Thursday, 20 February 2014


No one likes to change how they do payroll. It's a bit like changing your dentist or doctor. Frankly it's a pain. I think I can give you some ideas on how to make it much less troublesome. Here are some tips to 
help you through this challenge.


While a necessary part of any business, let there be no doubt that payroll can be a headache. Add on a stiff penalty for failing to file a tax payment, or being a little late and the headache can turn into something that your favorite pain-killer cannot even fix! As with all outsourcing, choosing the right payroll services provider (PSP) can provide a less expensive, simpler means of paying your employees, filing your taxes, and performing a host of other duties. However, if you select the wrong provider it can be one of the most frustrating experiences you will ever have in your business.  

Why keep payroll processing in-house?
  • Some business owners believe in-house processing to be more cost-effective than outsourcing.
  • Often business owners are protective of wage information. 
  •  Sometimes just not knowing how to find a good payroll service provider may be the reason.   
The Reality!
  • Smaller firms with a stable, salaried staff and minimal changes in tax obligations may well be better off processing internally. It can certainly be more convenient and efficient if your needs are straightforward. Many however, ultimately discover it's not all that inexpensive and that Time Is Money!
Beware Hidden In-House Processing Costs
  • Mistakes due to lack of up-to-date knowledge on payroll procedures.
  • Mistakes from less then up-to-date payroll software.
  • Time necessary to keep up to date on information, laws, software, etc.  
  • Late payments result in monetary penalties.
  • Employee turn-over due to mistakes on employee checks.   
When To seriously consider whether to Outsource:
  • When you want ease of mind that you and the IRS won’t meet under negative terms. 
  • When you want to avoid a tax penalty that can easily affect your bottom line. 
  • When you have hourly employees and/or frequent changes to payroll information.
  • When you don’t want to track and reconcile changes in personnel, deadlines and tax requirements on an on
    going basis
  • When you figure out that you will save the company money by doing what you do best
  • When you have payroll taxes for multiple states. When you must pay someone internally and maintain their training to keep up-to-date and have a backup person to take over should they become ill or leave
Basic Payroll Services To consider 
  • Calculation of payroll and tax obligations for each employee.  
  • Check printing and delivery. 
  • Management reports.  
  • Quarterly and Annual tax form preparations.  
 Selecting A Payroll company

  • Unlike other services you may use, you will communicate regularly with your payroll provider. Obtain a clear commitment to a high level of “personalized” customer service and assurance that you will not be dealing with some “sales” representative, but with someone who is familiar with your account and handles it regularly. 
  • Request a number of client references, including some that might have had problems that were resolved. Call these references and discuss customer service specifically. If they seem delighted, ask a simple question: “If there was one thing you wish they did differently, what would it be?” Don’t even consider a provider who will not provide references 
  • Thoroughly review the services you require with the potential providers. 
  •  Look for providers that are within reasonable driving distance, allowing you to pick up checks if an emergency arises. 
  • Determine who is responsible for penalties due to late or non-filed tax liabilities 
  • Find out if the provider “impounds” tax payments. This means that they move tax liabilities, along with payroll amounts, from your account to theirs prior to due dates.  Confirm that local or city payroll taxes are calculated and how they are paid?.
Questions For Those References
  • How responsive is the provider to your questions? 
  • Have you had any problems with accuracy? 
  • Have you used another payroll service? If so, why did you switch? 
  • If you had it to do over again, would you chose the same company?  
Communicating Your Payroll Information
  • Nothing in your relationship with a payroll service provider is more critical then when, how and why you communicate with them regarding regular payroll input, changes, last minute fixes and more. Spend a lot of time when reviewing your potential providers, talking specifically about these issues. 
  • Will information for each pay period be sent via a telephone call, fax, email, remote entry or other means? Are they flexible to meet your needs? The “traditional” method of the employer calling the information to a service representative offers the least flexibility as it means the two of you must find a mutually agreeable time for both and must do so each payroll period. What happens if you get tied up with a profitable customer and miss the time? Are there any penalties?
  • While fax machines provide a more flexible method, they do also have some security issues. Review procedures regarding this method to avoid problems. 
  • Remote entry may sometimes cost more but can be an effective means of entering data because you do it all yourself.  
  • Internet entry is still another way of entering data and communicating.
Filing Electronically
  • If the provider is going to file using the Electronic Tax Payment System (ETPS), is there any cost involved. 
  • If you are going to use the ETPS system yourself, what assistance will be provided by the payroll provider and are there any fees involved?  
  • If you are going to use the ETPS system yourself, what assistance will be provided by the payroll provider and are there any fees involved?
  • Many providers now have “remote entry” or other methods that can include Internet entry within secure access. These services often have additional costs, but can be very cost effective as it allows the employer to enter payroll data 24 hours, 7 days a week, and/or make last minute changes easily.
check Their Pricing check Their Pricing 

  • Be aware that payroll services are competitive and reflect local conditions. The typical basic service includes a per employee per month (PEPM) payment , PLUS a base amount or one time set-up cost . Generally slab price(consolidated cost) typically have higher costs than PEPM, however annually the overall costs are less. 
  • BEWARE of hidden costs(viz.cost for any customize report,BCP/DR,Data protection etc) that get “overlooked” . Once a price proposal has been issued, request that the providers specifically state that there are “no other costs involved other than those shown in their proposal and/or in other literature provided and clearly shown.”

Review carefully with each provider: 

  • Their individual costs for any and all additional services. 
  • Tax filing fees. 
  • Direct Deposit fees (typically a per payroll period, plus a transaction cost). 
  • Setup fees, for initial setup, adding and/or dropping employees. 
  • Fees for updating or adjusting employee information.  
  • Any additional fees charged for anything during the year. There should be NO SURPRISES!  

  • Pricing for services is frequently negotiable. However, it’s important that you do your homework. Some providers have low cost basic services but are expensive with add-ons such as direct deposit, or stuffed envelopes or delivery.
  • Others may have a higher base cost, but their add-on features are less costly. You must be certain that you
  • know what you want first and then provide each potential payroll source with the same exact list of what you need in the way of features. 
Ask these Important Questions  

  • What does your basic service include? 
  • How quickly can you re-run a payroll if there is a mistake? 
  • How long does the average client stay with you? 
  • If I use your tax filing service, do you cover the penalties and/or interest charges? 
  • Do you provide filing assistance for local taxes? 
  • What is the cost to file taxes for multiple states? 
  • What is the cost for your service for one year, including year-end W-2 forms? 
  • How long are these rates in effect? What rate increase should I expect after that? If there are payroll data mistakes, How long will it take to reconcile the errors and what will it cost?  
Some important Final Tips before Making Your Choice
Look for a stable provider: If a firm's only business is payroll, make sure to check the number of clients it supports and look for payroll service providers who have been in business for some time. This does not translate into “the more clients the better.” The large national payroll providers have thousands of customers, yet historically they rank much lower in customer satisfaction surveys, due primarily to the fact they just do not historically provide that extra “personal touch” that most business owners want and often need. Double-check the math when switching:Transitioning to a new payroll firm rarely occurs without glitches. Be especially thorough in reviewing the first paychecks issued through the service as well as the money paid to cover tax obligations.
Watch prices over time:Do not be swayed by services that waive charges upon sign-up. Often rates go up or harges start accruing after six months to a year of service.
  • Understand that, even though you have a payroll provider doing your payroll, it’s your business and you need someone you can trust to do it right and when it’s not right, they will solve the problem first and then haggle over who was at fault!

Paysquare has made significant investments in technology. With intelligent use of advanced tools and leveraging years of experience, we deliver accurate and timely payroll consistently. Paysquare has helped its clients to bring down their costs incurred on payroll processing.
In case you are facing similar challenges, we will be able to provide an efficient solution to meet these requirements for your company.
Check out our short video on Hidden costs of managing payroll in-house and I am sure you would want to set up a discussion to explore more.Please feel free to write me me to discuss it further. 

-Amit Kumar
+91 7755 903 862

Courtesy : Open Source


  1. As days are progressing, Importance to HR policy is increased a lot , and biggest carrier if pay roll. Correctly said most of employer manage it in house but now time has changed the requirement of PayRoll services In India

  2. Hi thanks i personally like your blog and also would like to share about the payroll service provider in India

  3. Nice article and it will surely help lot of peoples in India to get travel assistance. I loved to travel and always book discounted yatra tickets by using coupon codes from