Choosing an online payroll service? … better roll up your sleeves

So you’ve been comparing internet payroll solutions lately, and are leaning toward an online payroll service provider.  That’s good;  because (as we blogged about just recently) there’s virtually nothing to recommend the traditional payroll processing services, whose business model and technological foundation is largely unchanged since the 1960s.

But now the challenge becomes choosing the right internet payroll solution for your business …and that won’t be easy.  Simplistic, one-size-fits-all answers won’t help, because there’s just too much variability from business to business.  Perhaps the best thing we can do here is to sketch out a set of factors that tend to discriminate among the various offerings;  then you can decide what’s best for you, based on the relative importance of the various factors to your business…

  • Was the vendor’s system designed for a company of your size?  Some systems were designed for paying fewer than 5 employees …which is fine, if your company is in that size range and planning to stay there.  Such systems tend to fall short on providing meaningful cost allocation information (among other things), which will become increasingly important as your firm grows. 
  • Do you have full, real-time control over the system? …or – harking back to the bad old days of traditional batch-oriented systems – can you only perform certain operations on some sort of vendor-defined schedule?  Are you beholden to someone in the “back room” to initiate certain common operations?
  • Is the system intuitive?  Can you add deductions, departments, pay categories, etc., on your own, or do these need vendor intervention? …and require how much lead time?  Does it provide a simple payroll “dashboard”?
  • Does it enable online access, so that employees can easily view paycheck and paid time off information?
  • Does it do more than process checks?  In particular, does it support tax filing/reporting and W-2 filing/printing?  And how about…

 task reminders
 HR performance statistics
 a custom report writer
 ability to post documents
 tracking employee paid time off, training, company assets

  • Does the service charge only a single flat fee? …or does it nickel-and-dime you with many miscellaneous charges?  Such charges – for things like delivery, direct deposit, reports, W-2s, etc. – can add up in a hurry.  Also, is the payroll service priced by the transaction …even if you’re the one making the tax deposits and printing checks? 
  • Does the vendor provide added-value services at no extra charge? …for example, general HR consulting.
  • Does the service provide multiple support options? …most especially telephone, vs. Web/email only.  If so, will you be assigned to a specific person who will come to understand your business? …or simply handed off to the “next available” agent in the phone bank?

You’ll find more in-depth information to facilitate your comparison on the MyPayrollHR website;  you’ll even be able to take a virtual tour.


  1. If you had a house, the interest on the house would be tax deudbticle. All that means is, whatever tax bracket you’re in, you’d get back that percentage of every dollar in mortgage interest you paid.So your monthly mortgage payment is $1300 a month. Let’s say $600 a month is interest. That’s $7200 a year. You’re in the 25% tax bracket or whatever. You’d get back $1400 of it.

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