Congratulations, your business is adding its first employee! What are your best options for payroll services?
Read through for the common categories, and my recommendation.
MAJOR PAYROLL COMPANIES
These are the companies that everyone has heard of (think ADP, Paychex). They are large payroll companies that have been doing this for a long time.
Some people have great experiences with them (and we have current clients who are happy with them). Some people have not had great experiences with them and have actively switched. I find that the quality of service you get somewhat depends on the quality of your assigned representative. These companies can be good, especially for large, complicated businesses. It may not be the best for smaller businesses.
ACCOUNTING FIRMS
Many full service accounting firms will offer payroll services. You can inquire with your current tax preparer/CPA about this service.
Again, people have had good and bad experiences with this option. It is completely dependent upon the firm and how they handle payroll services.
One pitfall is using a firm that is still doing it the way they did it years (or decades) ago. We have a couple clients whose payroll reports coming from the accounting firm look like they are based on spreadsheets, the checks are manual instead of direct deposit, and we’ve found multiple errors in the calculations. Some also do not give payroll adequate resources and customer service, similar to bookkeeping services.
ONLINE SUBSCRIPTIONS
This has been a big trend in recent years: using an online payroll subscription like Gusto, Patriot, or QuickBooks Online Payroll. We have clients who are happy with this option, too, and clients who have switched away.
My biggest reservation about this option is that it is essentially DIY payroll. You are responsible for making sure everything is set up correctly. You are responsible for running it correctly. If you receive a notice from your state, you have to figure out what to do about it. In general, feedback I get about customer service is that it’s abysmal.
This is nice when there are no issues. It can be a nightmare when there is an issue.
MY CHOICE: A LOCAL PAYROLL COMPANY
Hands down, my recommendation is going with a local payroll company that specializes in payroll, will handle all of the setup, and has amazing customer service for when things come up.
As a business owner and a bookkeeping professional, I see this as the sweet spot among all of the above options, and the one I personally use. A good local payroll company knows their stuff and will make sure it is all set up correctly. They have invested in the technology that they use to run everything. They will research and know the laws in any new state or area that you hire in. They will even sign up for the necessary withholding and unemployment accounts on your behalf. When things come up, you can forward them the notice or ask the question and they will take care of it. And in my experience, pricing is competitive.
As is true whenever you are shopping for something, you should do your research to determine what is best for your situation. People have had good and bad experiences with all of these options. Make sure to ask situational questions. Who does the setup? What happens if you get a notice? What is the customer service policy and response time? Doing this up front can save a lot of headache down the road.
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