As a small business owner, you've got many balls to juggle at once and payroll service companies can help lighten that load for you. Calculating payroll and taxes for each employee, distributing checks and providing you with timely reports are just some of the services you can outsource, freeing up your time for more of the day-to-day business operations.

Payroll processing services can also keep current on new laws, keeping your business in compliance with industry standards. As a small business owner, you won't have the time or necessary resources to keep on top of this task.

When working with payroll services, consider the following information:

1. Online payroll services are popular because of fast processing and no requirement for the business to add complicated software.

2. Be sure to choose from payroll service providers with a strict confidentiality policy and one with a trusted reputation. Is the work 100% guaranteed? What happens if a mistake occurs?

3. Instead of hiring someone to process small business payroll in-house, outsourcing the job may be more cost effective in the long run.

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Find reputable payroll companies that make the process easy through the Internet

Advances in technology have made submitting payroll online an easy and fast option for many businesses. One major benefit is that businesses have access to payroll data in real time. When needed, adjustments to payroll can be made just as easily.

I recommend: Bank of America offers an Online Payroll program for its customers. Paychex allows clients to submit payroll information online, by phone or fax.

Consider hiring from payroll processing companies who also supply tax services

As an employer, your obligations include paying state, federal and local taxes for each employee as well as deduct taxes from the employee's pay check. All of these transactions can easily be handled by a payroll company. They will also record this information for your business tax and auditing needs.

I recommend: Perquest can handle your payroll issues as well as tax compliance. Tax deposits are paid on time with Accuchex, helping you avoid any late fees or missed payments.

Make worker's compensation payments through your payroll company, too

Just like taxes, you'll need to pay Social Security, Medicare and worker's compensation insurance as well. Choose a company that includes worker's compensation payments as part of the many services they already offer.

I recommend: Automatically pay your workers' compensation premiums through payroll companies like Advantage Payroll Services and Evans Payroll Processing.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Before choosing a payroll outsourcing company, compare fees and services with several different providers. What services are included in standard packages and what additional needs will you have throughout the year? Don't forget, you can always negotiate the final price and services.

First off, no business is too small to use an outside payroll service. Most payroll processors will handle as few as a single employee. And considering the hassles and liabilities of processing payroll and payroll taxes accurately and timely, any business owner is wise to consider farming out this chore. In fact, with services easily accessible online, you'd be a bit daft not to at least consider the option. Payroll is one of the main tasks that small biz owners outsource. Top reasons include these:

1. It's inexpensive
2. It can save you tremendous amounts of time and trouble with tax filings and other government mandates
3. You have better things to do with your time than futz with payroll paperwork
4. Plus, you have choices. Do some of the work yourself (with an online provider, for example), or turn over the entire lot.

Business.com's "What Works for Business" blog is a great way to keep up with the latest solutions, trends and strategies for small and medium business — including payroll.

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Target payroll processing small business specialists

Tom Golisano started Paychex in 1971 with $3,000 and a good idea of how to make it easy and affordable for small biz to outsource payroll. The firm also offers payroll tax administration, 401(k) plans, Section 125 plans, COBRA administration and Workers' Comp. But Paychex isn't alone - several others are also great small biz choices.

I recommend: The Paychex site has an excellent introduction to what's involved in the payroll process. Paychex has 100 offices nationwide and also specializes in restaurant payroll and time and attendance solutions. Other good options include: Advantage Payroll and CompuPay.

Manage your own payroll in part or in full with an online service

For less money and a little extra time on your part, your business can manage its own payroll with online services that put everything you need in one easy-to-use place.

I recommend: Sure Payroll is the ace among small business owners seeking an online payroll service. The company focuses exclusively on small biz and has a Web-based app that's simple and convenient. With Advantage Payroll's Instant Payroll, you can manage payroll with a few mouse clicks and make real time changes. All you need is a browser and Internet access. No software to install.

Talk to the big guys

ADP processes payroll for over 30 million people worldwide and is the giant in the field. But ADP has also worked hard to develop a small business following, and it can bring serious clout to its small business customers.

I recommend: ADP Small Business Services aims to be your single source for payroll solutions. In addition to payroll, ADP offers employee screening and selection, benefits (like retirement plans), time and labor management and Workers' Comp.

See what your business bank can offer

Many major banks have ventured into payroll services to capture more of your banking business.Some, like Bank of America, even offer free payroll processing if your employees have accounts there and sign up for direct deposit.

I recommend: Wells Fargo has long been one of America's most prolific small business payroll processors. Their ExpressPay service is for the smallest businesses using phone or fax input. ExpressPay Plus includes PC-based options.Bank of America has stepped up to the small business window with its Easy Online Payroll service that promises to make payroll processing quick, simple and low cost.

QuickBooks users look to Intuit for payroll processing options

If your business already uses QuickBooks, parent company Intuit also offers an enticing menu of online payroll solutions as well as QuickBooks payroll software.

I recommend: QuickBooks Payroll Solutions for small business cost as little as $17 per month for a basic in-house solution. You can select assisted or complete payroll services.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Payroll services are highly competitive. Basic processing typically costs between $2 and $3 per check, plus a base fee.
• •  Expect additional fees for account setup, adding/dropping employees and changing information.
• •  For a complete solution, expect to pay $3 to $5 per paycheck issued.
• •  Without proper knowledge of payroll tax rules and procedures, it is easy to make mistakes. For that reason alone, many small businesses use an outside service.
• •  Employees as well as federal, state, and local tax collection agencies must be paid on time, or you could face penalties.
• •  Each pay period, you may still need to submit payroll data to the service, via phone, fax or online. Even if salaries are fixed, your approval is still needed to make payments.

Outsourcing some of your human resources work through payroll services can save you time, headaches and even money in the long run. Along with payroll, many services also offer other options to lighten the load such as administering employee benefits, helping you with tax compliance and allowing automatic payments through direct deposit.

Payroll processing services can offer many different services but as a small business owner you need to constantly look to the future. Will the company be able to meet your needs in the long term? You may want to consider choosing a company with innovative ideas, one that is able to adapt quickly to the changing landscape of human resources.

Utilize this information when it comes to making the most of payroll services:

1. Improved technology has made online payroll services a must for efficient processing and accuracy of payroll.

2. Check costs, but be sure to plan ahead for extra services you may need throughout the year from payroll service providers.

3. You can outsource every single aspect of small business payroll but make sure you're putting your assets in the right hands. Check up on a potential service through independant ratings through organizations and publications.

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Choose payroll companies that offer payment via direct deposit

Making payroll as efficient as possible should be the goal. Your employees will appreciate the opportunity to have their paycheck deposited directly into their account and you may enjoy the benefit of not signing checks every pay period.

I recommend: SurePayroll and Telepayroll offer free direct deposit as part of their payroll service package.

Consider outsourcing 401(k) administration to payroll processing companies

Payroll services can make the deductions necessary for 401(k) administration including company matches. Determining the percentages and handling payments to a 401(k) administrator on your own can be a big-time hassle.

I recommend: 401(k) and IRA retirement plans, executive compensation plans and cafeteria plans are offered through Automatic Data Processing. Paychex administers not only 401(k) but also health care and flexible spending accounts.

Find a payroll company with other unique services to meet your individual needs

Whether it's industry compliance, accounting or labor management, there are many other options available through a payroll service. As a small business owner, it's difficult to find both the times and resources to keep up on all of these issues. Outsourcing this area of your business can help you focus on the day-to-day operations.

I recommend: The PSP Group offers accounting services that includes personal income tax for employees and clients as well as general ledger accounting, among others. Payroll Service Plus offers electronic time management, which will automatically send employees' time for processing.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  A payroll outsourcing company may even offer development of an employee handbook.

Third-party payroll services can help any company, especially small businesses where employees may already be stretched thin. Hiring a payroll services firm can help ease this strain, and give employees more time to focus on developing the company's product or service. But while most payroll providers offer the same basic services, the extra features offered can vary widely among companies. By understanding some key terms common to payroll services, you can better determine if you're getting the most for your money.

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Direct deposit

With direct deposit, employees can have their checks deposited right into their bank accounts. Many employees prefer this option, because they have immediate access to their money, and don't have to take extra time to go to the bank. Some payroll services include this as a standard feature in their packages.

I recommend: Check out Bankrate.com for an explanation of direct deposit. ElectronicPayment.org offers a guide for businesses on using direct deposit, with sections on how it works, the benefits and the costs.

Tax filing

Tax laws vary from state to state and they change frequently. Many payroll services monitor these laws and automatically file your payroll taxes for you, eliminating missed deadlines and penalties.

I recommend: Paycor explains how a payroll service provider can help you comply with tax laws, and how these companies streamline the tax filing process.

Benefits administration

Your benefits package is a crucial part of your total compensation plan; in fact, many employees give it as much weight as salary when evaluating job offers. Many payroll services firms also oversee your benefits plan, ensuring you stay compliant and competitive.

I recommend: Paychex offers an introduction to the various kinds of employee benefits you may want to offer, including retirement services, health insurance and flexible spending accounts.

Workers' compensation

Workers' compensation premiums are a necessary expense for any business, but monitoring your workers' compensation obligations can eat up both time and money. Some payroll services firms will oversee your workers' compensation program, helping you reduce costs and increase efficiency.

I recommend: WorkersCompensation.com offers a state-by-state guide to workers' compensation rules and statutes.

401(k)

A 401(k) plan is a standard part of compensation packages at most companies. The same firm who oversees your payroll can also monitor your 401(k) plans, ensuring you and your employees get the best return on your investment.

I recommend: SurePayroll offers guides to 401(k) plans, written specifically for small businesses.

Time tracking

Many payroll services will not only issue your payroll checks, but also keep track of the hours worked by your employees. Many will also monitor sick days and vacation time.

I recommend: Check out the interactive guide to integrating time and attendance with payroll services at the TimeTrex website.