Not All Online Payroll Services are Created Equal

So you’ve been studying the payroll service provider space and are leaning toward an online payroll service.  Well, congratulations! As I blogged about recently, I truly believe that for most SMB companies, Internet payroll solutions prove a better choice than either in-house application software or a traditional payroll processing service.

But now comes the hard part, because the criteria becomes finer-grained from here on.  In the remainder of this posting, I’ve assembled a checklist of items you can use to compare the offerings of the various providers you’re considering.  Not that there are “right or wrong” answers;  the point is to use the following criteria to pick the solution that represents the best fit to your situation:

  • Design center.  Some services are tailored for companies under five employees, so they may be too slow or cumbersome to handle companies of your size and complexity. 
  • History/legacy.  Some providers are traditional payroll processing service companies in disguise, having grafted a Web-ish front end onto a legacy batch application.  Their software isn’t truly Web-based:  you have to install something on your desktop, you have to synchronize with a central server, payroll isn’t calculated immediately for you to review.
  • Flexibility.  How much can you control on your own?  Can you easily add new pay codes, departments, deduction codes, etc.?  Is the report writer real-time and easy to use?  Do you have the option of printing your checks locally?
  • Full cost.  How will you be charged? …per payroll run, or by the month?  Are there extra charges for such things as delivery, reporting, tax reporting, hiring/terminating employees, year-end processing (W-2s), direct deposits, etc.?
  • Support.  Is it separately charged?  Is it provided by phone, as well as Web/email?  How do current clients rate the payroll service provider’s responsiveness?
  • Application ownership.  Does this provider own the software that powers its service, or do they simply front-end another vendor’s software?  If the latter, you can probably expect significant wait times for enhancements and/or problem resolution.
  • Breadth.  Do they provide for related HR functions such as HR newsletters, tracking of employee training and certifications, company property accountability and employee performance reviews?
  • Expertise.  Can this vendor provide expert consulting services on HR issues beyond payroll, such as EEO and general labor law, training and development, hiring and promotion?

The right online payroll service can certainly be a boon to your productivity and your business.  Just make sure the one you chose is right for you.

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