Paying Employees: How to Outsource Payroll Services

If you’ve hired employees – congratulations! Now it’s time to ensure your new recruits get paid.

Last Update: April 25, 2015

If you’ve hired employees – congratulations! Now it’s time to ensure your new recruits get paid. Earlier this week, I shared two essential steps to set up and manage payroll for your small business.

Now that you’ve decided to outsource payroll management, it’s time to assess your business needs, locate the best providers and learn how to manage the process.


Selecting a Payroll Service Provider

One of the most important things to consider is the level of interaction you want from your payroll service provider. It may seem like payroll is a “set it and forget it” component to running a business, but the truth is that a number of issues can arise as part of the normal course of running your company.

It is critical to understand the level of involvement and customer service your provider is going to give you. Make the wrong selection for your business, and you could end up throwing your own resources at these unforeseen items that need resolution. Your people and time should be focused more on your company’s core competencies. A good customer service team will work with you to save you time, money and frustration, should issues arise.

It is also vital to consider the industry in which your business operates and consider any specific needs that need to be factored into payroll. For instance, restaurants have some unique reporting needs such as tipping that some payroll companies handle better than others. The trades (construction, electrician, etc.) also have specific needs like job costing, certified payroll and others.

While most payroll companies will claim to have the expertise to handle these requirements, there are definitely some that are better than others. Find out if they have direct experience by asking who their clients are in specific industries.


8 Questions to Ask A Payroll Services Company

Once you have determined your payroll needs and vetted some options through conversations with business peers, it is time to go ahead and evaluate payroll service providers.

In those meetings, there are some questions worth exploring:


  1. When I have questions, who do I call?
  2. How many clients are managed by each client service representative?
  3. Where will my paychecks and reports be printed and sent from?
  4. What other services are offered besides payroll services, such as business insurance, human resource services, background checks, time and attendance systems, etc.? If these services aren’t offered, is the system compatible with providers of the services?
  5. How will I be trained on the system?
  6. How do I provide my payroll information to my accountant?
  7. How often does the system get updated and who is responsible for handling the updates?
  8. What if we have employees in multiple states?


If technology is important to you and your employees make sure to see a demonstration of the tools that both you and your employees will access. Ask about the training and ongoing support for the technology you will be using. You might want to speak with some existing clients that are using the technology as well, to see how user-friendly it is both for every-day use and long-term.


Evaluating Your Payroll Service Provider

Finally, once you have selected a payroll service provider, it is important to always evaluate how the process is going.  Periodically, it would not hurt to consider the following:


  • What new services does my service provider plan to roll out?
  • What services are offered that I am not currently taking advantage of?
  • If we continue to hire will my payroll system be able to grow with me?
  • Do we have any new needs that my service provider cannot meet?
  • Are we still satisfied with the quality of our service provider?


Hiring employees is an exciting time for any startup or small business. It means growth, and that growth usually coincides with success. With some due diligence, the process behind instituting or maintaining payroll can be easy and help facilitate success.

Not being mindful of finding the right payroll services provider, however, can result in valuable time and energy lost (and not to mention, some angry employees and potential tax implications if things are not processed smoothly).


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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