I’m Ready to Hire Employees: How Do I Setup Payroll?

So, it’s happened. You've made it. It’s time to hire your first employee (or five, twenty or more). But before you add an employee to your startup’s payroll,...

So, it’s happened. You’ve made it.

It’s time to hire your first employee (or five, twenty or more).

When you start a business, hiring employees can be a rite of passage; a sign that the business is really getting off the ground. But before you add an employee to your startup’s payroll, it is important to think about what that payroll is going to look like.


Should I Manage Payroll or Outsource It?

It used to be that anyone starting or running a small business had two choices when it came to paying employees: manage the process in-house, using over-the-counter payroll software, or outsourcing the task to a payroll services provider.

Today, successful entrepreneurs realize that dedicating time and resources to in-house payroll management can be cumbersome. Ultimately, it can detract valuable energy you’re your company’s core focus. Instead, it is far more common nowadays to partner with a payroll services provider to handle this task.


Assess your Business Needs

When you’re ready to set-up payroll, selecting the right payroll services provider for your company is vital. While it may seem a bit of a nuisance, taking the right measures now will save a lifetime of headaches in the future.

There are a few key determinations that need to be made when figuring out the right fit for your small business:

1. How many employees will need to be paid?
2. How complicated or simple is my payroll?
3. Do I need a scalable solution to accommodate rapid growth or seasonal staffing?
4. In how many states do we have employees?
5. How technologically-sophisticated is our workforce and will they use the system to view their payroll and human resources information?
6. Do we need to integrate the payroll system with other applications?

You can easily search online for a payroll service, or use a website to seek out competitive bids. As a small business owner you might find the cheapest deal this way, but could easily end up using an out-of-state provider that is not familiar with specific state regulations.

Going with the cheapest option may also mean you sacrifice customer service, or worse, accuracy in processing.


Finding the Best Payroll Service Provider

The best way to find payroll services is through referrals from other businesses or from business partners (accountant, banker, etc.). Through referrals, you can be confident you are meeting with reputable businesses that will take good care of their customers.

Some questions to ask anyone providing a referral include:

1. Overall, how satisfied are you with your current payroll service provider?
2. Who else have you used and why did you switch?
3. How responsive are they when you have a question or need help?
4. Are there any services that they don’t offer that you wish they did?
5. How flexible are they to accommodate any unique requirements?
6. How will I be billed for services?

Once you have developed your list of potential payroll companies, a number of factors should be evaluated prior to vetting each of them individually.

Find out more later this week, as I share how to vet your new payroll services provider, the types of questions you should ask and what to do once you’ve found the perfect fit for your business.


Jason Maxwell is founder and president of MassPay Payroll Services, based in Beverly, MA. Founded in 2004, MassPay offers small- and mid-sized business owners a full suite of services to support their payroll, insurance and human resources needs, including web-based and paperless payroll; workers’ compensation; group health, dental and property and casualty insurance; human resources services; and time and attendance administration. Learn more at www.masspay.net.


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