Keeping up with all the changes in payroll regulations and withholding tables can be a full-time job. Getting it right is somewhere between a challenge and a nightmare.

Worse yet, if you make a mistake, your employees and the IRS will read you the riot act. Indeed, the Internal Revenue Service indicates that one of every three employers has been penalized for a payroll mistake, accounting for billions of dollars in fines.

When you factor in the value of your time and the prospect of penalties if you make a mistake, processing payroll internally can be very expensive.

Have you been thinking that your time might be better spent on other activities? Are you in need of some aspirin for your payroll headaches? If so, it may be time to take a look at outsourcing.

Less Room for Errors

Just as law firms continue to evolve, so too have the nation's payroll services.

New outsourced payroll solutions on the market can save time and money. More importantly, they let employers stay in control throughout the process.

Historically, outsourcing payroll meant firms needed to call in payroll on a predetermined day and time. Business owners inconveniently had to jump out of important meetings to call in payroll.

Some payroll providers offered software solutions, allowing data to be entered locally and sent in via modem. While this represented a step forward in terms of convenience and control, the software was too complex, designed to handle the payroll needs of large corporations like IBM rather than the simple needs of small businesses.

The new breed of outsourced payroll services overcomes these deficiencies by offering simple Web-based interfaces. With Chicago-based SurePayroll's offering, for example, all that is needed is a Web browser and an Internet connection. Once you enter your payroll data, SurePayroll automatically calculates, deducts, pays and files all taxes. The employer decides when and where they want to process payroll.

And there's an added bonus. Because the data is entered by the firm itself with the results viewed in real time, there's no need to worry about a data entry clerk making errors in taking information over the phone. Thus, the odds of an incorrect check or direct deposit amount are substantially reduced.

Other leading payroll providers such as ADP, Paychex, Ceridian and Wells Fargo also have rolled out new web-based services.

Choosing a Provider

So what exactly does a payroll provider do?

Payroll services calculate payroll and withholding obligations. They process the checks or provide direct deposits into employees' bank accounts. They take care of all the government filings with federal, state, and local tax collection agencies and issue W-2s, as well. They also can provide employers with management reports that let them track and monitor payroll themselves.

The trick is choosing the right payroll service.

First and foremost, firms have to decide how they want their payroll processed.

For lawyers frequently on the road or those who like to do payroll whenever they choose, a Web-based service may be just the ticket.

But if they prefer to give their information to a customer service rep, they need a provider that offers a call-in service.

Employers need to make sure their payroll service addresses their unique needs.

Most services will handle a business' basic needs, such as whether they pay payroll taxes in multiple states. For employers with complex needs, they might want to go with a larger provider like ADP.

They, however, should be sure to understand all the costs up front. Occasionally, additional charges will add up to make what initially seemed to be a good price not so attractive after all.

The key is taking the time to talk to providers and finding out what service works best for you.

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Be sure to understand all the costs up front. Occasionally, additional charges will add up to make what initially seemed to be a good price not so attractive after all.

Payroll Providers

• SurePayroll. SurePayroll uses a Web-based plan to offer small businesses lower-cost service. A flat fee includes payroll processing, all tax filing and payment, quarterly reports, and more. Visit www.surepayroll.com for more information.
  
  
• ADP. ADP offers a full range of benefits, payroll and business management services. Its web site is located at www.adp.com.
  
  
• Paychex. Paychex is a national provider of payroll, human resource and benefits solutions to small business. Visit www.paychex.com for more information.
  
  
• Ceridian. Ceridian is a large national payroll processor. Ceridian recently introduced a Web-based payroll solution, PowerPay. For more information, visit www.ceridian.com.
  
  
• Wells Fargo. Wells Fargo has been offering payroll services to small companies for 40 years. Their OnlinePayroll offering is for businesses that want to run payroll online. Its web site is located at www.wellsfargo.com/biz.