You’re looking to hire a payroll service for one basic task: managing your regular payroll. However, you’ll find as you start talking to payroll service providers that there are many options to choose from, and in most cases several other services they can provide. Consider these payroll services before you start doing your investigation and you’ll be able to breeze through your provider interviews.
Payroll services options
Any provider can do weekly, biweekly, bimonthly, or monthly payroll — you can set up the schedule to match yours. Be sure to give your employees significant advance notice — at least 3 pay periods — if you intend to change the schedule. Even the difference between every-other-week and twice a month can disrupt people’s budgets.
The provider will calculate appropriate withholding, retirement plan contributions, health and other benefits deductions, all based on the rules you set up. They can handle full time, part-time, temporary, and contract employees, whether salaried or paid by the hour.
In most cases, the provider can also calculate and pay your payroll taxes. This includes federal and state taxes, and can really help free up your in-house staff to do more important work. Be aware, though, that they may not be able to do local taxes, and that responsibility will remain with you.
Heads up! You are responsible for paying all the taxes you owe, including employees’ withholding and your own payroll taxes. Even if the payroll company is handling the process, you are legally responsible for those payments. It pays to double check the provider’s work for the first couple of pay periods, just to make sure that they’re handling the tax payments correctly.
Entering payroll data
Each pay period, you’ll have to get the relevant payroll data to the service. For workplaces where all employees are salaried, the totals may not change much week to week; at restaurants or other businesses where employees work varying schedules at hourly rates, the payroll can look very different from one week to the next.
No matter how much your payroll changes, you have to submit it to the provider each pay period. Understandably, there are significant privacy and security concerns about this information, so it’s important to keep it safe. These days, communicating your payroll is almost always done on a computer.
There are two main options for transmitting your payroll data via computer. Simply using a secure web site is gaining popularity — the security and privacy guaranteed by SSL (Secure Sockets Layer) web pages is convincing more payroll companies and their clients to trust the Web for this sensitive information.
The older and even more secure method is to use a dedicated computer with a modem that dials directly into the payroll company’s servers. This method doesn’t use the Internet at all: you wind up with a direct connection to the provider. If the computer you use for this isn’t connected to your company network, this means there’s no network connection at all that could be used by a hacker or thief to get access to your data: they’d have to physically break into your office and access the computer.
Other options are available — you can simply call in your employees’ hours, or send a fax — but computer-based hour tracking gives you more flexibility and reporting capabilities.