To effectively run your company, you must have efficient payroll management. This ensures that your employees receive accurate compensation for their work and that your business remains in compliance with state and federal tax laws. To avoid the burden of payroll processing, nearly 40% of U.S. companies outsource this task, according to a report by Robert Half.
However, when outsourcing to a payroll partner, confidentiality, control and trust are of the utmost importance. You can ensure these areas remain a priority in your partnership by asking the following five questions.
1. Do You Have Any Credible References?
With this question, you can see if the PEO company can support its claims of excellence in the field. Successful companies have likely built an impressive list of credible references. These references can attest to the results achieved by the PEO and give their recommendations to help guide your search. They can also provide insight into the company’s quality of service, customer support abilities and other practices to help you understand their experience with the PEO partner.
2. Are We Covered in the Event of a Payroll Issue or Error?
Outsourced payroll teams handle all data input, paycheck processing and delivery, tax withholding and other related tasks. Even if they are cautious, mistakes can still happen and they can lead to lawsuits and other repercussions. For this reason, it is important to select a payroll partner that has adequate business insurance to cover any errors or liability claims. When partnering with a PEO, for example, any errors are covered under its professional team and company federal ID number. Many payroll companies that are not co-employers can not offer this level of protection.
3. How Will Payroll be Processed?
Payroll can work quite differently when partnering with a PEO. As co-employer in your business, payroll is processed under their tax ID numbers. This means that all checks will be processed, printed and delivered by your PEO partner. At the same time, you will maintain full direction and control of employees in the day-to-day business operations. Use this question to determine how payroll processing will work and whether it aligns with your company’s needs.
4. How Will You Keep Our Employee and Business Information Protected?
Privacy and security standards will vary from company to company. However, it’s important to ask this question to verify their commitment to keeping confidential information protected. This is a top priority for PEOs, as they use Human Resources Information Systems (HRIS) or similar software to keep all data secure through every step of the payroll management process. This software and similar tools help to protect your company and employee information from potentially harmful privacy breaches.
5. What is Your Financial Standing and History?
As your payroll partner, you want to ensure the company you choose has a strong financial standing and history. Since they act as a co-employer and handle sensitive financial information for various businesses, PEOs are held to certain standards. They are required to have a third-party accounting firm audit their records to evaluate how they handled their clients’ finances in the prior year and if they applied all funds in an appropriate manner. With a PEO, you can even review audits from prior years to verify its financial health and responsibility.
Making Confidentiality, Control and Trust a Priority
With these questions, you can determine if the payroll company you choose can provide the confidentiality, control and trust you need to benefit from this partnership. Compare your findings, narrow down your options and find a partner that will offer the highest level of service and support in these areas. Finally, consider partnering with a PEO to outsource your company’s payroll processing and management. To get started, learn more about PRemployer, our approach and how we can handle your payroll needs along with all the other HR functions you rely on for your business.
