5 things to consider when choosing a payroll provider

    Small business owners often utilize cloud-based payroll systems to effectively and efficiently pay their employees. With today’s technology, online payroll services provide an ease of access and affordability that make the decision a no-brainer. In order to choose a provider, you’ll want to consider your specific business needs. But, where should you even start? These are the five most important things you should think about when making your decision.

    Available Features

    As you begin down the path of choosing a new payroll provider, you may find yourself asking “Where do I start?” or “What does my business really need?”. We believe that the foundation of those questions is found in the features, and while these can be intimidating questions – We thought we’d give you a few simpler ones to get you on the right track.

    How quickly can I process payroll?

    Typically, most providers have a 2-3 day funding period. Less often, there are others that offer next day funding. This may vary depending on your location and bank, so be sure to ask specific to your business.

    Will it integrate with my accounting software?

    Cloud based accounting solutions such as Xero and Quickbooks Online have direct integrations with payroll services that make it easier than ever to track what you’re paying to your employees. Manual entry is often a big time burden, so direct mapping to your accounting platform is key.

    Is this solution scalable?

    As a small business owner, you are always thinking one step ahead. A vital question to ask is whether or not a provider will be able to scale with you. As your business evolves, a provider that offers features beyond just payroll, such as benefits, time tracking, etc. can be a better full suite solution along the road.

    Can I track time for my team?

    This is huge for a business hourly employees. Many providers have built in timekeeping that will allow you to track time and pay employees from the same system. This will make your (and your teams) lives a whole lot easier. If your provider does have time tracking, be sure to ask if it is an additional fee.

    Is there a support team that I can reach out to if I have questions?

    No matter how user-friendly a platform may be, we all have questions sometimes! Determine what level of support you may need to help you make your decision. Make sure to consider the methods of communication - email, phone, text message, etc.

    Will I be able to use the platform to track time off?

    Accruing time off and tracking hours as your team uses them can take a ton of time and resources. Many providers will allow you to create the parameters within the system and will take care of all of the leg work for you along the way.

    Can I pay 1099 contractors?

    If you utilize contract labor, this is definitely something you will want to think about. Many payroll providers that allow you to process contractor payments on their platform. Some will even issue your year-end 1099s at no additional cost.

    Full-Service Taxes

    Some of the most daunting but important tasks as a business owner surround tax. As you hire employees, you are responsible for all taxes associated with paying them. This includes withholding the applicable tax amounts, remitting tax amounts to agencies as they are required, filing quarterly and annual tax forms, and much more. You may want to consider choosing a payroll company that will handle these responsibilities on your behalf.

    In addition to traditional withholding taxes, there are other tax services that many payroll providers will offer at no cost. Make sure you keep the following in mind:

    • New Hire Reporting - Some states require employers to report information on new employees upon hire. Is this something they will handle for you? If so, are all 50 states supported?
    • W2s - Wage and Tax Statements for each employee that are required to be filed with the IRS at the end of each year. Is this something that your payroll provider will file for you? If so, is it for an additional cost? Also, will they provide a copy to each one of your employees, or will you need to distribute these independently?
    • Local Tax Payments - Does your state have local taxes? If so, these can often have complicated parameters and can be difficult to calculate/remit. ADP, for example, will help you determine any taxes applicable to your business based on your address. They will also file and remit payment to the localities on your behalf. Make sure you inquire whether or not these services are available if local taxes apply to your business.

    Many intuitive payroll solutions also have a tax compliance team that are available to you for questions and to check for any potential errors. This can really help avoid a headache.


    As a business owner, accessibility is key. A platform that has an online interface allows you to make updates and process payroll allows you to run your business from anywhere you can get an internet signal. There are a few key items here you will want to ask about.

    Employee Portal: A self-service portal allows employees to do a lot of the onboarding and upkeep that you may have to worry about otherwise. These tasks may include updating direct deposit information, downloading pay statements, updating W-4 tax elections, requesting time off, and much more.

    Employee Self-Onboarding: Some cloud-based providers have a self on-boarding feature that is a game changer for business owners! Gusto, for example, only requires the employer to enter an employee’s name, email, and pay information. The system will then send an email to the provided address, prompting the employee to enter all of their own information. This includes their personal home address, social security number, and birthday. Gusto’s self-onboarding feature will also prompt your employees to complete an online direct deposit authorization document, in addition to all relevant payroll tax forms. As an admin on the account, you will have continued access to these documents, which will replace the need for an additional system or database to store employment documents. This can be a huge value add as your business scales, saving both company time and resources.

    Mobile App: Many cloud-based payroll providers have platforms that are easily accessible on any device. Keep your eye out for a provider who offers mobile services without sacrificing your experience.


    Providing a competitive benefits package is one of the best ways to hold on to talent. Though a vital part of running a business, it can often be both expensive and an administrative burden. As your business scales, it’s vital that your payroll and benefits are in sync. Choosing a payroll provider that has a built in HR offering is a great way to ensure that. As a business owner, you should start by considering what benefits would provide the greatest value to your team specifically in order to understand if a provider’s offering can suit your needs. Here are a few key items you will want to consider.

    Cost: Many small business owners think that providing benefits to their teams is simply out of reach, but you might be surprised at what some payroll providers can offer. Make sure to keep in mind the different plans offered and how costs can be split with your employees.

    Benefits Package: In addition to the medical, dental, and vision plans; there are a ton of other benefits that can be of huge value to your team. Consider what additional benefits a provider can offer, such as 401(k) plans, commuter benefits, flexible spending accounts, college savings accounts, health savings accounts, or life and disability

    Benefits Administration: Benefits enrollment can be confusing and time consuming. Many payroll providers will allow your team to enroll in benefits and update plan elections directly through their online interface. Consider how much of the enrollment process your prospective provider will take on, and how much you will still be responsible for.


    Pricing is typically one of the strongest deciding factors in making any business decision. Be sure to pay close attention to the pricing model and what features are available at an additional cost. Some payroll providers list their pricing directly on their website for ease of access and transparency, but others require you to request a quote so it might take you some time to gather all of your pricing options. You will typically find that pricing is either fixed or variable based on the services.

    Fixed Monthly Pricing: This model provides a standard and predictable monthly cost. Typically, there is a standard base cost per month in addition to an amount per employee amount. This fixed amount includes payroll processing fees in addition to all other features that are available for use. Employers find that these pricing models, while at times higher in the beginning, are scalable for their business as they find a need for all of the additional features offered.

    Variable Per Use: This model typically uses a standard percentage to charge per employee, per payroll. Any services in addition to payroll, such as timekeeping or benefits, are treated as a la carte offerings and are an additional cost billed monthly. There are at times a lower point of entry with this method, however, since the cost is variable, you will want to ensure that you budget based on how often you are processing and what features you are utilizing.

    We’re here to help

    As a small business owner, choosing a new payroll provider can feel like a daunting task. We think that using these focus points will make your decision much easier. Still confused on where to start? Bookkeeper360 is a one-stop shop for all of your payroll, accounting, and advisory needs. We can extend the benefits of our partnerships with Gusto and ADP to provide you the best payroll solution for your business.

    By Heather Schmidt