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Managers should do their homework before committing to a payroll service

Posted on September 12th, 2011 Read time: 1 minutes

More than 50 percent of small businesses decide to outsource their payroll services at the beginning of each year to create a smooth transition following end-year calculations, Smart Business reports. With 2012 on the horizon, managers may want to consider shopping around for a provider of payroll outsourcing services.

"The key benefits of outsourcing payroll are that (it) is more cost-effective and allows companies to concentrate fully on their core business activities," said Martyn Hart, chairman of the UK's National Outsourcing Association, as quoted by 1st Contact.

Smart Business recommends performing due diligence before committing to a payrolling service. This may include meeting with a variety of service providers to check methods and price to ensure they can meet the company's needs.

Furthermore, can a payroll company provide supplementary business-specific needs, such as 401(k) help, worker's compensation or annual employee tax filing in addition to basic payrolling? How secure is each company's submission methods? Being comfortable with how sensitive payroll data is transmitted can reduce possible legal issues involving employee data in the future.

It may also be helpful to ask around. Seeing which providers other business owners use as their payroll processor of choice may act as a gauge of a service's reliability.  

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