Guide to Negotiating a Payroll Processing Service Contract

The decision to outsource your small business’s payroll processing makes sense – finding the right payroll system takes a little more thought. After all, there are numerous terms and features offered by a payroll processing service or accounting payroll software system, but if you cannot negotiate the best deal on the services YOU need, then a payroll processing service may end up costing too much, and giving your company too little in return. When negotiating a payroll processing service contract, make sure the features you need are included and make sure you are aware of any and all add-on charges.
The top three questions to consider when negotiating the best payroll processing service contract:

1. What is the rate you will pay, and what does that price include?
2. Are there any add-on charges that aren’t included in the basic fee?
3. When will prices increase and how much will the increase be?

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

Make sure the payroll processing service contract includes the features you need

Some of the top features small businesses look for in a payroll system are: tax filing specifics, cost of services annually, the most popular add-on features (and costs), set-up costs, error reconciliation time and charges, and pricing consistency. Any contract you sign should spell out which features are included in the price.

I recommend: Business.com offers a directory of small business-specific payroll services. Visit the payroll processing service “big guy,” ADP, for its Small Business Services – and for those services that will grow with your company.

Pay attention to the conditions of your payroll system contract

Some payroll processing service contracts dictate that you must submit payroll information several days in advance and will charge you for last-minute changes. If you aren’t able to meet the deadlines, your costs will skyrocket.

I recommend: Business.com gives the small business owner many payroll system choices at Payroll Software. Check out PayCycle, the online accounting payroll software system that 30,000 small businesses rely on to handle “it all” – paychecks, electronic tax payments, W-2s, and more.

Read the fine print before signing with a payroll processing service

Who pays postage fees to deliver checks to your office? If you hire additional employees, do you have to pay additional fees? Will you have to pay for software updates? Are there any charges for filling out government required tax forms? Do they provide filing assistance for local taxes as well? What are charges for filing in multiple states? Before signing a contract, check out any hidden fees, add-on charges, or accounting and payroll software subscription/licensing costs. Watch out for low start-up costs that increase dramatically over time or a low base rate and high-cost add-on charges. With either of these situations, you could be spending more than necessary.

I recommend: Go to BuyerZone to describe your needs and get matched up with as many as six payroll processing companies. Go to All Options to compare prices, features, and services from multiple payroll processing service vendors through their free, no-obligation quotes.

Consider a contract for accounting and payroll software bundles

Find a payroll processing service that offers you options in terms of their services and best values. Think of it in terms of ordering in a 5-star French restaurant. If you order (services) “à la carte,” you’ll end up paying more than a simple prix fixe 4-course meal. However, if you only want the appetizer, then ordering a whole meal would be a waste – of money and products.

I recommend: At Business.com, check out the options and bundles available at specific payroll accounting services in the US. Go to AmCheck for a one-hour quote on payroll accounting services.

Tips & Tactics
Helpful advice for making the most of this Guide

• Make sure the contract states that the payroll processing service will take financial responsibility for any tax filing errors.
• Ask for and verify the accounting and payroll software service’s guarantees, and security measures to keep your company’s data safe and confidential.
• When contracting with a payroll system, get everything in writing, including (but not limited to) the contract terms, dates, all tasks that the company agrees to manage, and the exact fees for specific features, when applicable, and payment terms.
• Contractual discrepancies or disputes are no picnic, so make sure you are 100% clear on everything in the agreement.