Payroll Services for Contractors

As a small business owner or contractor, you probably wear a lot of hats. You not only provide products or services, but you also administrate your entire business. One of the many tasks that you have to manage is payroll. If you want to save time and increase your efficiency, you may want to consider outsourcing the work to payroll services for contractors.

You might also need payroll services for contractors if you hire contractors. We will be focusing on payroll services for contractors to use, but we will also discuss scenarios where you have contractors on your payroll as well. This might be the case if you are, for example, a general contractor who runs your own business, with various sub-contractors working for you.

Why Outsource Your Payroll?

Here are some of the advantages of outsourcing payroll as a contractor or small business owner:

• Reclaim your time: How many hours are you spending each pay period managing your payroll? By outsourcing payroll, contractors and small business owners can get back all of that time, spending it on higher ROI activities.

• Cut your costs: It’s true that outsourcing payroll costs money. But you may discover that doing so pays for itself. For one thing, if you are currently paying for a payroll system that you are using in-house, you can cancel that subscription. For another, you can put the work hours you are getting back into activities that pay you more money.

• Stay compliant: Business owners who outsource payroll to experts no longer have to struggle to keep u with all the federal, state and local laws. The payroll service will take care of that for you. As they are experts, they can reduce the risk of regulatory mistakes, sparing you from penalties and fees you might otherwise have incurred.

• Reduce errors: In general, you should see fewer errors when you switch to an outsourced payroll service. Payroll experts boost accuracy through their expertise, and by being able to spend the time that is needed on payroll tasks (whereas a business owner trying to juggle everything might rush and make mistakes).

• Access experts: Chances are good that your main expertise lies in whatever product or service you are selling or performing. You probably have learned a lot about payroll, but it is not your primary area of focus. Outsourcing lets you benefit from professionals who have specialized knowledge and do nothing but payroll work all day. They may also have more sophisticated software and resources than you have access to on your own.

• Scale as needed: If your business is growing, your payroll needs can also grow. Managing all that on your own could become unwieldy or impossible. Instead, you can have a payroll company do it. They’ll scale with you, and you can just focus on keeping your business growing and thriving.

What to Consider When Choosing Contractor Payroll Companies

Not all payroll companies are equal. Here are some criteria to consider when you are deciding which company to outsource payroll to.

• Expertise with small business: You should try and work with a payroll company that is used to working with small businesses, and understands the needs of small business owners. If you try to work with a company that focuses mainly on huge enterprise companies, you may find that a lot of what they offer is overkill for your requirements, and pricier than it should be.

• Experience with contractors: Whether you are a contractor yourself, or you hire contractors, you need a payroll company that has experience dealing with contractors. There are different tax issues, compliance requirements, and insurance considerations around contractors vs. employees, and your payroll service needs to be ready for that. With the right payroll service, paying your contractors will be just as simple and straightforward as paying your employees.*

• Flexible plans: Some payroll services may not have plans that are suitable for small businesses. They might charge a high base rate, with the expectation that you will be covering a large number of employees and/or contractors. If you only have a few people working for you, look for a payroll service that offers plans for just a few workers at a reasonable price.

• The level of support you need: If you want self service, then choose a company that offers you self service tools. But if you need full service, then make sure you choose a company that offers that level of support.

• The services you need: Make a list of all the services you want your payroll company to be able to handle. In some cases, you might just want them to help you with the payroll itself. But in other cases, you might be looking for HR support, time and attendance, talent management, insurance, retirement plans, etc.

• Integrations: You might be using software that you want to be able to integrate with the payroll software you choose. Make sure that they are compatible. For example, you might want to be able to connect your payroll solution to Quickbooks, Xero, Jirav, 7Shifts, Clover, etc. Check compatibility, as well as the steps to connect the software. Ideally, it should be a quick and easy process.

• The quality of the support: We already talked about levels of support. But the quality of support is very important to assess as well. To do this, you can look up customer reviews. See how easy it was for other people to reach the team, and how knowledgeable and helpful support was. You could also contact the payroll service provider yourself. Chat with them over the phone and email. Test them out by asking them a few questions. This should give you a feel for what it will be like to deal with them as a customer.

• Pricing: Of course, one more factor to consider is the cost of services. As a small business owner, you may have a tight budget. There is no reason to splurge on enterprise services you do not need. But you may not want to go with the cheapest option either. You should pick the payroll company that will give you the best value for your money.

*A quick note, make sure you are classifying your workers correctly. Employers often misclassify employees as contractors.

Our Recommended Payroll Solution: Paychex

Whether you are a small business that hires contractors, or you are operating a small business as a contractor yourself, Paychex is our top recommended payroll solution.

Paychex is one of the biggest names in payroll services, so you probably have at least heard of them. But what you might not know is that small business payroll is one of their specializations.

Paychex Benefits

• Flexible support: Paychex lets you choose how you do payroll. You can have a Paychex representative assigned to you, or you can opt for self-service using Paychex software to simplify payroll tasks. Paychex can also provide you with total HR support and services, if you want to go beyond just payroll outsourcing.

• Self-service for employees and contractors: Your employees and contractors can access self-service tools through the Paychex portal for onboarding, updating personal information, and filling out forms.

• Scale as needed: Whether you have just a few employees or a lot of them, you can use Paychex. You can even use it if you have just one employee or contractor. As your business grows, you can upgrade your plan.

• Track time: Use time tracking technology from Paychex to monitor the hours your employees or contractors are working.

• Workers’ compensation: You can get worker’s compensation insurance plans for your employees via Paychex.

• Retirement services: You can set up retirement plans for your employees with Paychex.

• Protect your business from cyber fraud: Paychex can help you get cyber liability insurance. This is very important for small business owners, since half of all data breaches happen to small to mid-size companies.

Keep in mind that not all plans include all features, and some of these are ad-on services. The ability to select exactly what you need for your business, no more and no less, is one of the ways you can keep your costs manageable with Paychex.

FAQ

Q: What is the best payroll service for contractors?

A: Our pick for the best payroll service for contractors is Paychex. In terms of features, pricing, and experience working with contractors, we feel it offers the best value.

Q: What questions should I ask potential payroll providers?

A: Ask the provider for answers to any questions you have that their website did not answer. Consider asking if they handle both W-2 employees and 1099 contractors, and whether they can manage payroll scenarios specific to your business. Perhaps, for example, you need a service that offers multi-state taxes or union tracking.

Q: Are there advantages to construction-specific or industry-tailored payroll services?

A: Yes. A payroll service that has experience working with businesses in your industry will understand your specific pain points, and have solutions that are tailored to address them.

Q: When is it time to outsource payroll?

A: When you determine that outsourcing payroll will cost you less than continuing to do it yourself, it may be time for outsourcing. Consider savings in terms of money, time, and energy.

Get Paychex for Your Small Business

Outsourcing payroll can help you save time and money, streamlining your operations and preventing costly errors. If you are ready to outsource payroll and make it easier to operate as a small business or contractor, you can click the link below to get started with Paychex.