Hiring third-party payroll service providers can help small businesses ease their staff's workload, giving them more time to focus on developing their service or product. Many payroll services in the us provide not only basic services, but also administration of things like worker's comp, 401k, payroll taxes and employee benefits.

US payroll outsourcing can make all the difference for small businesses because they can efficiently manage their human resources needs without taking attention away from their first priority: offering exceptional customer relations and a top-notch product or service. When working with payroll accounting services in the US:

1. Look for small business accounting and payroll services.
2. Get greater access and flexibility through online payroll outsourcing services.
3. Merge your banking and payroll tasks.
   

Action Steps
The best contacts and resources to help you get it done

Find payroll processing services that specialize in small business

A payroll service company that works primarily with small businesses will better understand your company's needs. They'll likely offer other administrative, human resource and financial services, eliminating the need to farm out those tasks to multiple providers--something that is both time-consuming and difficult to efficiently manage.

I recommend: Paychex offers a wide variety of human resource, accounting and administrative services. The company offers payroll processing, HR administration and compliance, and administration of 401(k) and employee benefits. Paychex also offers online access to employers, employees, accounting professionals and financial advisers, and has solutions designed specifically for companies with between one and 50 employees. Advantage Payroll Services specializes in payroll processing, tax filing and HR management, for small- to medium-sized businesses. Advantage includes, at no extra charge, tax filing services, sealed payroll checks, management reports, and up to three direct deposit accounts per employee.

For greater flexibility, consider online payroll services

With online payroll services, you can access payroll processing tools at any time and manage some of the administration yourself. With this option, you can quickly and easily check things, change things and generate reports.

I recommend: PayCycle offers online payroll processing designed with small businesses in mind. The service offers free direct deposit, unlimited payroll runs, state and federal tax payments and filings and phone support. Sure Payroll also offers full service, online payroll processing specifically for small businesses. The web interface is designed for ease-of-use, and the service offers more features than payroll software.

Streamline your finances by using your bank's payroll processing services

Many of the larger banks now offer payroll processing services. By using your bank for your payroll, you simplify things, and may even receive a discount for already being a customer.

I recommend: Wells Fargo offers payroll processing as part of its small business services. The company offers two versions: ExpressPay, which is designed for smaller companies and offers basic features, and ExpressPay Plus, which offers customized solutions. Bank of America offers Easy Online Payroll, designed for companies with less than 50 employees. The service supports several kinds of pay structures, including salary, hourly, overtime, tips and bonuses. It also offers vacation and sick day tracking, as well as employee access for viewing and printing out pay stubs.

While there are few no-brainers in business, direct deposit is one of them. Depositing funds directly into an employee's bank account rather than issuing a paper check provides a number of advantages for both employer and employee.

For the employee, there's the convenience of getting their funds sooner. For the employer, it can mean lower payroll-processing costs. It may only come down to a few pennies per check, so if you have only a few employees, the cost savings may not be significant. But the convenience factor is still huge.

Payroll cards are another story: They offer advantages to employees who don't have bank accounts, but come with significant disadvantages as well.

1. Payroll cards give employees access to their pay by using what looks like a bank debit card. Employees can use the cards at participating ATMs to withdraw cash or in certain retail stores to make purchases.
2. Because of the fees involved, employees may find that using them is more expensive than having a bank account, but less expensive than using retail check-cashing outfits.
3. Some payroll-card vendors charge users numerous "hidden" fees.

Action Steps
The best contacts and resources to help you get it done

Sign up for direct deposit

To set up direct deposit, you'll likely pay a nominal one-time set-up fee, then about $4 to $9 per payroll period plus a nominal fee per check, usually a few cents. Even if your savings don't outweigh your costs, you might still want to offer direct deposit as a low-cost employee benefit.

I recommend: Check out the following payroll vendors: Paychex, Wells Fargo, Intuit, ADP and Advantage Payroll Services. Bank of America will even process your payroll for free if your employees have direct deposit at BofA.

Consider payroll cards

Payroll cards can work for employees who don't have t bank accounts. But be sure to inform them of the costs. Ask prospective vendors whether employees can use the cards at ATMs and for in-store purchases, whether they'll incur a fee each time they use the card, and whether additional fees apply (i.e., 'inactivity,' replacement or load-in fees).

I recommend: Among the well-known payroll companies offering payroll cards are ADP and Paychex. To inform employees about the costs and options, refer to this helpful checklist from Consumer Reports.

Do your due diligence

Payroll companies are less closely regulated than banks and thus require due diligence, particularly if you're not dealing with one of the better-known companies.

I recommend: As of July 2007, these accounts will be protected by law (like a bank that is FDIC insured), but for now, it's a good idea to check references and to check vendors out with the Better Business Bureau.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Payroll cards can come with many fees. Some employers offer to pay the fees as an added benefit to employees.
• •  Ask prospective payroll-card vendors to provide a list of fees that you can give to your employees.
• •  If a payroll-card vendor offers employees 'cash advance,' advise employees not to use it, as it can make debt-ridden employees fall further into debt.
• •  Direct deposit also gives you a more accurate sense of cash flow: Since payroll funds clear faster, you have a better gauge on your available cash.
• •  Most payroll vendors offer direct deposit, so if you already use a payroll service, you'll likely be able to add direct deposit without switching vendors.