What are the benefits of outsourced payroll providers?

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Glenn,

First you need to look at yourself:

1) Do you have employees in a lot of states? Because Tax Filing is usually along for the ride, the more states in which you have employees the more administrative effort a good payroll processor can alleviate.

2) Are you looking to replace your payroll person? Typically, you still need to give your payroll providor a "point person" to deal with, but they can be less knowledgeable as a payroll person and still do a good job. The justification for outsourcing can also be freeing your knowledgeable payroll person to do other things in your organization.

Second, look at a provider:

1) Depending upon your company size, extremes may not be the best bet: the local guy down the street might sell his book of business or go out of business and probably won't have the technology you need because he is focused on companies with 1-12 employees. The largest vendors are the most expensive and when it comes to service, you are just a number.

2) Also, depending on your size, you may want a report writer: the ability to write an ad hoc report using the fields within payroll.

3) Make sure they offer SaaS (Software as a Service), and make sure the application is easy to use. You do this by not only seeing a demo, but asking for and calling their references. You may also ask them to run you in "parallel": have use of their application while you are still running your payroll the way you are now.

We have more information about how to evaluate potential payroll providers on our site: http://www.best-business-payroll.com/outsourcing-payroll.html

Hope this helps.

In response to David's #1, I'd like to add that there's sometimes a $10-12 additional fee for each additional state, come tax-time. There's a comparison chart of the top payroll companies here http://online-payroll-service-review.toptenreviews.com/

I don't generally like outsourcing, but I think Payroll is the one perfect app for it. Payroll (and HR) laws change constantly. YOUR business isn't payroll and your internal resources really should be running the business. I work with Kronos HRPR and it works both ways. I almost always recommend that they manage their own data and send to the vendor for cutting checks and taxes.

Bryan deSilva
www.improvizations.com

Glenn; This is the bottom line regarding why I outsource payroll:
When you miss a deadline; you'll get fined. You're just one company and you have no clout.
When Primepay (or Paychex, or ADP) misses a deadline, they don't get fined or penalized. They are massive companies and have good relationships with every government agency at every level.
The good news for payroll firms is; payroll is pretty easy. It's a detailed process, but it's also systematic. So payroll companies can systematize the process and do your payroll for very little cost to them.

Payroll processors take a large amount of deadline responsibility off your shoulders, and they do it for a relatively low fee.