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How to Choose the Best Small Business Payroll Services
Your small business won’t perform up to its potential unless your team is happy. That’s why payroll services for small businesses are so important. If your team doesn’t get paid, on time, and conveniently, it’s going to cause issues with morale and productivity.
Finding the perfect payroll service for your small business is a crucial process, but it isn’t necessarily the most straightforward decision you’ll make for your business. If you’re new to choosing one, it’s hard to know where to start.
Let’s run you through the five most important factors to consider while choosing your payroll services, plus the details on the three most popular small business payroll services currently available:
What to Look for in a Payroll Service
You know better than anyone exactly what your business needs. So let’s consider the factors that play into finding the perfect payroll services for your business. Here are the five things to keep in mind as you search for your small business’s payroll service:
Pricing Structure and Total Cost
You probably already knew this, but the pricing of your payroll services is crucial. The total cost of a payroll service will depend on how many team members your business employees, what kind of employees they are, and the features that the payroll service offers.
Most payroll services will come with the pricing structure of a base monthly price, plus a per employee monthly price. Many payroll services will offer tiered services that cost more based on the additional services they offer. The additional cost will often surface in the per-employee monthly cost, so additional features will be incrementally more expensive with each employee you have.
Even more, many payroll services will offer a la carte employee benefit add-ons like workers’ comp, health benefits, and 401(k) retirement savings. Tacking these on to your business’s payroll services will make your overall plan cost more, but you might be able to score a bundled price that is more affordable.
Tax Capabilities and Guarantee
Payroll services exist in part to help small business owners pay their payroll taxes correctly and efficiently. Many small business owners purchase payroll services primarily for this reason. Some payroll services will offer a tax guarantee, which means that they guarantee that you won’t incur any fines, and if you do, they will reimburse you.
Many business owners will consider this a must-have for their payroll services, but keep in mind that a tax guarantee is really only available through more expensive, automated payroll services. The payroll services that have you manually file your taxes can’t provide a guarantee.
Next, you’ll need to consider the fundamental features that you must have. This decision is for you to make. What does your business need? If you have a small team with no benefits administration requirements, then you might simply need a payroll service that offers direct deposit, paid-time-off policies, and payroll tax filing.
On the other hand, if you have a large team and want to offer benefits through your payroll service, your list of requirements might be longer. Be sure to list out all of the features your team will require from a payroll service before you begin your search.
Depending on what industry you operate in, you might need additional features from your payroll service. These industry-specific features could look like tip distribution, independent contractor tax filing, or commission calculations, or bonus processing. Your industry likely comes with a few unique requirements for paying your team, so be sure to clue into them before you choose your payroll service.
Finally, you’ll need to research how happy a potential payroll service has made customers before you. Check-in on reviews for any payroll services you’re considering. How do they stack up? Pay particular attention to how customers review customer service teams—if customer service employees are helpful and professional for a given payroll service option, that’s a great sign. If reviews indicate otherwise, that’s a red flag.
Top Small Business Payroll Services
Now that you’re equipped with the necessary knowledge to find the right payroll software for your business, where do you begin? To start off your search, consider these top three small business payroll services:
A popular small business payroll service to consider is Gusto Payroll. Gusto comes in three tiers: Core, Complete, and Concierge. Core comes with full service payroll, health benefits admin, workers’ comp admin, and paid-time-off policies and costs $39 monthly base price, plus a $6 per employee monthly price.
The Complete version comes with all the features of Core, plus employee permissions, offers and onboarding, simple time tracking, time-off requests, employee directory, and employee surveys. This Gusto plan will cost a $39 monthly base price, plus a $12 per employee monthly price.
Another top small business payroll option is Square Payroll. If you use a Square Point of Sale system, then this is almost certainly your top option. You can easily import your time-tracking and tip info from your Square POS system and pay both salaried and hourly wages. And you can offer health benefits, as well. Square Payroll doesn’t offer tiered services, so you’ll just have one option to consider. It has a $29 monthly base price, plus a $5 per employee monthly fee.
We suggest you also look into QuickBooks Payroll, especially if you use QuickBooks accounting software for your business. If you use QuickBooks for both payroll and accounting, you can easily streamline your financial information.
QuickBooks Payroll comes in two versions: Self Service and Full Service. Self Service offers 24-hour direct deposit capabilities, employee paycheck calculation, year-end form calculation and filing, and unlimited payroll runs. For these features, you’ll have to pay a $35 monthly base price, plus a $4 per employee monthly price.
Full Service QuickBooks Payroll will offer all of the advantages of Self Service QuickBooks Payroll, plus much more. You’ll also have your payroll taxes done for you and your W-2s filed and sent for you. You’ll also access same-day direct deposit and a no-penalty tax guarantee. But you’ll have to pay for these extras—Full Service QuickBooks Payroll will cost an $80 monthly base price, plus a $4 per employee monthly price.
Next Steps for Choosing a Payroll Service
Now that you’re acquainted with all the details on choosing a payroll service, what are your next steps? Before anything, compile a list of what you need from a payroll service. You should also compile a list of what you would ideally want from a payroll service. Next, solidify your budget.
As you explore payroll service possibilities, see if your budget aligns with your preferences. If it doesn’t, you’ll need to adjust your expectations accordingly. That said, you might be surprised by how powerful a payroll service you can access on a budget. And the three payroll services options highlighted above are exhibits A, B, and C.
Guest Blog by Fundera. Eric Goldschein is the partnerships editor at Fundera, a marketplace for small business financial solutions. Eric has nearly a decade of experience in digital media and writes extensively on finance, HR, marketing, entrepreneurship, and small business trends.