The top performers in our review are Intuit, the Gold Award winner; ADP, the Silver Award winner; and IOIPay, the Bronze Award winner. Here’s more on choosing a service to meet your needs, along with detail on how we arrived at our ranking of the best online payroll services.
When Do I Need Payroll Services?
Payroll services are designed to help you stay in compliance with all of the policies and regulations involved in payroll, taxes and IRS reporting. These services are most useful for your company if you find yourself worrying about staying in compliance or if your company has been fined in the past for making payroll mistakes.
When it comes to managing payroll, you may be using your own accounting software, like QuickBooks or FreshBooks. This kind of accounting software offers the features necessary for you to meet payroll compliance regulations on your own, but the overall process can be time consuming and complex as you start to hire more employees. It can be easy to miss things here and there, which can result in you having to pay hefty fines to the IRS. You don’t want to find yourself in legal trouble because you or your bookkeeper have made a simple mistake when processing payroll. Our articles about online payroll services can help you further understand some of the expenses behind processing payroll in house instead of outsourcing it.
In the end, you may find that online payroll services bring peace of mind and are cost effective because they help you avoid noncompliance issues and the fines that come with those issues. Purchasing accounting software is much cheaper and can save you money in that regard if you are confident in your own bookkeeping skills. However, having a service handle the reporting for you can save you both time and money when you aren’t confident in those bookkeeping skills or when you just aren’t available to spend the increasingly longer time it takes to process payroll for multiple employees.
The Benefits of Using an Online Payroll Service
Being compliant with major laws and regulations like the Affordable Care Act (ACA) – which comes into play when you have 50 employees – is one of the biggest benefits of having a dedicated company manage your payroll processing. These regulations typically require you to file certain forms, and if you don’t file them correctly, the IRS can fine you. While compliance with the ACA is only required if you have over 50 employees, other regulations like paying your employees on time and correctly are always required of you, regardless of the number of people working for you.
These regulations and compliance laws are all important because they apply to every company, which is why payroll services are important for any company with multiple employees. However, there are lesser-known regulations and other processes involved with payroll that not every company handles on a regular basis. Payroll providers take care of these as well in order to keep things running smoothly.
Pay Distribution Options
All payroll services we reviewed include three options for paying your employees: direct deposit, pay cards and live checks. If you pay your employees by check, you can choose to distribute them in any of those three methods. However, several states require employees to receive pay through direct deposit. If those employees don’t have bank accounts, you can choose to use pay cards. Instead of cutting a check or depositing money into a bank account, you can load paychecks directly to the pay card, which your employees can then use just like a debit or credit card.
The payroll service you hire knows the ins and outs of your state’s requirements when it comes to the ways you pay your employees, and it can help you pay your employees in the correct manner. It’s best that the provider you hire offers all three options so your employees can choose how they would prefer to receive their paychecks. ADP, IOIPay and BenefitMall are the only three companies we tested that offer all the payment options without charging extra.
Worker’s Compensation
The best payroll companies offer workers’ compensation insurance in their services. All businesses are required by law to ensure employee compensation should anyone be hurt while working. You can hire a third-party broker to handle this insurance for you, or you can have the payroll services take care of it for you. Companies like Intuit include workers’ compensation insurance as part of their payroll services, which means you don’t have to hire a separate entity to cover you.
Integration With Other Business Solutions
Payroll is the last step of a long process. Gathering the important information for payroll can be complex, and many common business solutions integrate well with payroll companies to help the process run smoothly from one step to the next. For example, many time card software solutions automatically convert the hours employees worked into a CSV file. The payroll provider can then use these files to determine how much pay each employee should receive.
Most POS systems also integrate well with online payroll services, which is a big help if your company depends on tips as part of your employees’ compensation. Likewise, integration with eCommerce and CRM solutions makes it easy for the payroll service to track sales tax and commissions. You need to accurately track and report both of these groups of data as part of your overall payroll responsibilities.
These are just a few examples of the ways payroll services can work with other business solutions you may already have in place to ensure you are reporting payroll properly to the IRS. Each payroll provider we reviewed is willing to create a customized solution for any situation.
Online Payroll Services: How We Tested, What We Found
It’s typical for companies to start looking for payroll services as they start to hire more employees, but outsourcing payroll can be useful no matter how many employees you have. As we called different payroll providers, we gathered information for companies with five employees. We received quotes for services as if our company had five employees, paid on a semi-monthly basis. We compared each provider’s equivalent of a full-service package. With these full-service programs, the payroll provider takes care of everything when it comes to compliance and tax matters, and it distributes your pay for you.
Most payroll companies offer similar features, so we found it important to differentiate between services based on four considerations: the payroll features each company offers, the tax expenses each company pays, the options you have through which you can pay your employees, and the kind of help and support you can expect to receive. Each of these categories represents an essential step in the overall payroll process and has a profound effect on the way you and your employees interact with the company you choose. We ranked each service to measure its effectiveness in fulfilling each of these needs – payroll features, tax expenses, payment options, and help and support – for your company. The services we reviewed had no input or influence on our testing, and they were not provided with any results of our testing before publication.
More Payroll Features Increase Efficiency
The features each payroll service provides is important because those features help you run payroll in a more efficient manner. Things such as reporting features let you track trends within your business and your employees; whereas other features, like employee tracking functions, help you better serve your employees. While you look for the right payroll provider for your business, look for companies that offer a wide variety of payroll features so you can have access to the most comprehensive solution. The best payroll companies, such as Intuit and ADP, offer the widest variety of features to fill the needs of many business models.
We found it important that online payroll services offer easy ways to access your payroll dashboard through mobile devices like tablets and phones. Most of the companies we reviewed offer mobile access to their interfaces, which is important if you’re always on the go. Typically, mobile access can take place in the web browser on your phone or on downloadable apps.
Paying Fewer Tax Expenses Frees Funds
Payroll companies charge you based on a variety of different considerations. When you initially get a quote, it typically be based around how many employees you have, the methods through which you pay them, and whether or not they all reside in the same state. While these are standard considerations, be aware that there are more expenses you might have to pay based on your individual situation.
All businesses are required to report tax information every year, and most companies take care of filing and paying those taxes for you. However, as a business, you are also required to report year-end tax information and provide forms like W-2s and 1099s to your employees. While some companies, like MyPayrollHR, include W-2 and 1099 processing as part of the payroll package, most companies charge you extra for the service.
Good Support Helps You Avoid Headaches
Payroll is a time-sensitive process, and you don’t want to have to pay government fines associated with not paying your employees on time. Support is an important factor for you as an administrator in any situation. If you can’t get the help you need at any given moment, it may cause you to miss errors on your payroll, resulting in fines from the IRS. All of the payroll services for small business we tested provide support through the standard support channels like phone and email, but only a few provide support via live chat, like OnPay and APS. Live chat can be incredibly helpful when you need quick answers to simple questions, but be aware that if you have more in-depth questions, you may need to call.
You should also be aware of any online resources available to you, like forums and user communities. Intuit has a very good online presence, where it offers up-to-date training videos and help guides.
Another important aspect of support when it comes to payroll companies is whether or not the company you choose provides a dedicated account specialist to take care of your account. This account specialist is assigned to your account and is your go-to point of contact for any problems you might encounter. Not many payroll services provide dedicated account specialists, but those that do – like Coastal Human Resources Group and BenefitMall – offer a service that is very valuable. You may also want to find a company that offers 24/7 support so you can always get support, even outside of normal business hours.
Online Payroll Services: Our Verdict & Recommendations
If you’re worried about tax compliance and avoiding fines for filing payroll wrong, finding an online payroll service can be a good move, especially as you start to grow and gain responsibility for more employees.
Top performers became clear as we evaluated companies based on the features each offers, the tax expenses each pays, the payments options available and the quality of support you can expect to receive from each company. Intuit earned high marks in each of these categories, and it has a high level of flexibility for all kinds of situations. ADP offers a high level of support, and you can expect to have your problems solved in a timely manner with this company. IOIPay gives you the option of paying your employees in any way you like, which makes it easier for you to take care of your employees in a way that works for them.
Some payroll services specialize in certain industries, like SurePayroll, which can customize a plan for nannies and other household workers. Paychex offers local customer service, with local offices in or close to your home state. This provider even sends a representative directly to your office to get you set up, if there is one available in your area.
Each online payroll provider can provide you a quote within minutes of calling. This quote includes all the services included in each package and can give you a better idea of what you get from that company. We advise getting quotes from the online payroll providers you are considering to better understand what they can do for your specific situation and make the best decision possible for your company.