Following are the top seven practices that make a great payroll processing vendor.



High Accountability: Effective firms hold themselves accountable for errors in payroll and are quick to fix them as and when they happen. Service provider should have an inbuilt error checking system to catch such mistakes before the checks are written and money transferred to employees account.

Great Compliance: They follow best practices to maintain compliance with federal, state and local employment and tax laws. According to a study few years ago, in the US about 30% of businesses that process payroll themselves have faced audits from IRS and paid penalties for transgressions that happened while calculating or paying their payroll taxes. Payroll services must have stringent checks and balances to avoid such audits and penalties.

Enables Online Data Transfer: If weekly transfer of key payroll data is a chore and bogs you down it defeats the purpose of hiring a payroll service provider. Good payroll companies make it easy for business owners to transfer data necessary to process payroll. An online system that is accessible via a web interface is ideal since it eliminates the need to install expensive software on your computers and its maintenance.

Flexible Billing: Good payroll administration providers offer a variety of fee structures. Almost all companies charge an initial set up fee and a flat fees per employee per payroll cycle to cover the cost of issuing a paystub, executing direct deposits or mailing live checks to employees. Innovative companies may offer different fee structure like flat annual fee per employee and extra fee for any additional service. For example if a business starts to offer health care to its employees, fees to process deductions for health care would be charged on top of the basic flat fee.

Provides Online Tools: Payroll companies offer online tools for employees and the business owner. Employee tools include the ability to view and print payroll stubs and tax forms. They also allow employees to make modifications to deductions.

Businesses that have hourly employees are offered online tools to enter time card information. Business owners need tools to monitor payroll expenses and deductions so that they can keep track of their finances.

Awesome Customer Service: If a crucial service provider like payroll administration is not responsive to your queries, it can be a source of stress. It is imperative that the payroll agency have a short turnaround time to fix any errors in paychecks, to set up new accounts for hires and to address any other issues that may arise.

Option of Advanced Services: Great payroll companies offer advanced services like processing of new hire by conducting background checks, distribute key communications to the employees as and when needed, enrollment and tracking of various benefits programs like health care, life insurance etc. If the company offers retirement plans like 401K, payroll service providers partner with financial advisors and will help employees make smart investment decisions.

Before making a hiring decision, talk to a few payroll vendors and evaluate their track record. Payroll service providers that have been established recently may be a good choice only if they can assure you of reliable service with good processes that assure service continuity. Hiring a payroll vendor is like getting into a financial partnership. Remember to review all contracts with your attorney and the accountant to ensure there is no potential for conflicts.