Understanding The Different Types Of Payroll Services
From simple do-it-yourself platforms to high-end systems and experienced experts, the payroll industry has come up with a diverse range of creative solutions to the payroll process. Having so many options can make deciding which one best fits your business a challenge.
The last thing you want is to pay a lot for payroll services, only to discover they don’t match your business’s needs. For example, you can get caught paying for extra services you don’t want or use, just because a package includes these items.
At EmPower HR, we want to help you avoid paying for what you don’t need when it comes to payroll services — and we’ve put together this handy overview of the various types of services out there to help you make the best choice for your business.
Types Of Payroll Services
Bookkeepers And CPAs
There are accounting and bookkeeping firms that handle payroll processes in addition to doing financial audits. Their con is that they also tend to outsource the payroll tasks given to them depending on their capacity. This can lead to a potential risk of confidentiality and security issues depending on the process. Also, given the vast knowledge across industries and business sizes, they may not know the best advice or support to give you specifically for your personal business needs.
In-House Payroll
This sounds straightforward and convenient as it’s within the organization. However, in-house payroll requires a lot of resources in terms of time, expertise and staffing. And what if there’s an error with regulatory compliance? Your business will bear the brunt.
DIY Software Services
Do-it-yourself (DIY) payroll software is similar to in-house payroll, only without the payroll experts in place. So, you save on the cost of hiring experts in-house, which is the upside. The downside is the increased risk of errors and compliance issues that may arise due to a lack of payroll industry knowledge.
Small Payroll Providers
These providers offer the best of both worlds, as they provide the relevant technology as well as the expertise and personalized services to your specific industry. With this option, you’ll also have a person (or persons) whom you can directly connect with when it comes to payroll questions and needs.
However, some small payroll providers can have limitations, including a:
- Limit on the number of users
- Chance of losing information due to inefficient backup options
- Risk of instability and system crashes
Medium Payroll Providers
As your business grows and expands, so will your payroll needs. As a result, you may need to engage with payroll service providers who work at a greater capacity.
It’s easy to accidentally employ the services of large payroll providers at this stage, so you will need to pay close attention. Most of them offer services in bundles, and you may end up paying for services you don’t actually use.
However, the processes are usually well streamlined, tend to be more thorough, and have many HR service add-ons that will likely be useful. Due to the additional and sometimes complex solutions, they can come with layers of confusion in what they’re providing.
Furthermore, these providers tend to be less personalized as the small payroll providers, as they have a broader scope and more extensive client base. Finding the provider that matches your business is critical.
Large Payroll Providers
As the name implies, large payroll providers are more applicable to sizable organizations with an employee base of more than 10,000. It’ll be more reasonable to consider them as your business continues to expand.
You’ll absolutely love the fact that they provide state-of-the-art technology and top-notch expertise. The thing is, you will lose the personal touch offered by small payroll providers in place of more features and a more versatile approach to solutions.
Understanding the best payroll solutions for your business is one thing, but it is a whole other rollercoaster when you are also growing and expanding. You want to make the right decision for your business today and be ready for growth and expansion tomorrow.
Don’t get carried away rushing off to get an over-the-top service your business won’t need. Taking the time to understand your options, the providers, and the process is essential to ensure you feel confident in this area of your business.