Building the Ultimate Payroll Solution: A Vendor’s Vantage Point
Choosing the right payroll solution for your organization can be a daunting decision, so here’s a simple guide to help you ask the right questions of a vendor and decide which solution is the right one for your payroll needs.
Who Are You Paying?
This is a simple question with many answers, but it will help you check off many of the core features a vendor’s platform needs. For example, it should have a system that can easily handle recordkeeping and payments if you’re paying both employees and contractors. For contractors, make sure you can e-file 1099 forms with the IRS and have copies sent to the workers themselves. For employees, you’ll want easy automation to get salaried or exempt workers paid, plus an integrated timecard system for hourly or nonexempt workers. Next, think about benefits and how your system will need to handle the garnishments and deductions you need to track, as well as help you to stay on top of the latest local, state, and federal laws and regulations.
Errors on paychecks aren’t only a legal risk. A recent survey by QuickBooks found that 52% of the employers surveyed are finding it harder to retain skilled workers right now, while 42% say they are finding it harder to hire skilled workers. It’s more important than ever to make sure you have a payroll solution that helps you get your company’s payroll right and keeps workers motivated.
How Quickly Do You Need to Pay Employees?
Direct deposit is a standard feature in many vendors’ payroll systems, but do you need next-day deposits or same-day deposits? For same-day deposits, check to see if the vendor has any additional charges. The benefit to you is that you can get more time to run payroll. The benefit to your company is that it can hold onto the money longer, which may help with cash flow. If you’ve always pushed for time, automation is another feature to consider for your payroll solution—especially when coupled with a great interface by the vendor. Having everything clearly laid out with the option to quickly review and make edits will save time every pay period.
Do You Want to Automate Taxes, Forms?
Having your ultimate payroll solution automate taxes and forms for you could save time and reduce your stress level, too. The vendor’s software should also be able to take care of this at year-end, meeting both the IRS requirements and your employees’ needs. If you don’t want to email tax forms out at the last minute, another feature to look for in your vendor’s payroll solution is an employee portal where people can get their latest forms whenever they need them.
Can You Get a Guarantee on Payroll Taxes?
Employees will be the first to tell you when something’s wrong with their paycheck, but will they be checking for tax errors, too? Probably not, and these types of errors are something you’ll want to avoid at all costs.
Employment tax violations cost U.S. businesses more than $6 billion in 2020, according to the IRS. Therefore, combining good processes with the right payroll solution can minimize that risk. First, it helps to ensure your calculations are correct up front. Second, if something does go wrong, some vendor systems offer a guarantee against tax penalties. With this guarantee, the provider will pay your fees plus interest, up to a certain amount, if you get an IRS penalty. That’s a great thing in a vendor’s ultimate payroll solution.
What Integrations Do You Need?
There’s nothing worse than having two sources of data, especially when there’s no easy way to keep them in sync. One of the most important integrations for payroll is with your accounting software. The other is your time tracking system. When it comes to timecards, “garbage in, garbage out” has never been truer. It can be a daily risk if you don’t have the right vendor systems and procedures in place.
If your employees are not recording their daily hours in the moment —including breaks—it’s going to be almost impossible for you to pay them what they are owed. Some vendor payroll systems come with fully integrated mobile apps, which employees can carry with them at all times on their phones. Putting more control in the hands of employees and their managers should mean fewer headaches for you on paydays. It’s in everyone’s interest to have a solution that makes it easy for people to clock in and out, to quickly fix errors on timesheets, and for managers to approve. Good apps that vendors supply are great at facilitating this, and all that data can flow straight to you. That’s an ultimate payroll solution!
Do You Need HR Support?
Increasingly, payroll systems offer support for HR services and employee benefits. While 401(k) and health insurance features may come as standard in a vendor system, the ultimate solutions also offer personal HR advisors who can help you create custom handbooks and workplace policies. Another consideration is workers’ compensation. If you need this for employees, your vendor’s payroll solution should be able to provide it for you from the same interface. If you don’t know if you need workers’ compensation, then that extra HR support in your vendor’s ultimate payroll solution might come in handy.
Will Your Payroll Solution Grow With You?
The software you choose will likely cover all 50 states as standard, so expanding domestically should be no problem. If the business is expanding overseas, some vendors have custom products in other countries which are built on the same platform. But, of course, a bigger payroll isn’t the only sign of a growing business. Perhaps you’re becoming more reliant on customer relationship management software or a dedicated billing system. If so, it’s a good idea to check if your organization’s accounting and payroll platform has all the integrations you need for this process. Similarly, if you need to run job costing reports, do you have all the features you need for this—to include the way time is recorded, and labor costs are allocated? Some vendors’ payroll and time tracking systems are built for this while others may require an app integration. Know this as you look for your ultimate payroll solution.
When Should You Switch?
If you’re thinking about switching to a new vendor’s payroll system, you might want to wait until the start of the new year, so you don’t have to import your year-to-date information. But you don’t necessarily need to wait, because when you set everything up in the new system, you should be prompted to upload the information you need. The most important things to focus on when building your ultimate payroll solution are the people who will be using the systems you choose and the wider benefits they bring to you and your business.
Simon Worsfold leads data communications for QuickBooks, looking at the big trends affecting small businesses around the world and how they react to them. Before QuickBooks, he worked at TSheets. The views expressed in this article are his own. This content is for informational purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business.