When it’s time to drop everything and run payroll, even the most experienced small business owners can find themselves grinding their teeth when handling payroll themselves. And for good reason: It’s easier than you may think to make payroll mistakes, and those errors can cost you. In fact, the Internal Revenue Service (IRS) charges 2% to 15% for unpaid deposits (plus interest on penalties) when employment taxes are late.

But that’s not going to happen to you, right? You’re good enough and you’re smart enough, and you’re gonna get payroll straight. When you set off down the path to payroll paradise, there are two ways to do it: You can sharpen your pencil and slip on your green visor, or you can find the best payroll service to streamline and automate parts of the process and free you up to focus on everything else your business needs.

When you take a step back, it’s easy to see how all those little payroll responsibilities can lead to errors: Employer payroll taxes have to be filed on time, deduction levels shift as the year goes on, and there are ongoing changes to federal, state, and local tax laws that need to be tracked and implemented. The sheer number of associated to-dos for tax filing and making sure everyone gets paid accurately and on time can make your head spin when you don’t have a full-service payroll solution to take care of everything. A good payroll service provider can do a lot to help your business get it right.

How much do payroll services cost?

For a lot of small businesses, the first question that likely springs to mind is: How much does payroll cost? Because there are different pricing structures, it’s not always easy to compare apples to apples. Most payroll companies charge a flat monthly fee, plus an additional fee for each employee. Typically these fees start at around $5 to $10 per employee per month, but there can be some extra costs too.

Some payroll companies charge fees for things like:

Before you get started, outline everything you’re going to need from your payroll provider so you can get a more realistic sense of how much payroll will cost. And be realistic about how likely you are to do things like amend your payroll. After all, we all make tpyos sometimes.

What do payroll companies provide?

First of all, payroll services give business owners peace of mind. Those late-night payroll runs, emergency calls to your accountant, and energizing (not!) visits to the IRS website will likely become a distant memory if you pick the right provider.

But the real reason to sign up for a small business payroll service is to take some of the work off your shoulders. When you don’t have to think about FUTAs and SUIs, you can focus on all the other stuff that goes into running your business.

To keep your time (and your mind) free of all the payroll distractions, a good provider should:

  1. Be able to run payroll on your schedule
  2. Have an online payroll portal that’s user-friendly
  3. Provide payroll reports or give you the ability to access them for tax records and get a full view of labor costs for all pay periods
  4. Calculate payroll taxes and withhold them from employee and independent contractor paychecks
  5. Deduct payments for benefits and wage garnishments
  6. Pay both employees and contractors
  7. Process all your payroll tax payments
  8. File all your payroll tax forms
  9. Send year-end tax forms to employees and contractors
  10. Offer employee self-service tools, so your team can access their own payroll information

Sounds good, right? Payroll companies also offer additional features (or integrations with other types of software) to help you go above and beyond simple payroll processing. For example, some payroll systems also:

  • Track PTO requests
  • Manage employee onboarding for new hires and tax documents like I-9s and W-4s
  • Handle reimbursements, bonuses, and other payments
  • Take care of workers’ compensation
  • Provide human resources support, which can be very useful when you don’t have the budget for in-house HR services
  • Help administer employee benefits, including time off and retirement plans, including 401(k) deductions
  • Integrate payroll data with time-tracking or accounting software, or with other back-office tools and systems to improve and simplify your operations
  • Offer mobile apps for convenience and efficiency

To make sure you’re getting everything you need, try putting together a wishlist of your specific needs before shopping around.

Support and switching payroll providers

Because payroll never takes a vacation—and neither your employees nor the government are okay with errors—it’s crucial for any good payroll company to offer strong customer support when you have problems or questions.

Are you going to be able to get help when you need it? Are the people on the other end of the phone, chat, or email going to get to the bottom of your state’s tax regulations?

And don’t forget the process of switching payroll providers. It can seem like a small thing, but outsourcing payroll is a process that might test your team’s patience. Are you going to have to input all your employee information yourself? Is your payroll provider willing to help you migrate to their service or provide any resources to make it easier?

Since this can be the most stressful part of outsourcing payroll, you should make sure you know exactly what to expect upfront.

Getting a peek inside your new payroll provider

If you just look at their websites, every company looks like the right payroll provider. But chances are that some will be better for you than others. To get a better sense of what’s going to work, take a look at online reviews. Thousands of small businesses have made this decision before you, so it’s worth looking into their experiences with payroll software.

Read a mix of good and bad reviews with an eye toward how people like the features that matter most to you. Also try to get a sense of whether the people who are reviewing the software face challenges that are similar to yours.

For example, if the reviewer is a restaurant owner, they may be concerned with things like reporting tips that might not apply to you if all your employees are salaried (or vice versa). You can also find reviews by professional reviewers who have a good perspective into all the options available.

For example, you can check out Gusto’s reviews or search for other payroll companies on some of these shopping sites:

Deciding on the right payroll company

So you know what you want, you’ve set some budget aside, you’ve done your research, and the next payday is bearing down on you. How do you make your decision?

If you’re still not sure, spend some time on payroll providers’ websites to get a sense of each company’s personality and to really understand everything they can do for you. (For example, here’s information on how Gusto’s platform works to help you determine if there is a fit with your payroll needs.) See how a range of providers respond to customer issues on social media, and check out each company’s resource center to make sure it’s easy to find and comprehensive.

Good luck with your payroll shopping. Some providers even offer a free trial that lets you experience the services, kick the tires, and see if everything looks good before you take the plunge. You’ll be doing yourself a big favor in the long run!

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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