It's typical for companies to seek out a payroll service as they hire more employees, but outsourcing payroll can be useful no matter how many employees you have. For our evaluation, we posed as a small business with five employees who are paid semimonthly. We compared each provider's equivalent of a full-service package. With these full-service plans, the payroll provider takes care of everything when it comes to compliance and tax matters, and it distributes your pay for you.
Most payroll companies offer similar features. We evaluated each service based on the following four factors:
- The payroll features the service offers
- The fees the service charges for tax-reporting purposes
- The options you have for paying employees
- Customer help and support
Each of the above categories represents an essential part of the payroll process, and each has a profound effect on your and your employees' experience with the payroll company you choose. We ranked each service on our list, measuring its effectiveness in fulfilling each of these four needs for your company. The services we reviewed had no input or influence on our testing, and they were not provided with any results of our testing before publication.
More Payroll Features Increase Efficiency
The features your payroll service provides is important because it influences your ability to process payroll more accurately and more efficiently. For example, reporting features let you track trends within your business and your employees; other features, like employee-tracking functions, reduce errors and maximize your time. Look for companies that offer a variety of payroll features so you have a comprehensive payroll solution. The best payroll companies, such as Intuit and ADP, offer the widest variety of features to meets the needs of many businesses.
Another important feature online payroll services had to have is that they had to offer easy ways to access your payroll dashboard through mobile devices like tablets and phones. Most of the companies we reviewed offer mobile access to their interfaces. Typically, mobile access is through a web browser on your phone or a downloadable app.
Paying Fewer Tax Expenses Frees Funds
Payroll companies charge you based on a variety of different considerations. When you initially get a quote, it's typically based on the number of employees you have, the methods through which you pay them, and whether or not employees reside in the same state. While these are standard considerations, there are other expenses you might have to pay based on your situation.
Businesses are required to report tax information every year, and most payroll companies will calculate, file and deposit federal and state taxes for you. In addition, businesses are required to report year-end tax information and provide forms like W-2s and 1099s to employees. Some companies, like MyPayrollHR, include W-2 and 1099 processing as part of its payroll package. Most companies charge extra for the service.
Good Support Helps You Avoid Headaches
Payroll is a time-sensitive process, and you don't want to pay government fines for not paying your employees on time. Customer support is an important factor. If you can't get the help you need when you need it, you may introduce errors into your payroll, resulting in fines from the IRS.
All of the payroll services for small business we tested provide support through the standard support channels like phone and email. Only a few, like OnPay and APS, provide support via live chat. Live chat can be incredibly helpful when you need quick answers to simple questions, but if you have more in-depth questions, it's best to call.
You should also have access to online resources, like forums and user communities. Intuit has a strong online presence; it offers up-to-date training videos and helpful guides.
Finally, the payroll company you choose should provide a dedicated account specialist. This account specialist is your go-to point of contact for any problems you encounter. Not many payroll services provide dedicated account specialists, but those that do – like BenefitMall and Paychex – offer a service that is very valuable. You may also want to find a service with 24/7 support so you can always get support, even outside of normal business hours.