Whether you process payroll manually or use a payroll service, the time is right to reevaluate your payroll processes - as the new year approaches, small business payroll outsourcing options are better than ever.
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Are you bogged down with tedious, time-consuming administrivia that prevents you from focusing on your core business? Instead of growing your business, are you suffocating under a pile of mind-numbing paperwork?
Join the club. Most small business owners wish they had more time to focus on growing their business. The solution to the problem is to outsource those things that take up your time but don't really help to grow the business. Outsourcing payroll is an easy one. If you're tired of all the headaches associated with payroll, it may be time to take a look at outsourcing payroll.
Processing payroll is a pain. If you process payroll yourself, you've got to keep track of payroll regulations and changes in withholding tables, a time-consuming task. Calculating the actual payroll amounts and deductions is equally tedious - it's very easy to make a mistake.
Then, there's the arduous chore of writing checks and making all the proper quarterly and end-of-year filings for federal, state, and local payroll taxes. It's not uncommon for small businesses to spend two to three hours processing each payroll if they do it manually.
Mistakes are costly. Employee morale dips when you give an employee a check or a W2 with errors - they quickly lose faith in management when that happens. They may forgive but they don't forget.
File late or with an incorrect amount and you'll have to pay a payroll penalty. Every year, four out of ten small businesses pay an average payroll fine of $845 for payroll errors. When you add it all up, that's billions of dollars in payroll fines.
Plus, there are other payroll fines that penalize you if you don't keep good payroll records. California passed a law that imposes a $750 payroll fine on small businesses that aren't able to quickly produce accurate payroll records upon an employee's request. Experts believe that many other states will follow with similar legislation.
When you consider these payroll penalties and the value of your time, processing payroll internally can be a very costly proposition. Even if you're already outsourcing payroll, there may be room for improvement. Payroll services change over time, and there are new payroll services that are worth checking out.
To be sure, if you've already outsourced payroll, it's worthwhile to consider whether you're current payroll service is giving you everything you want. Payroll service offerings today are better than ever, and now is the right time to be thinking about making a switch to a new payroll service.
When Should I Outsource Payroll?
The end of the year is the best time to sign up with a new payroll service. In fact, it's estimated that 60% to 70% of the small businesses that decide to outsource payroll each year do so effective January 1.
That's because you and your new payroll service provider start the new year with a clean slate. There's no payroll history to transfer over to the new payroll service. You can change payroll services after the new year starts, but it requires more paperwork. Now is the time that it is quick and easy to get started with a new payroll service.
What's New in Payroll Outsourcing?
The Internet has greatly improved the process of outsourcing payroll. With SurePayroll's online payroll service, for example, you can enter and view payroll information from anywhere at anytime, as long as you have access to a Web browser.
Once you enter your payroll data, the Web-based payroll service automatically calculates, deducts, pays and files all federal, state and local taxes. Paychecks can be printed on your laser printer or can be routed to your employees' bank accounts via direct deposit. W-2s are automatically prepared at the end of the year.
The key benefit of an online payroll service is enhanced control. Traditionally, payroll services required small business owners to call in payroll at a designated time, even if that meant having to leave an important meeting with a customer or an employee. With an online payroll service, payroll can be processed whenever it's convenient.
Control also comes through the ability to modify payroll information in real time and view your payroll calculations instantly. With traditional "offline" payroll services, the small business owners act through an intermediary - the payroll clerk - who enters the data. When mistakes are made, which frequently happens, the small business owner doesn't know it until the checks arrive.
Finally, control is increased through the availability of reports that let you track and monitor your payroll. Employers have access to online payroll reports in real-time after logging into a secure web site. Similarly, employees can log in and access and print their payroll records, thus alleviating an administrative burden that frequently arises when employees need proof of payment history for loan applications and other purposes.
Beyond increased control, online payroll services let small business owners save time and money. It only takes a few minutes to process payroll online, so time is freed up for more important things, like getting a new customer or spending time with your family.
How do the new payroll services save money? Because the new online payroll services don't have the same cost structure as traditional payroll services, they can charge 30% to 50% less. Moreover, many payroll services guarantee that you won't incur a payroll penalty, which can represent a considerable savings.
Taking Control of Payroll
Outsourcing payroll is a no-brainer. It simply doesn't make sense to waste time, money and resources on a tedious task that is ancillary to your core business.
Getting started with payroll outsourcing is easy enough. You can find the payroll service that's right for you by searching on the Web or by asking your colleagues for a recommendation. In many cases, you can simply enroll online and get started immediately.
Here are a few payroll services that are worth checking out:
- SurePayroll Online Payroll Service - This online payroll service is our favorite. It's amazingly convenient because you can process payroll anytime, anywhere as long as you have an Internet connection. Very affordable.
- ADP Payroll Service - You can't get fired for using ADP, or so the saying goes. They are the biggest payroll service. They've been around for a long time. This payroll service is most appropriate if your business is bigger - say, over 100 employees.
- Paychex Payroll Service - This is another big payroll service, a runner-up to ADP. Good offerings and good service. Again, most appropriate for larger companies.
- Paycycle - This is a good service that reminds you when to process payroll. Unfortunately, it doesn't guarantee that you won't have penalties and you still need to do a fair bit of work yourself.
The bottomline? Making payroll is something that small businesses have to do. Outsourcing payroll or switching to a new payroll service for the new year can alleviate pain and let you focus on what's most important - growing your business with focus and attention.
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We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.
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| VP Technology |
7/18/2008 |
I've used both ADP and Ceridian.
Both have deplorably bad online systems, evidently written by high school web wannabe's. The user interfaces are arcane, non-configurable, and just plain hard to use.
Our managers waste hours per week approving (or trying to approve) timecards. Our staff have to put up with a daily hassle, especially the non-exempt employees.
I have an engineering staff reporting to me, and if we could spare the time I'd have them write a *real* front end and just send a file to ADP for processing.
ADP, Ceridian, if you're listening (and from my experience, you're not) please please please hire a user interface or user experience expert and fix your online system!
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| Dir Finance |
10/3/2008 |
Our company has used paychex since inception. We are shopping for a new payroll provider now due to a terrible online payroll presence that Paychex presents. The layout is not user friendly, and seems to have been written some time back. The online program and reporting is quirky.
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| Controller |
12/27/2008 |
I used ADP when they bought out Intuit and thier service was laughable. Paychex's rep came in and promised to do better, but after 2 months they were worse than ADP. And their online system was horrible. I switched over to a company called E-chx earlier this year and have not had a problem since. Their online interface is great and thier customer service is head and shoulders above ADP and Paychex.
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| CEO |
4/15/2009 |
We used ADP "Easy" online payroll for two payroll periods. It did not take us long to find out the myriad of mistakes that they made, debits that were unauthorized, the horrible customer service we encountered, and the high pricing that they charged and the absurd amount of unnecessary paperwork and reports they would send us. We went back to Bank of America payroll.
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| VP |
5/14/2009 |
We used ADP for several years and finally got tired of the constant increase in their fees and the lack of customer support. The final straw was when they charged us 3 times to process our W-2s. We switched all of our processing to Payco in NY about 3 months ago. The difference in customer service, responsiveness, and ease of their online system is simply unbelievable. I now wonder how ADP is so successful, and wish we made the change years ago.
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| KC |
5/16/2009 |
I was a customer of Paychex for nearly a year and they provide the worst service, most annoying billing model, and most frequent “Billing Errors” that I have ever experienced. We signed a contract that laid out a price per payroll however, the price we actually paid was always 40-50% more than that price because of “mysterious charges” that kept appearing on our bill, billing for extra payroll that were never processed, and also all the extra fees and surcharges that Paychex adds on that nickel and dime you to death. Every month we spent hours calling multiple times about the “mysterious charges” or extra charges that somehow would appear on our bill 10 out of 12 months during the year. They would always reverse the charges and claim that the error wouldn’t happen again but it always took 60 days (per their contract) for them to credit our account (which means they have our money during that time), it always took more than 2 calls and the next month there was a different “mysterious charge” that they could not explain that would appear on our next bill. I think this is how they make their money because most people probably don’t check their bill and they always try to hide the charge in something that sounds legitimate. Beware of their scam!
Second, if they want to speak with you for any reason, they have this automated computer call you and tell you to call them back. It doesn’t even give you the option to connect right away so you have to hang up and dial back which I guess is to save them long distance charges. Sorry, guys if you want to talk to me, you will have to have a live person pick up the phone and call.
Third, the reporting is decent but they charge a lot for this service and it uses their own software that you have to install. Again, it’s 2008 and everyone expects online access to data and it should be included in the price of the product. You can tell they build this site in 1998 and it hasn’t changed since then so it costs them less to provide electronic access than to print reports.
In conclusion, Paychex revenue model is to scam you out of your money hopefully without you realizing it. They are a company that seems to still be operating in 1998 with all of their efforts being put into printing paper reports and checks and charging the customer extra for any modern technology that saves them money like online reports and electronic deposit. They choose instead to modernize by purchasing automated calling machines to insulate themselves from their customers.
Stay away, they will take your money, overcharge you repeatedly, hold your money for 60 days, charge you extra for services that save them money, and send their automated calling machine after you.
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| HR |
5/19/2009 |
I have never had a bigger nightmare to deal with then when I went with ADP for 2 of my companies' payroll services. This company has made more mistakes than I can even count. Even when they are trying to fix a mistake, they mess that up. This is not a joke when it comes to dealing with taxes, as I've had to deal with their mistakes with the state and local. DO NOT USE THEM! Went with a competitor and have not had a problem. They also gave us a rep we could call all the time, unlike ADP where you speak to someone new all the time.
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| SB Owner |
6/4/2009 |
We have been using Paycycle for a bit over 1 year. It has been just great! So much better than ADP in both use and predicable costs. (They actually charge you exactly what the promise, unlike ADP!) From a utility standpoint, they are easy to setup and use, provide e-mail and on-line paystub access, and very nice reporting. There are definitely a few more steps involved compared to ADP when taking into account tax payments, but overall I spend far less time on payroll than with ADP as I don't have to analyze their paper reports and reconcile seemingly endless charges.
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| Ken Gaebler |
6/5/2009 |
SB Owner, glad to hear you've found a choice that works for you. We use SurePayroll because we think it's the best combination of great technology and great service at a good price. PayCycle is good too, but it's a payroll reminder service, so there are some things that SurePayroll does as a full-service payroll service that PayCycle doesn't do. As for ADP, we've used them in the past and they were fine. They've just been a little slow on the uptake with a simple online payroll service, which is important to us. In any case, thanks for the feedback. It's good to hear what people think about the various payroll services, including the good, the bad and the ugly.
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| PR mgr |
6/11/2009 |
I think ADP is horrible. I worked for a multi-million dollar corp a few years back who FIRED them in the middle of a payroll year because they were so consistently AWFUL. Mistakes... bad customer service, etc. The corp I work for now switched from Primepay (who weren't really THAT bad) because of the fact that we had a few MAJOR problems when we were 'transferring' payrolls and our system went down due to power failures... it was a nightmare. We switched to Paychex who is okay, but we had a HUGE problem with them at one point and they actually gave us a free month of payroll because they screwed up so bad. They are presently switching their website and reports to be more user friendly so we will see how that works out. I think, personally, that no matter what you do, a third party payroll system will ALWAYS have quirks.
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