How Can Businesses Avoid Overpaying for Payroll Services and Software?
Running a business is no easy task. With plenty of responsibilities on your to-do list, there are some tasks that just take too much time or require expertise you don’t have – and for many business owners, payroll is one such task.
Managing your payroll is both complicated and difficult. In fact, it’s such a tricky task that Employers Resource reports the IRS penalizes one out of every three business owners for payroll errors each year. In order to avoid facing a serious IRS penalty, you need a professional payroll service.
Unfortunately, payroll services and software can be expensive. If you’re looking for affordable payroll help that’s easy to use and beneficial for your business, here’s what you need to know.
Look for Payroll Options Offering Expert Help
Your first step in the search for cheap payroll services or software should be this: searching for reputable payroll options that offer professional, experienced, and expert assistance.
If you simply choose the cheapest payroll service or software, you could wind up with serious financial consequences. Many free or low-cost payroll software options can put you at risk for compensation and tax reporting liability – and you don’t want to run the risk of incorrectly reporting your payroll expenses or taxes.
So, instead of searching for cheap payroll services alone, look for payroll software or services that come with expert guidance. Search for options that let you speak with an expert or offer the chance to have an expert review your payroll processing. Employers Resource calls expert help and advice one of the most important elements that helps business owners in a cost-effective way.
Pay Only for What You Need
Many “affordable” payroll services and software sound great up front – but if you don’t do your research, you could wind up paying a big price later down the line. The initial price could be within your company’s budget, but sometimes extra features come with an added and surprising cost.
Payroll software in particular often comes with great features when you first buy it. While all of these amazing features sound great initially, you’ll likely wind up purchasing a host of features that you never actually use. As Credibly writes, buying “fully loaded” payroll software often leads business owners to overpay.
Additionally, if you’re hiring a payroll service, you should be on the lookout for additional features and services your business doesn’t need. You could wind up overpaying by hundreds or thousands of dollars if you opt into services that go unused if you choose a one-size-fits-all service. Employers Resource recommends paying only for individual payroll services like the following:
- Payroll processing, which is software designed only for companies that need help processing regular employee payments.
- Bookkeeping, which keeps track of payroll finances and handles all tax filing and reporting.
- Annual tax filing, which enlists the help of a tax professional once a year to handle all tax documentation.
- In-house payroll processing, which is one full-time employee who handles payments only, no tax or human resources included.
Don’t Sign a Lengthy Contract
Another way business owners can avoid overpaying for payroll services and software is to be wary of any long-term contracts. When you’re looking for the perfect payroll option for your company, you’ll likely see great pricing – and even cheap pricing – offered by plenty of software companies and payroll services. However, make sure to read the fine print of any agreements or contracts.
As Credibly notes, software companies and other services often require you to sign a long contract if you want to secure affordable pricing. However, these long contracts are a red flag: it’s a sign that the service or software company is trying to lock you into a commitment that you likely won’t want in the future. Often, these lengthy contracts hide annual fee increases, add-on features and pricing, and other hidden expenses that could ultimately drive up the price you’re paying per month or year.
And if you find out your payroll services contract is way too expensive later down the line, there will likely be another catch: you’ll have to pay additional fees to exit or break that contract. So, it’s crucial that you ask about any contracts before choosing a service or software solution before agreeing to any pricing or terms.
You may also want to look for payroll software and services that don’t come with a contract. There are packages and month-to-month options that allow you to pay as use the service, making it easy to keep your payroll expenses affordable and ensuring you won’t overpay for anything you don’t use or need.