How Do I Pick a Payroll Provider?

You are an owner of a New Jersey Based small business. You don’t have a dedicated payroll manager on your staff. You need ready access to payroll expertise. Here are six questions that will help you select  a payroll provider that is a good match for you.

1. Are You Based in New Jersey?

• New Jersey payroll taxes are among the most difficult in the nation. There are seven distinct payroll taxes levied by the New Jersey Department of Labor alone. In addition, New Jersey payroll deductions do not follow Federal Guidelines for what is tax exempt and what isn’t.
• Here is a test… If they don’t know that employer contributions to Simple IRAs, 403B plans, and Legacy SAR/SEP plans are taxable in New Jersey cross them off your list.

2. Do You Have a Guarantee?

• You are hiring the payroll service to protect you from making a costly compliance error. You want the service to guarantee that if they make a mistake they will pay any fines, penalties and interest charges.
• Here is a secret. If you are using an online service then you are doing most of the work. If you make a mistake w/ an employee set-up, entering a payroll, or processing your tax deposits or reporting the guarantee is void. They didn’t make the mistake, you did!

3. Can I Speak with the Owner if I Have a Question or a Problem?

• You are a small business owner. You should be able to speak with one. You shouldn’t be more than one step away from the owner.
• This is what you don’t want: A service that uses data entry call centers, voice response systems, and online chat support.

4. How many clients have you lost in the last year?

• This is a very revealing question. There are usually only two reasons why clients leave. Poor service or high pricing.
• This is how larger payroll services work. They raise their prices every year. Usually during the summer. It is math for them. They expect some clients to leave but the majority stay and their revenue grows.
• Here is a quote from a PayChex earnings release “Payroll Service segment revenues increased 1.1% from the year-ago quarter to $354.8 million, attributable to a 2.5% growth in checks processed per client and an increase in pricing per check. However, the payroll client-base fell 2.2% from the year-ago quarter.”

5. May I see Your Price List?

• If their pricing is not posted on their website, or they won’t give you a price sheet, then cross them off your list.
• This is why most payroll companies hide their prices. They give you a low rate to sign you up and then raise your prices every year. If their pricing was posted then you could always compare your price to what they give their new customers. If it is hidden you never know if you are getting the same price as their other clients.

6. How Many References Will You Give Me?

• You don’t really expect to call a long list of references but this is why it matters to you. The longer the list the more confident they are that you could select any client and get good feedback. The shorter the list the less confidence they have.

So here it is.. Six questions that will help you pick a Payroll Service Provider that would be a good fit for you.  This isn’t a list of how to compare features. It is a list for how to tell if you will be happy with the service!