Payroll Services

By Dylan Mazeika

When first starting a company, the new owner is concerned with getting the revenue stream generated, the sales force on the street or the marketing initiated, and staying afloat until the cash flow is positive and robust. Generally the employees that are hired would be considered 'essential employees' to the business plan. Hiring someone just for payroll, payroll taxes and tax forms is an unnecessary luxury for the start-up.

Thankfully there are payroll service firms that are inexpensive and fit the needs of the new business. The CEO or owner will not have to worry or stress about compliance, laws and issuing checks. It can all be handled for him.

What is a payroll service firm?

Payroll service firms are accounting firms, often run by certified public accountants (CPAs), that process the payroll of other businesses, in entirety or in part. Most of their clients are small companies that cannot afford to have a full-time payroll department of their own but are large enough to require one.

Some of the more popular payroll service firms are PrimePay, TimePlus, and Oasis. When looking at payroll services for start-ups, payroll service firms are a good option because they typically provide these five services:

1. They print employee paychecks on behalf of the client company.
2. They pay employee salaries and wages by bank deposit.
3. Quarterly and annually, they file payroll reports.
4. On behalf of the company, they calculate and pay federal, state, and local taxes.
5. They print and file employee's year-end tax documents.

What to look for in a payroll service firm

As a start-up business, you will want to reduce your overhead and concentrate on achieving your business goals. When choosing a payroll service firm, you should focus on:

Good track record: Choose a payroll firm that has a good track record of paying employees, filing tax forms, and paying taxes on time. Local business associations and small businesses in your area are good sources for information about reputable payroll services. Preferably, the firm should also have a good track record of saving its clients money on taxes and penalties. Give priority to firms whose software is geared toward payroll services for start-ups.

Payroll processing software: There are many kinds of payroll software, such as Check Point HR, CompuPay, SurePayroll, and Paychex. It is particularly important to remember that each has its own strengths and weaknesses, so compare service features against cost.

Cost of payroll services: Since the main reason for outsourcing payroll is to reduce overhead costs, choose a firm with an affordable pricing scheme. Do not buy services that you do not need, and make sure the firm will not use your tax money to earn interest (a common practice with many large firms).

Pricing

SurePayroll will process payroll in three steps plus calculate, file and pay federal, state and local payroll taxes for you. For a start-up employer with 10 employees on a bi-weekly payroll the cost would be $49.45 per payroll. There may be additional charged for paper checks.

Based on five employees paid on a bi-weekly basis companies like PayChex could be as low as $29.96 per month and ADP as high as $159.57. It all depends on the exact services needed. PayChex charges an additional $10 per month for state taxes and ADP has no state surcharge.