time for payroll services?

Right now many of you are hunkering down to do the year end ‘tick and tie’ to validate what should be included on employee T4’s (in Canada) or W2’s (in the United States).  It is a thankless task, will require many late nights and overtime, and god knows what you will find when you have finally reconciled.

is it time for payroll services?

Maybe it is time to transition from doing payroll in-house to payroll outsourcing.  Don’t get me wrong, there will always be the tick and tie because internal controls require you to validate a third party vendor.  But if you set it up right, and keep on top of it during the year, perhaps you won’t be doing so much OT during the winter holidays.  And, if you were going to make the move, the beginning of a year is the best time to do it (vs. mid year when you have to upload all the historical data and verify mid year like it was year end).

So, what should you look for in a provider?

Well, you could go with either Ceridian or ADP (the two ‘go to’ providers) but before you jump into the relationship with them (or others) here are a few things to consider:

• a complete range of services (just in case you don’t go with Ceridian or ADP): make sure they have successfully integrated technology into the process (the last thing you need is more manual processes - the point was to reduce this!); I know this goes without saying but make sure they offer full tax-filing capabilities, including the ability to automatically calculate, deduct, pay and file all taxes including federal, state/provincial and local and provide supporting documentation and reporting; best practices also allow employees to directly access their information through the site; and, of course, direct deposit (stop cutting manual cheques or doing costly wire transfers!).
• a solid reputation in the industry: screwing up payroll is the number one way to reduce morale so make sure that you work with a company that will deliver yet be flexible to your cash fluctuations and understands the specific needs of a small business.
• ease of use: make sure you are comfortable with the user interface and that help is available when you need it (e.g. robust web-based interfaces).  Small business needs are a lot different from the big guy.

OK, as you are pulling late night hours this sounds too good to be true.

How much does it cost?

Of course cost is indicative of your particular needs and how many employees you have.  But I have a client that has fourteen employees and they pay roughly $50/payroll run which is worth it when you think of the peace of mind, reduced reconciliation headaches, direct deposit and T4’s/W2’s that go out on time with confidence.

Just something to think about over the holidays before you enter into the next personal tax year.