor ticks most of these boxes, among others:

  • A fully mobile-friendly and mobile-functional experience
  • Ease of use for nonprofessionals
  • Excellent value for a variety of use cases
  • Value-added functions like integrated time tracking and accounting
  • Total peace of mind about payroll tax management
  • Flexibility and scalability for growing enterprises with a mix of independent contractors and part- and full-time employees
  • Hands-off operation, including automatic payroll processing
  • Employee-friendly features, such as same-day direct deposit

These are reasonable demands for enterprises seeking a full-service payroll provider that makes good on its promises.

Some businesses have other nonnegotiables for prospective payroll providers too. Don’t be afraid to push your sales contacts to explain how they can accommodate your needs. If they really want your business, they’ll do their best to come through.


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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.