Evaluating payroll processing services

Evaluating payroll processing services to find one that fits your company's specific needs can be a time consuming process. But beyond comparing the basic features that many payroll services provide, avoiding several common pitfalls will help you save money and get the features that best fit your needs.

Mistake #1: Not knowing the difference between State Unemployment Insurance (SUI) and State Unemployment Insurance Service.

State Unemployment Insurance is both a necessary and a standard component of tax payme nt features in payroll services, and it is required by law. However, State Unemployment Insurance Service is a different thing--it sounds the same, but the latter is an add-on feature which only benefits clients who have extremely high turnover rates, which in turn drive up their unemployment rates. If a company has a time with less turnover, the state does not automatically reduce their rate accordingly; if you opt for this feature, your state unemployment insurance will petition the state to drive down your rates accordingly. Another feature of this service is that if you have a lot of unemployment claims against you, your outsourced payroll service can send someone to represent you. But if you don't have much turnover or a lot of bogus unemployment claims, you don't need this service--don't pay extra for this unless you need it.

Mistake #2: Not knowing up front what your payroll processing services provider will charge for Year End and Miscellaneous fees.

If you think you've found solid payroll outsourcing services with the features you need at a good monthly rate, you may be in for a surprise at Year End. Before you sign up, make sure you know what ALL the fees will be. Many charge extra for W-2's; some will offer a free reprint if an employee loses their original W-2, some charge.What is the charge for New Hire Reporting? This may matter more if you have a lot of turnover. Is there a Hosting Fee for an online payroll service? Adding up all those miscellaneous fees may make a big difference in the bottom line. Knowing these additional fees in addition to the base fees will make it easier to make an apples-to-apples comparison of payroll processing services.

Mistake #3: Buying an add-on HR Module you don't really need.

Many payroll outsourcing services will offer an additional HR module with things like templates to create employee evaluations, fields for keeping track of employee training, leave of absence requests, job descriptions or Benefits Administration.

While these are good features to have if you have a number of employees, you may be able to keep track just as well in an Excel spreadsheet, saving you money. Weigh the cost versus the benefits to see if it's worth the extra money.

With these tips in mind, you are now ready to make an informed decision on which payroll processing services are right for you.

Suzanne is the Director of Operations for G & K Office Solutions. Her numerous articles cover a variety of topics, incudings human resources issues, payroll and payroll management, and retirement funding. For more information on evaluating various payroll processing services providers, visit http://savingsfordoctors.com/outsourced-payroll-services.html.

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