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Payroll Software vs. Payroll Service Provider: Things to Consider

Posted on Fri, Sep 22, 2017 @ 08:00 AM

Paying employees is a thankless, seemingly never-ending task. You only hear from someone if there is a mistake. You also have to navigate ever-changing and confusing payroll laws, tax rules, and employment regulations. If you have ever considered seeking the services of a payroll software provider, you are not alone. But handing off this critical piece of your organization's operations is a big decision, with potentially disastrous consequences. A bad choice could cost you --- BIG. So what should you do -- use payroll software or hire a firm to handle it for you?

The Pros and Cons

Many organizations run payroll manually with software like Quickbooks. However, when you "do-it-yourself" using payroll software, you are solely responsible for remembering to enter, print, and deliver paychecks. You have to send quarterly tax payments to the IRS and you shoulder the burden of staying compliant with local, state, and Federal employment laws. Also, you bear the responsibility of fines, extra costs and fees that arise when you make a mistake.

payroll software

Larger organizations with many employees and no dedicated accounting team most often hire a service to handle processing payroll. But even small companies with relatively few employees can benefit from using a payroll solutions provider. The provider does everything for you. Employees are paid in a timely fashion, cash is deducted from the business bank account, taxes are diverted for state and Federal payments, and all paperwork is taken care of by the vendor. This can save you time, money and a great deal of stress.

These are some of the most common services offered by payroll solutions providers:

  • Salary or hourly payroll entry
  • Paycheck delivery via mail and/or direct deposit
  • Tax withholding
  • Benefit withholdings and management
  • Tax reporting and payment

There When You Need Them

Another thing you will need to consider is the types of support and customer service you receive as a user of payroll software versus a customer of a payroll solutions provider. Because your payroll provider may be submitting tax filings on your behalf, it is important to work with an organization you can trust, easily contact, and quickly get answers to any questions you may have. Payroll service providers who do NOT outsource support typically have higher rates of customer satisfaction and above-average NPS scores.

Switching from payroll software to a service provider is an important step in the long-term success of your company, so pick a company that you think will work with your organization. Take into account your projected growth. You don’t want to outgrow your provider and change to a better suited service. The time, hassles, and costs of shutting down a payroll service and setting up a new one makes it important to choose the best provider the first time.

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