Three cheers for payday! Now, let’s chat about hiring a payroll company.
We all know the feeling. There’s nothing quite like looking at your bank account and seeing the direct deposit—or having an office manager slip that paycheck envelope onto your desk on a Friday.
There just truly is nothing quite like it.
However, if you own a business or manage payroll, you’re quite familiar with the other side of the picture. And if you’re sick of it, we totally understand! After all, payroll is the kind of thing that nobody thinks about until there’s a problem.
It’s hard work managing the day-to-day of payday, whether you run a small bike shop with five employees or a large company of 5,000. Whether you’re just getting started or you manage payroll for thousands every single month, there are a lot of good reasons that might lead you to want to outsource and take that work off your plate.
Before you hire a payroll company, though, you need to ask—and answer—a few important questions. Trust us: You’ll be glad you did.
Yes, outsourcing payroll can save you time, hassle, and money that you might otherwise lose either managing it yourself or hiring full-time professionals onto your team. But outsourcing any portion of your business is a serious decision.
With that in mind, if you’re considering bringing on a company to manage your payroll, be sure to ask three questions before getting started.
If you’re going to outsource your company’s payroll needs, you should also determine if you’d like to outsource any other processes as well.
For example, you may go into this process thinking you just need someone to handle your weekly paychecks. However, you may realize that you can save more hassle (and more money) by bundling together and outsourcing other payroll-related services, like bookkeeping or taxes. Not only will that help you streamline costs and reduce even more stress on your end in the long run, but it will help you as you begin searching for a payroll company—because you can look for firms which handle other accounting and tax needs, as well.
Like we mentioned earlier, payroll is one aspect that most employees don’t think about at all until there’s an interruption. For that reason exactly, if you’re bringing on a payroll company, you need to be realistic about whether you can—or should—adjust your payroll processes?
Here’s what we mean: If you’re starting a business and planning to outsource payroll from the beginning, the details of the payroll (e.g. pay periods, direct deposit options, etc.) may not be that important to you. On the other hand, if you’ve been paying your employees every Friday for the past three years, suddenly changing your pay periods to every other Friday will make waves—but not the fun surf kind. More like the tsunami kind.
The best payroll companies will offer turnkey solutions, or payroll services that they can cater to the specific needs of your company. You shouldn’t have to adjust your business model to your payroll company; your payroll company should fit within your business model.
To make the best use of a payroll company, you should first identify the problems you’re hoping to solve by hiring one.
Here’s a great example that we see all the time. A lot of employers have difficult managing their payroll taxes and 941 deposits. Mistakes in this area can result in huge IRS penalties, which may slow business growth and potentially put you in a financial bind.
Whichever problems your company has faced with payroll before, compile a list when you begin the hunt for a payroll company. Not only will it help you better recognize the value that will come with outsourcing your payroll, but it will also give you specific talking points to help ensure you’re choosing the right payroll company. Not every payroll company is right for your business, but knowing which points to bring up when interviewing them is one way to ensure you find the right one.
For employees, the difference between in-house or outsourced payroll may be little to none. But for you, hiring a payroll company can mean saving days—and thousands of dollars or more each year. Payroll may be a basic part of running a business, but that doesn’t mean it isn’t costly and stressful!
Start by asking the right questions, and you’ll get the answers you need. For everything else, just ask us.