4 Tips to Get the Most Out of Your Payroll Company
Payroll companies are often an invaluable resource in operating your business, but they can also be a source of frustration or, in the worst case scenario, potential legal exposure. Having worked with clients to help resolve payroll issues or defend litigation relating to payroll processing, we have a few helpful tips to ensure that your business is getting the most out of your payroll company and securing compliance with applicable employment laws.
1. One Size Does Not Fit All
With so many options, it is very important to make sure that your payroll company is best suited to meet the unique needs of your business. Ensure that the payroll company is familiar with your industry, company, and your workforce and is experienced in handling the specific and unique issues that may arise. Ask about their payroll processing turnaround times, how they go about issuing payroll corrections, what is their recordkeeping policy, how easily can your business obtain historical payroll records, etc. Similarly, as your business grows, changes, or takes on a new endeavor, it’s a good idea to revisit your payroll company to ensure that it’s still right for your current business needs.
2. Trust, But Verify
We strongly suggest that you always discuss the applicable state and federal payroll requirements for your business and workforce with your payroll company. Additionally, you should confirm that the payroll company is familiar with how certain wages need to be calculated (i.e. overtime, bonuses, commissions), what needs to be included on an employee’s wage statement, and how the payroll company will address any potential new laws that impact payroll requirements, if at all. Reviewing and confirming compliance with the necessary payroll processing and wage statement requirements will go a long way to avoiding inadvertent potential payroll liability.
3. Check Their Work
It’s too risky and there’s just too much at stake for your business to turn over complete, unchecked reliance on payroll and wage statement compliance to your payroll company. That is not to say you need to spend hours exhaustively reviewing each wage statement issued or payroll calculation made, but taking the time to check wage statements and payroll calculations once a quarter, twice a year, or even just once a year can be an invaluable measure to prevent any issues and give you peace of mind that you’re in compliance. Such spot checking is particularly important while your company is getting its payroll off the ground or after recently implementing new changes that will effect payroll.
4. Keep Them Updated
Failing to keep your payroll company updated as to recent changes in your business and relevant changes in the law that may impact your payroll processing is a common pitfall and can lead to violations in the law and/or payroll inaccuracies. For example, as minimum wage increases and state or federal employee mandated benefits become more regular, your business and your payroll company must stay updated to ensure timely compliance. You cannot assume that your payroll company will stay on top of any developments, and in most cases it is your obligation to inform them of any necessary changes.
Whether you have a well-established relationship with your payroll company, are looking to make a change, or just beginning to search for a payroll company for your business, these best practices should help to create a seamless and beneficial relationship that helps your business run smoothly and protects your company from potential liability.