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Your Ultimate Guide to Choosing the Best Payroll Provider

Payroll icon9 min read


In the market for a new payroll provider? Ready to move to the cloud?

You've got some research ahead of you. You'll want to choose the best payroll service for your company: one that fits your needs and your company culture. You want a payroll provider you can trust with confidential information and rely on for support. You want a payroll service that can streamline your efforts and deliver results.

Consider the benefits of a payroll system:

  • Save time. Automated services do so much of the work for you. They keep you up-to-date with continuous processing and insightful reports. Additionally, employee self-service features allow employees to do a lot of the onboarding and upkeep that an employer or payroll manager may have otherwise had to do.
  • Save money. Most payroll software systems cost less than hiring a full-time bookkeeper.
  • Reduce errors. Payroll software service reduces the opportunity for people to make manual errors. Payroll can get complicated. Be confident the automated service processes correct information and minimizes risk for things like tax noncompliance.
  • Access it anywhere. Cloud-based payroll means you can access payroll information anytime, anywhere—not just at your desk.

What’s the next step in selecting a payroll provider? Time to start a payroll checklist.

Make a Payroll Checklist.

Before you go on your search for the perfect payroll provider, identify what’s on your company’s payroll checklist for software. Map out your organization’s needs first. That way, when you speak with payroll providers you know what questions to ask and which answers to look for. Then bring an open mind for options that you may not have thought of but could benefit your business. Understand your company first before you try to understand a payroll provider.

Learn more about which providers may be best by hearing from others. 

After you’ve put together your own payroll checklist, start your search.

  • Get recommendations from friends and colleagues in your field.
  • Read about different payroll providers on software review sites like G2 Crowd.
  • Hear what LinkedIn professionals working with similar company size and type have to say about their experiences.
  • Make a list of payroll providers that seem to meet your payroll checklist.

Understand which services you need and what providers offer

Of course, when you’re looking for a payroll provider, you want to know which services the providers offer. Consider your last payroll audit to identify where some of your top challenges lie. If you’ve already put together your list of payroll needs and wants, you can compare the two lists. See if a particular payroll provider can be the right fit. But first, you need to understand the services many providers may offer and what they mean.

→ Ready to save time on payroll and deliver the perfect paycheck every time?  Get the guide.

Here are some offered services to consider looking for when selecting a payroll provider.

  • Continuous payroll processing: Automatically run payroll and calculate how much each employee earned for the pay period. Access this payroll data at any time.
  • Real-time calculations: Know exactly what each employee is doing and how much they’re getting paid for it.
  • Versatile pay rules engine: Determine pay for regular and overtime hours. Should support various scenarios including shift differentials, order of importance, location, etc.
  • Paychecks & direct deposit: Many payroll providers will print paychecks. A great provider will offer direct deposit services to deposit paychecks right into employee bank accounts. This saves the hassle of printing, stuffing, and furnishing checks—it saves paper too.
  • 401(k) plan administration: Setup and track employee retirement plans.
  • Adjustment management: Manage bonuses, reimbursements, commissions, tips, and other garnishments.
  • Tax filing services: These services should include withholding employee taxes and issuing W-2 and 1099 forms to employees. Service may also include filing quarterly payroll tax reports and paying appropriate state and federal taxes.
  • Alerts: Know when an employee is approaching overtime hours or benefits eligibility. Receive notification of any flagged issues in the system.
  • New hire reports: Some states require employers to report information on new employees. Many payroll services take care of this report for you.
  • Automated tax table updates: Ensure the accuracy of employee withholdings.
  • Analysis reports: Get insight and visibility into your organization with dashboards, reports, and support tools.
  • PTO requests: Keep track of paid time off and allow for employers to approve or deny employee requests for days off.
  • Web-based system: Get all these services online anywhere, anytime. Payroll isn’t limited to the office anymore.

Know which questions to ask when selecting a payroll provider.

Now you know what to look for and have an idea of which providers may be the best fit for your organization. The next step is to interview your payroll provider prospects. Be sure you’re getting everything you need from the payroll provider you choose.

Are any other HR services included? (Core HR, Time & Attendance, Benefits Administration, Scheduling, etc)

Ask the payroll provider about the other services included in the software or program. Is it a stand alone payroll service or does it include human resources functions as well? You’ll want to know exactly what you’re paying for in a system. This is where you will want to identify what is best for your organization—siloed systems or an integrated platform.

With best-of-breed systems, you have the ability to pick and choose which system you want to use for each service—time & attendance, payroll, core HR, etc. However, this does mean dealing with multiple vendors and keeping up with integrations among different systems (if available).

With an integrated system, you can manage everything for your workforce in one system rather than switching between services and syncing those systems. Because everything is part of the same system, you pay one vendor, get support from a central provider, and keep everything for your employees in one place.

Which payroll taxes do you include in your service?

As a payroll manager, taxes are a huge part of your job. You need to know what the payroll system includes before signing up. Not only that, but your company can suffer major penalties if taxes aren’t properly handled.

See how much the payroll provider will take care and what’s left to you. Does the payroll provider generate required tax forms for your business and its employees and contractors ( i.e., W-2s and 1099s)? Will the provider manage compliance for state and federal taxes? What is available for ACA reporting with forms 1094-C and 1095-C?

Make a list of the tax services you need. Find out which of those tax services come with the system and if any customization options or add-ons are available.

What is your pricing structure?

You want to know exactly how you the vendor will be you and how often. Many cloud-based payroll services offer monthly subscriptions for a flat fee. Additional fees for extra levels or services may incur. Many vendors also use a price-per-employee structure.

What kinds of insights are available through reports and dashboards?

Having visibility into your employees and your business is vital to decision-making. Does a payroll provider offer service with real-time visibility for up-to-the-minute data on employees? Having data in your hands enables you to make decisions and keep unnecessary spending from hurting your bottom line.
You may want your own reports or need to provide a report for a manager. Dashboards rich with information can help you accomplish that. Also, look for dashboards and reports you can easily tailor to fit your business needs and preferences.

Can I access your payroll services on any device?

Being chained to your desktop is no way to track payroll. Be more effective when you can access your payroll anytime, anyplace. Cloud-based payroll providers should have platforms that are easily accessible on any device. Look for a provider who offers mobile services without sacrificing a satisfying customer experience.

Is your payroll system customizable?

Your business may have some unique needs or wants. You will want a payroll provider who can be flexible and help meet those needs. Look for payroll software that is extensible with its API. That way, you can customize your platform for any special needs or requirements.

Is there a self-service option for employees?

Delegate HR and payroll tasks to employees with a self-service feature of your system. This allows employees to access their profiles, pay statements, schedules, PTO, and more—all on their own (without bugging you). They can also complete tax forms and update any changes in contact info. This makes onboarding and upkeep a lot simpler for you.

For example, with electronic onboarding, a new hire can complete all of his or her paperwork right in the employee portal before they ever arrive on the first day of work.

Is your payroll system complicated or easy to use?

You don’t want to pay for software only to spend countless hours trying to understand how to operate it. Ask the payroll provider for a demo so you can see how intuitive the system and its navigation features are.

How do you set up the system? Will someone from your company walk me through it?

The setup process can be the hardest part of a new system. Does the payroll provider offer onboarding services to help you get started with the system? Do they offer tutorials to help you learn how to use the system? How do they keep customers educated on system updates?

Look for a provider who will help you get onboarded with the payroll system and be there for you whenever you get stuck.

What kind of customer support do you offer?

This is a big one. If you’re relying on a service to do so much for your company, you want to rely on their customer support to help take of your needs. In G2 Crowd’s Fall 2015 Payroll Grid Report, of all products reviewed, every one had at least one or more reviews dealing specifically with customer support. Support is important to users.

Many companies will offer big promises. They claim their customer service sets them apart, so get into some specifics here. Determine what level of support your company will need to help you choose the best service option for you.

It’s important to know things like if you call, will you speak to a robot or an actual human being? Will you speak to the same person every time or to the “next available person”? Do they offer support during business hours only or 24 hours a day? Can you get online support through a chat service or via email?

Find out if a support service is included in the system or if they provide different levels of customer support for additional costs. Some payroll systems may provide free email support while phone support comes with a fee. Other payroll vendors offer a 30-day trial period of free support before your paid service begins.

Read reviews from users to learn about their customer service experience. Check out how payroll providers rank on G2 Crowd's Highest Rated Satisfaction in Payroll. 

How secure is your service? Where is your data center and what kind of security do you have?

Handling payroll requires handling a lot of confidential information. From social security numbers to salaries and tax information, you need to be confident that this info is safe and secure. Ask about the provider’s encryption standards, SSL certificates, and authentication steps.

You may also want to ask the payroll provider how they plan to protect your company’s data stored that is on their servers from everything from theft to a natural disaster.

Can your system scale to my business needs?

If you’ve got a growing business, you want a payroll provider that can grow with you. You don’t want to find yourself looking for yet another payroll provider in a few years. Find out how the system can grow with you and if there are options to change your plans as you grow.

Which industries do you specialize in?

It never hurts for your payroll provider to have a niche in your industry. Many cater to a certain size of business, but some even specialize in certain fields. For example, non-profit organizations have special tax regulations that a provider should be familiar with. With this, the payroll provider can bring that much more experience to the table for handling your payroll.

Choosing the right payroll provider can seem like a daunting task. Use this guide to help you ask the right questions and find the right answers for your organization.

payroll manager's guide


Originally published Mar 31, 2016, updated Sept 1, 2020