10 Questions to Ask When Choosing a Payroll Service Provider

Payroll services are a convenient way for small business owners to meet their payroll and tax filing obligations. Rather than struggling to run payroll on your own as you grow, outsourcing to a third-party payroll service provider can save time and make the entire process less complicated.

Whether you’re outsourcing for the first time—or you’re considering changing providers—it’s important to choose the right payroll specialist for your business. Asking these 10 questions will ensure you find the best payroll service provider for your needs.

10 Payroll service provider questions to ask

1. What payroll service features does my business require?

The first question you should ask is what small business payroll service features do you actually need? While providers offer a range of service features, some will be less relevant to your situation than others. 

For example, you may or may not require:

• Auto-processing and direct deposit
• Time tracking and access to payroll reports via mobile app
• Online pay stubs and employee self-service portals

To determine the best fit, start by identifying any specific payroll or human resources requirements your business may have. 

2. What payroll and HR services does the provider offer?

Most big-name, cloud-based payroll providers—like Payworks, Intuit QuickBooks, and ADP—offer a variety of automatic online payroll services, with access to custom reports.

By engaging a fully-managed payroll service (like Enkel, for example) you can typically expect: 

• Bi-weekly or semi-monthly direct deposit payroll processing (including inputs for workers’ compensation and employer health tax filings)
• Handling of various employee earnings and deductions (including bonuses, commissions, tips, reimbursements, garnishments, and health and insurance benefits)
• HR benefits like annual T4 and T4A processing, and assistance with ROE (Record of Employment) forms

Whichever provider you choose, just make sure they’re compliant with payroll legislation and offer support for CRA queries or audits involving payroll.

3. Do they understand the needs of my industry?

Since requirements can vary from business to business, it’s important to ask if a payroll service provider has experience in your industry. 

The more time they’ve spent working with similar companies, the more likely they are to have a thorough understanding of any laws or compliance matters pertaining to your particular business.

4. What is their pricing structure?

It’s especially important to consider price when short-listing payroll providers since you’ll want to make sure the entire cost of their service fits within your budget. 

Here are a few initial points to keep in mind:

• Costs can vary depending on the features and integrations a payroll service provides
• Different providers may charge monthly, annually, or by the pay period  
• Since cloud-based software is typically used, it’s worth asking individual payroll service providers whether software fees are included or charged separately from service rates

We recommend compiling and then comparing price quotes (including any additional fees) side-by-side. Since some providers will offer savings in certain circumstances, you should inquire about these in advance. 

5. How frequently can they process payroll?

Different payroll services routinely offer different processing frequency options. Since your business may have specific expectations around when employees are paid, it’s important to inquire whether a given provider processes payroll weekly, bi-weekly, monthly, or semi-monthly.

6. What tax obligations do they handle?

While a good online payroll service will handle all your payroll tax obligations accurately and on time, not every provider assumes the same level of responsibility. This is an important distinction because, if you don’t process payroll correctly, you risk incurring financial penalties.

Be sure to ask prospective providers if they:

• Cover year-end tasks like CRA filings and T4 or T4A preparation 
• Submit ROEs automatically to Service Canada
• Offer tax penalty protection

Many automated payroll services, for example, will take responsibility for payroll processing errors.

7. Which payroll software do they use? 

Since you’ll likely need to use cloud-based software to work with an external payroll service provider, it’s important to find out:

• Which software package they use 
• Whether there’s a free trial or demo available to help you determine its user-friendliness

Ideally, you should take any business-managed payroll software you’re considering for a “test drive” before you commit. At the very least, make sure you research key components like set-up, dashboard management, and tax law compliance. 

8. How much training will I need?

It’s also a good idea to inquire about the amount of training needed to use a payroll service’s software—and how much of that training they’re going to provide. This will help you gauge the time investment required as you compare the accessibility of different services. 

Don’t forget to also clarify exactly what the payroll process will look like, and whether it’s defined by you or the service provider. 

9. How secure is their service? 

Remember that your payroll service provider will be handling personal and confidential information. 

Since a breach could put your business at risk, it’s vital that you verify they’re well-equipped to safeguard your data’s privacy, integrity, and availability with:

• Firewalls and data encryption technology 
• Multi-factor authentication
• Stringent backup policies

In addition to inspiring trust, your payroll service should also support smart integration with budgeting or accounting software you already use (like QuickBooks or Xero, for example) or would like to try using. 

10. What is their customer support like?

Every payroll service provider will have its own customer care system. Since you’ll want to know there’s a professional available to assist you when you’re experiencing payroll processing issues, be sure to ask about:

• Customer service contact options (including hours of availability)
• Communication channels used to provide support (can you expect assistance via phone, chat, email, video call?)
• Whether your business will have a designated payroll specialist, or whether you’ll have to speak with someone new each time you need help

Don’t forget, too, the importance of choosing a payroll service provider with the capacity to ease workforce management by scaling alongside your business. Make sure, for example, that you can add users and employees to your account as needed.

Ultimately, the more questions you ask, the easier it will be to sift through your service provider options and find the best fit for accurate, timely, hassle-free payroll processing.

Got questions about finding an end-to-end payroll solution for your small business? Enkel can help!