Are you a “DIY” type or the kind of business owner who prefers to invest in the best?
There are many different types of payroll services. Trying to figure out what kind of service your company actually needs is challenging.
And the last thing you want to do is pay a lot of money to a payroll service only to find out they can’t do what you really need them to.
Even worse, you get your needs met, but you’re still overpaying because they sold you a bunch of services your company can’t use.
Doing it yourself brings a host of potential problems, too.
Understanding the different types of payroll services is crucial. It will help you better choose a payroll service that best fits you and your company.
The Different Types of Payroll Services
In order to choose the right payroll service, you need to determine what type of business you have and what your specific needs are. There are, however, similar benefits to all payroll software and services.
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- Time savings: Payroll services handle tasks such as calculating and distributing employee salaries.
- Reduced errors: Automated payroll calculations prevent human error.
- Assist with compliance: Payroll providers often file payroll taxes, file necessary paperwork, and assist with state compliance and federal laws and regulations.
- Tax assistance: Payroll services ensure all payroll taxes are paid and filed on time. Some even guarantee it by taking on financial penalties if they fail to file on time.
- Employee self-service: Many providers offer online portals that allow employees to view pay stubs and other payroll information.
- Generating reports: Get the reports you need, such as summary reports, employee pay history, and taxable wages.
Depending on how much you want to outsource, you will need different levels of service. Does completely outsourcing payroll make sense for your business?
Doing this will give you more time and resources to devote to other areas of your business.
But if you’re a two-person team, maybe you want to handle payroll yourself. Still, it takes a lot of time and effort to do it successfully.
Full disclosure: We are a payroll service provider focused on delivering hassle-free payroll processing for our customers.
If your company is a small business in need of payroll services, we would love to show you how we’ll save you time, money, and a whole lot of stress. You can reach out to us here; we would love to meet you.
#1: In-House Payroll
Some companies actually have their own department that handles payroll in-house. Obviously, this takes a lot of time, knowledge, and staffing resources.
There are also more risks involved, especially when it comes to regulatory compliance and taxes.
Typical companies that manage payroll in-house are large enterprises with thousands of employees.
#2: Bookkeepers and CPAs
Some bookkeeping companies and accounting firms handle payroll for their clients. However, most of the time, payroll is not their sole focus.
When clients ask about tax law changes or other payroll-related questions, as much as you want to help, your time is better spent elsewhere.
Many bookkeepers and CPAs actually outsource their clients’ payroll so they can retain their main focus on accounting.
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#3: DIY Payroll Services
For companies that just need the tools to help them do payroll themselves, online software options fill this gap. This is kind of like doing payroll in-house but without the full staff of payroll experts.
Two of the most popular DIY payroll services are Intuit and Gusto.
For some companies, this DIY option is good enough. However, there are some downsides, like an increased risk of human error, and failure to comply with labor and tax laws.
This brings up another big drawback: the lack of accessibility to experts to ensure you’re doing everything right.
Even if the software company guarantees strong support, check their customer reviews to see if they’re actually delivering on that promise.
Just be careful, do your due diligence, and make sure you want to shoulder payroll before going too far down this road. In many cases, the next couple of payroll service types might be a better fit.
#4: Small Payroll Bureaus
Small payroll bureaus offer much more personalized service than larger payroll companies.
This type of service usually operates with only a handful of employees and manages a limited number of companies’ payroll.
The possible drawback, although not always the case, is a lack of industry connections or integrations. When it comes to technology, they aren’t always up-to-date.
However, if you’re a small business and need a little bit of help, the small payroll bureaus may be the type of payroll service you should check out first.
#5: Small Business Payroll Specialists
For small businesses that need bigger company performance, small business payroll specialists are the best place to start.
This type of payroll service is equipped with cutting-edge technology and enough staffing to handle a larger number of client accounts while still offering personalized service and strong industry connections.
This is where ConnectPay fits in compared to all other payroll services.
We have the technology, expertise, and staff to manage payroll like the big-box providers do. But, we focus like a laser on the small business world, giving highly personalized service.
Lisa Tugal, one of our bookkeeping partners, said it like this:
“ConnectPay delivers big company performance while maintaining small company value.”
- We’re personal - our clients know us.
- We’re local - we probably shop at your grocery store.
- We’re reachable - we never send a call to voicemail during business hours.
- We’re reliable - our clients enjoy a zero tax fee or penalty guarantee.
If you would like to talk to us about your payroll needs, click here to schedule a call at your convenience.
#6: Mid-Sized Business Payroll Providers
When businesses grow beyond the small business stage, their payroll needs change. As their employee numbers scale, they need a payroll service to handle that level of detail and data.
Paycor and Paylocity are great examples of payroll providers focusing on mid-sized to large businesses.
There can be some growing pains at this stage.
We’ve seen many companies just moving into the mid-sized business level switch to payroll services from a larger provider.
Once enrolled, the familiar story is that they struggle to utilize all the services they purchased.
And, since most offerings are bundled, many companies overpay for payroll services.
Make sure you are getting the level of services you’ll actually use.
If you feel your company is outside of the small business stage, it may still make sense to go with a small business payroll specialist provider until you’ve grown large enough they can no longer accommodate the solutions you need.
Then, it should be safe and budget-friendly to scale into more services.
#7: Big-Box Payroll Providers
Just like mid-sized businesses, if you’re not a larger enterprise, there will be some growing pains as you transition into the size of a company that big-box providers like working with.
As your company grows larger, you will lose the personalized service and move into a more one-size-fits-all kind of world.
These payroll providers usually feature a vast suite of features and services, with larger upsells and, sadly, siloed departments.
However, they have the workforce and the technology to service large enterprises, and their technology usually integrates with just about anything you need.
ADP and Paychex are great examples of payroll services that fit enterprise-level businesses.
Different Types of Payroll Services: Which is Best For You?
The types of payroll services that fit your business directly relate to the size of your company.
And your company size matters. A small, local business won’t get personalized service if they try to work with a big-box provider.
On the flip side, a gigantic enterprise is typically not a good fit to work with a small payroll bureau.
With that said, there is more to choosing a payroll service than just finding one that serves your business size.
There are other factors to consider before signing on the dotted line.
You want to make sure you’re paying for the right thing and that you actually get what you pay for. Here’s a handy list of questions to ask any provider you’re considering partnering with: How to Choose a Payroll Service: 7-Step Evaluation Checklist.
If you’re a small business and want a highly personal yet full-featured payroll provider, we would love to have the chance to earn your business. You can schedule a meeting with us at your convenience, and we can’t wait to talk with you about your payroll needs.
