6 Types of Payroll Partners: How to Choose the Right One?

As a business, you may have a lot of tasks at hand that needs tending to, and handling payroll in-house, may seem like a burden in between all of these core business operations you need to overlook. An expert third party payroll partner could be just what you need in such a situation. However, there are various types of payroll partners you could choose from, depending on your business needs.

Payroll Partner Meaning

A payroll partner is a third-party payroll provider organization that helps a business with payroll-related tasks, such as paying employees, collecting payroll taxes, Filing payroll tax forms, Handling direct deposits, and Tracking employee time.

Payroll partners can also provide strategic advice to help a business improve its payroll operations. They can be proactive in offering advice and finding solutions to payroll challenges.

What criteria should you consider when selecting a payroll partner?

Choosing the right payroll partner is a crucial decision for a business. You must make a list of what you need before looking for a payroll service provider. For example, do you want a payroll service that simply concentrates on streamlining the payments to your employees? Or do you want more comprehensive services including payroll processing and other HR features?

Regardless of your requirements, some of the major factors you need to consider while choosing a payroll partner are- experience and expertise, services offered, data security, scalability, and client reviews. After a thorough research and careful consideration, depending on your business needs you can choose the payroll service that aligns best with your business needs.

What are the types of Payroll Partners?

To help you choose the right payroll service provider, let us discuss about the different types of payroll companies providing payroll service –

1. Bookkeepers

A bookkeeper records financial transactions, takes care of the debited and credited amounts, creates invoices, maintains and balances the books and, in some cases, manages payroll using Excel or a payroll software like QuickBooks.

Some of the major benefits of using a bookkeeper for your payroll needs are –

• Maintenance of a general ledger where payroll journal entries are automatically posted
• Offer accurate and complete financial picture
• Less Expensive that others

However, a downside to it is that with a bookkeeper you may have to take care of integrating your payroll with a third-party software by yourself.

2. CPAs

A CPA (Certified Public Accountant) could be ideal payroll partners especially for a growing business as they can not only handle payroll processing and administration but can also help make financial decisions. Some ways CPAs could help are-

• Ensure that your team is paid on time, with proper withholdings deduction
• Submission of payroll taxes
• Keep track of payroll reports, expense reimbursements and profit-sharing disbursements
• Expert level of service that can help ensure your business stays in compliance with laws and regulations.

3. PEOs

A PEO is a professional employer organization, quite often, also known as employee leasing model. A PEO will hire your employees, and you’ll lease them back. So, technically you both act as co-employers to employees. Since your employees technically work for the PEO, the PEO will be responsible for a wide range of workforce management functions, including payroll, HR, benefits and compliance.

This is quite an advantage for the client organisation, as this approach is associated with potential cost savings.

However, the downside is that PEOs may charge a minimum of administrative fees of 3%-15% of the wages unlike others who only charge you per employee per month fee. Also, there is this other concern for many businesses that since the PEO is co-employer, they may not have full control over the employees.

4. Payroll Software Providers

This is the most sought-after approach for most organizations. Engaging with a payroll software partner is a cost-effective way to improve your current payroll process. A payroll software can automatically calculate wages and withholdings and updated with the latest tax rules that helps minimize human error. Even if you do face some issues, they typically offer customer support. However, each payroll service provider differs, and may offer help in varied methods.

5. Local and Regional Payroll Partners

An outsourced payroll provider will handle as much or as little of the administrative and compliance tasks associated with payroll as you’d like. For example, you may just want a vendor to process payroll and take care of tax filings. Or you may want to offload more responsibility and outsource other functions as well.

While many local and regional payroll partners have the ability to scale with your business, a potential downside is that these providers do not always have the same breadth of offerings you may need as you grow. For instance, if you want help with employee benefits, they may refer you to one of their industry connections so you would have to deal with a different firm.

6. National Payroll companies

National payroll companies offer solutions to address all your payroll needs. They offer accuracy and efficiency as the vendor uses a single platform.  For example, when an employee enrolls in benefits, the amount of their contribution is automatically deducted from each paycheck.

What are the types of payroll services?

The aim of payroll services is to ease and streamline the process of paying your employees. There are several types of payroll services that clients can avail depending on their payroll needs and challenges. Some services a payroll service provider might offer are-

1. Payroll processing

This is the most basic, yet significant function of payroll. It involves the calculation of wages of employees depending on the type- full-time employees, hourly employees, overtime, holiday pay etc, to ensure that they are all paid accurately and on-time.

2. Tax withholdings

A payroll service provider takes the responsibility of calculation of payroll by withholding taxes that are appropriate and are in adherence to the local, state, and federal laws. As your payroll service provider, we even provide w-2 forms to contractors and freelancers, if any, that are working for your company.

3. New hire reporting

As per federal law an employer must report if there is a new hire or rehired employees in the organization and provide basic information of them within 20 days of hire date. A payroll provider can handle this task for you.

4. PTO management

A payroll provider will manage and track each employee’s activity, their sick days, vacation days, paid time off etc. With the help of an integrated payroll software system, we make sure all of the mentioned activities have a built-in approval system where employees can request their days off, manager approves requests and calendar invitations are sent out so that everything can be updated along with the appropriate work schedules.

5. Payroll Reporting

Detailed reports that include data and statistics on how your business is doing is provided by a payroll provider. With these reports managers, and other department heads can identify the areas that need improvement as well as keep track of the wages paid, tax withholdings, attendance, hours worked etc.

6. Integrations

It’s important for businesses to have access to their financial and data. As your payroll provider we will make sure that we integrate all the financial and data platforms that need access to this data.

7. Employee self service

A self-service portal is necessary for every employee to ensure smooth access to their personal data. Whether they want to change their personal data or need access to their payslips or would like to see their tax withholdings, and ESS is necessary in every organization.

How to choose the right payroll partner?

There are certain factors you must consider before choosing the right payroll partner.

As mentioned earlier on in this article, there are various types of payroll partners offering different payroll solutions. So, before you decide on one, make sure that their payroll services have certain features that can help address your payroll needs effectively. Here are some features to look out for

1. Core features

Every business is unique and has varied requirements. Now, you may have a list of features you need. Compare these features with what the payroll provider is offering. For example, are you ok with payment being made to employees with the method the payroll provider offers like direct deposits or checks, or do you prefer paying your employees through debit cards or other methods?

Next, check if the service offers PTO administration, garnishment payments, unemployment insurance, or any other features your business may need. Choose a payroll partner who can provide you all the features you require.

2. User Experience

Remember, that ultimately you and your employees must have an ease of access to the payroll information. So, make sure that the portal or software the payroll provider provides you with is easy to use, user friendly and is easily accessible to managers and employees around the clock, has minimum glitches, easy to navigate and is not cluttered with unnecessary features.

3. Service Integration

Of course, you may have outsourced your payroll work to a third-party payroll service provider, but you still always need access to the payroll data as and when you require. Suppose your in-house accounting team need access to data from their accounting software or HR services may need access to data, they must be able to access it easily. So, you need to ensure that the payroll service integrates with other services, as it can avoid all the manual record keeping.

4. Customer support

You need to be able to depend on your payroll provider to attend to any payroll problems swiftly.  Make sure you pick a provider who provides seamless customer support and responds promptly to your payroll problems.

5. Compliance management

A payroll provider must be well aware of all the labour laws as well as any changes or updates from the government regarding the same. They must make sure that you company’s payroll process follows the tax laws and is not prone to any kind of fines or penalties. Additionally, you can also find out if they offer penalty protection.

6. Cost of the service

Every payroll provider offers various payroll services, packages at different prices. Depending on the range of payroll services you require, choose a payroll service provider that can offer you your required services well within your budget. Also make sure they lay out the exact details and costs of their services to avoid any surprises of hidden costs.

Are you ready to hire a payroll partner?

Engaging with a payroll partner can free up a lot of your time so you can focus on providing the best service for your customers and growing your business. Alp Consulting is a leading payroll service provider In India offering a wide range of payroll and HR services. Our expertise has helped various fortune 500 clients handle their payroll seamlessly. Our team of experts are equipped to handle any or all payroll challenges you may be facing regardless of the size and nature of your business. If you are a business owner looking best payroll services that perfectly aligns with your business needs then contact us today, and we’ll provide you with the perfect payroll solution for your business.

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