Three Payroll Processing System Mistakes To Avoid

As you search for the best payroll processing system for your specific needs, avoiding several common pitfalls will help you save money and get the features you need:

Know the difference between State Unemployment Insurance (SUI) and State Unemployment Insurance Service State Unemployment Insurance is both a necessary and a standard component of tax payment features in payroll services, and it is required by law.

However, State Unemployment Insurance Service is a different thing--it sounds the same, but the latter is an add-on feature which only benefits clients who have extremely high turnover rates, which in turn drives up their unemployment rates.

If a company has a time with less turnover, the state does not automatically reduce their rate accordingly; if you opt for this feature, your state unemployment insurance will petition the state to drive down your rates accordingly.

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Another feature of this service is that if you have a lot of unemployment claims against you, your payroll processing service can send someone to represent you. But if you don't have much turnover or a lot of bogus unemployment claims, you don't need this service--don't pay extra for this unless you need it.

Find out what your payroll processing provider will charge for Year End and Miscellaneous fees up front. So you've found a solid payroll processing system with the features you need at a good monthly rate. Before you sign up, make sure you know what ALL the fees will be. Many charge extra for W-2's; some will offer a free reprint if an employee loses their original W-2, some charge for that service.

What is the charge for New Hire Reporting? This may matter more if you have a lot of turnover. Is there a Hosting Fee for an online payroll processing system? Adding up all those miscellaneous fees may make a big difference in the bottom line.

Don't buy an add-on HR Module unless you really need it. Many payroll processing service providers will offer an additional HR module with things like templates to create employee evaluations, fields for keeping track of employee training, leave of absence requests, job descriptions or Benefits Administration.

While these are good features to have if you have a number of employees, you may be able to keep track just as well in an Excel spreadsheet, saving you money.

By taking a closer look at what you actually need (or could do without) in a payroll system, you will spend money on just the payroll processing services you actually need, not those that look attractive on paper.

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