Are you the owner of a new corporation looking for a way to save money, streamline processes, and improve outcomes across the board? If so, one of the most pertinent steps is to outsource your payroll processing. Outsourcing pay processing offers your business a number of advantages, from reducing overhead costs to ensuring compliance with government and industry regulations and everything in between.
Here’s the thing, though – not all outsource providers are created equal. You need to ensure that you’re choosing the right company for your needs. If you’re new to the whole process, that can be confusing, even daunting. Let’s dig into the situation and clear the air a bit.
Compare the Services Provided
One of the key ways that pay processing providers differ is in the range of services offered. What does the company bring to the table and how can those services benefit a new corporation? Do they do pay accounting only? Do they offer value added services? For instance, can they handle your bookkeeping needs as well as pay processing? Bookkeeping goes much deeper than just payment processing, and requires expertise and knowledge that many providers lack.
Do they work with your own CPA or do they require you to go through the company? What about pay-related services – do they offer direct deposit? Do they offer pay processing on the schedule that works for your business? Do they issue W2 forms? Do they handle Section 125 plans or 401(k) contributions? Can they track employee benefits? Some of the most crucial options the company should provide include:
- Paid time off tracking
- Benefit deductions
- FSA and IRA contributions
- Bonus tracking
- Commission and tips tracking
- New employee reporting
- Accuracy-guaranteed tax processing
- Garnishment and levy processing/deductions
Bundled to Save
Another important consideration here is whether the company you’re contemplating is able to offer bundled services to help you save, while ensuring that you have access to the professional assistance, knowledge and experience that you need. For instance, in addition to pay processing, chances are good that you could use some help with your taxation matters.
You might also benefit from automated bill pay, sales tax solutions, accrual and more. Look for a service provider that is more than just a “one trick pony”. You need a range of professional services, and the right provider can ensure that you have access to exactly what you need without spending a ton of cash at the same time.
Pay processing requires more than just tabulating the hours an employee has worked and then cutting a check or depositing money via direct deposit. Both you and your employees have responsibilities to your local, state and federal governments in the form of taxes. For all salary and hourly employees that work for your business, you’re responsible for paying a portion of their taxes, and for deducting the remainder from their pay. You will also need to verify that the company is able to handle unemployment taxes, unemployment insurance, and end of year form processing.
Find out if the pay processing provider can offer this service for you. Make sure to ask about their accuracy in this area, and how they handle errors. There is no reason that your company should be on the hook for an IRS fine if the error was the provider’s fault.
What Is the Setup Process Like?
Getting up and running with the company you choose should not be a challenge. While there will be some setup required with every provider, the process itself should be relatively smooth. You should also have access to a live person to assist with answering questions, providing guidance, and otherwise ensuring a simple transition to using their services.
What Will the Service Cost You and What Do You Get for Your Money?
While there is no industry standard for pricing or service inclusions, the company that you choose should provide clear information about what’s included in your service package. For instance, you might receive data entry, reconciliation, reporting and business income tax support with an entry-level package, but a higher package might provide you with compliance assurance, loan assessments, industry snapshot reports and more.
The company should break down their packages so that you can see at a glance which one is a best fit for your needs and budget, but also help you understand how you might move up as your needs change and evolve. Ultimately, you should have access to a full range of solutions to suit your needs as the company grows.
What Sort of Security Do They Provide?
It seems like another massive data breach hits the news every other day. Data theft is big business, and only going to grow larger. In fact, information has become the prime target for thieves – they’re no longer after your company’s money, necessarily. This makes it crucial that you work with a payroll provider that offers state of the art security.
You should have access to 256-bit encryption for all transactions. You should also make sure that all of the information stored with the company is safe, including Social Security numbers, names, addresses, financial records, banking information, and more. Ideally, the provider you choose should offer not just encryption and firewall protection, but also two-factor authentication to prevent breaches.
In the End
When it’s all said and done, a new corporation can benefit from working with the right pay processing provider. It can give you access to services that would be otherwise unavailable, help you streamline costs and save time, and more. However, it is crucial that you work with the right company. The wrong firm can put your data in danger, or even leave you at risk for IRS auditing. On the other hand, the right company will be a trusted partner for years to come.