When Do I Need Payroll Services?
The top performers in our review are Intuit, the Gold Award winner; ADP, the Silver Award winner; and IOIPay, the Bronze Award winner. Here’s more on choosing a service to meet your needs, along with detail on how we arrived at our ranking of the best online payroll services.
When Do I Need Payroll Services?
Payroll services are designed to help you comply with all of the policies and regulations involved in payroll, taxes and IRS reporting. These services are most useful if you are worried about adhering to federal and state regulations or if your company has been fined in the past for payroll mistakes.
When it comes to managing payroll, you may be using your own accounting software, like QuickBooks or FreshBooks. This kind of accounting software offers the features necessary to help you comply with regulations on your own, but the overall process can be time consuming and complex as you hire more employees. It can be easy to miss things here and there, which can result in hefty fines. You don't want to find yourself in legal trouble because you or your bookkeeper have made a simple mistake when processing payroll. Our articles about online payroll services can help you further understand some of the expenses behind processing payroll in house as opposed to outsourcing it.
You may find that processing your payroll online with a service can bring peace of mind. These services are cost-effective because they help you avoid noncompliance issues and the resulting fines. Purchasing accounting software is much cheaper and can save you money in that regard if you are confident in your own bookkeeping skills. However, having a service handle the reporting for you can save you both time and money if you aren't confident in your skills or when you just don't have the time it takes to process payroll for multiple employees.
The Benefits of Using an Online Payroll Service
Complying with major laws and regulations like the Affordable Care Act (ACA) – which comes into play when you have 50 employees – is one of the biggest benefits of having a dedicated service manage your payroll processing. These regulations typically require you to file certain forms, and if you don't file them correctly, the IRS can fine you. While compliance with the ACA applies to larger businesses, other regulations, like paying your employees on time and correctly, are always required of you, regardless of the number of employees you have.
In addition to federal and state laws, there are lesser-known regulations and other processes involved with payroll that not every company handles on a regular basis. Payroll providers can manage these issues as well to keep your business running smoothly.
Pay Distribution Options
All of the payroll services we reviewed include three options for paying employees: direct deposit, pay cards and checks. If you pay your employees by check, you can pay your employees through any of these methods. However, several states require employees to receive their pay through direct deposit. If those employees don't have bank accounts, you can use pay cards. Instead of cutting a check or depositing money into a bank account, you can load paychecks directly to a card, which your employees then use just like a debit or credit card.
Payroll services know the ins and outs of your state's requirements, and can help you pay your employees in the correct manner. It's best that the provider you hire offers all three options so your employees can choose how they want to receive their paychecks. ADP, IOIPay, Paychex and BenefitMall are the only four companies we tested that offer all three payment options without charging extra.
The best payroll companies offer workers' compensation insurance. All businesses are required by law to ensure employee compensation should anyone be hurt while working.
You can hire a third-party broker to handle this insurance for you, or you can have the payroll services take care of it for you. Companies like Intuit include workers' compensation as part of their payroll service, which means you don't have to hire a separate entity to cover you.
Integration with Other Business Solutions
Payroll is the last step of a long process. Gathering information before payroll can be complex, and many common business solutions integrate well with payroll companies to help the process run smoothly from one step to the next. For example, many time card software solutions automatically convert employee hours into a CSV file. The payroll provider then uses these files to calculate each employee's paycheck.
Most POS systems also integrate well with online payroll services, which is a big help if tips comprise your employees' compensation. Likewise, integration with eCommerce and CRM solutions make it easy for the payroll service to track sales tax and commissions. You need to accurately track and report both sets of data as part of your overall payroll responsibilities.
These are just a few examples of how payroll services can work with other business solutions you have in place to ensure you are reporting payroll properly to the IRS. Each payroll provider we reviewed is willing to create a customized solution for any situation.
Online Payroll Services: What We Tested, What We Found
It's typical for companies to seek out a payroll service as they hire more employees, but outsourcing payroll can be useful no matter how many employees you have. For our evaluation, we posed as a small business with five employees who are paid semimonthly. We compared each provider's equivalent of a full-service package. With these full-service plans, the payroll provider takes care of everything when it comes to compliance and tax matters, and it distributes your pay for you.
Most payroll companies offer similar features. We evaluated each service based on the following four factors:
- The payroll features the service offers
- The fees the service charges for tax-reporting purposes
- The options you have for paying employees
- Customer help and support
Each of the above categories represents an essential part of the payroll process, and each has a profound effect on your and your employees' experience with the payroll company you choose. We ranked each service on our list, measuring its effectiveness in fulfilling each of these four needs for your company. The services we reviewed had no input or influence on our testing, and they were not provided with any results of our testing before publication.
More Payroll Features Increase Efficiency
The features your payroll service provides is important because it influences your ability to process payroll more accurately and more efficiently. For example, reporting features let you track trends within your business and your employees; other features, like employee-tracking functions, reduce errors and maximize your time. Look for companies that offer a variety of payroll features so you have a comprehensive payroll solution. The best payroll companies, such as Intuit and ADP, offer the widest variety of features to meets the needs of many businesses.
Another important feature online payroll services had to have is that they had to offer easy ways to access your payroll dashboard through mobile devices like tablets and phones. Most of the companies we reviewed offer mobile access to their interfaces. Typically, mobile access is through a web browser on your phone or a downloadable app.
Paying Fewer Tax Expenses Frees Funds
Payroll companies charge you based on a variety of different considerations. When you initially get a quote, it's typically based on the number of employees you have, the methods through which you pay them, and whether or not employees reside in the same state. While these are standard considerations, there are other expenses you might have to pay based on your situation.
Businesses are required to report tax information every year, and most payroll companies will calculate, file and deposit federal and state taxes for you. In addition, businesses are required to report year-end tax information and provide forms like W-2s and 1099s to employees. Some companies, like MyPayrollHR, include W-2 and 1099 processing as part of its payroll package. Most companies charge extra for the service.
Good Support Helps You Avoid Headaches
Payroll is a time-sensitive process, and you don't want to pay government fines for not paying your employees on time. Customer support is an important factor. If you can't get the help you need when you need it, you may introduce errors into your payroll, resulting in fines from the IRS.
All of the payroll services for small business we tested provide support through the standard support channels like phone and email. Only a few, like OnPay and APS, provide support via live chat. Live chat can be incredibly helpful when you need quick answers to simple questions, but if you have more in-depth questions, it's best to call.
You should also have access to online resources, like forums and user communities. Intuit has a strong online presence; it offers up-to-date training videos and helpful guides.
Finally, the payroll company you choose should provide a dedicated account specialist. This account specialist is your go-to point of contact for any problems you encounter. Not many payroll services provide dedicated account specialists, but those that do – like BenefitMall and Paychex – offer a service that is very valuable. You may also want to find a service with 24/7 support so you can always get support, even outside of normal business hours.
Online Payroll Services: Our Verdict & Recommendations
During our research and testing, the top performers quickly emerged. Intuit earned high marks for its comprehensive payroll features, inclusive tax-related pricing, multiple employee payment options and accessible customer support. Plus, it has a high level of flexibility for all kinds of situations.
ADP offers a high level of support, and you can expect to have your problems solved in a timely manner with this company. IOIPay gives you the option of paying your employees through multiple means: direct deposit, pay cards and checks. Paychex offers local customer service. It has offices throughout the U.S. This provider even sends a representative directly to your office to get you set up (if there is an office in your area).
Each online business payroll provider can provide you with a quote within minutes. This quote includes the services included in each package, but it can also give you a better idea of what you can expect from that service. We advise getting quotes from multiple online payroll providers. Doing so will help you compare service and features so you can make the best decision for your company and employees.
Contributing Reviewer: Karina Fabian