10 Mistakes to Avoid When Choosing a Payroll Service Provider

Most bad payroll decisions happen before the first demo. Letting the vendors define your needs, starting your search on a lead generation website, chasing three months free, and assuming the new provider works like the old one all lead to the same place: a switch you regret a year later. Here are the ten mistakes I see most, from a broker who has watched each one play out.

1. Letting the payroll companies decide your needs for you

Vendors have a conflict of interest. They will define your needs around what they sell. Do your own internal analysis before you start the search. Write down your must haves and your wish list, and hold every provider to that list.

2. Starting your search on a buyer website or a free whitepaper

Buyer websites can offer useful resources, but be careful when they ask for your contact information. That form is a sales funnel. Your details get shared with every payroll company that subscribes to the site, and those companies will call and email you, many of them, very often. If you want research without the flood, get it from someone who is not selling your name.

3. Looking only at big brand names

Bigger is not always better. Big brand payroll companies can be hard to work with, they tend to have high turnover, and they route you to call center support. That gets frustrating fast when something is wrong with a tax deposit.

4. Ignoring Google reviews, or dismissing the bad ones without context

Review the reviews. Good Google reviews are hard to earn, so give them weight. Read the bad ones carefully too, but be skeptical of one star reviews that are overly personal or short on detail. Look for patterns, not outliers.

5. Letting the ads at the top of the search results drive your choice

Paid ads do not guarantee a quality provider. They guarantee a marketing budget. The organic results below the ads are driven by reviews and reputation, and a four star rating with a solid reputation is earned, not purchased.

6. Using promotional giveaways or three months free as your starting point

Everyone likes a deal. In payroll, be careful with aggressive promotions. Some providers use them to offset weaknesses in their brand. Others use them to grow quickly right before an acquisition, after which you become someone else’s customer. Promotions do not equal quality.

7. Not asking about financial controls

Payroll fraud happens, and it has happened at providers. Added financial controls, or a third party annual audit, show that a provider takes its role seriously. These measures are expensive and not every provider has them, which is exactly why you should ask.

8. Not searching for “security breach” and “ransomware”

Payroll providers sit on a mountain of sensitive data and are prime targets. Search the provider’s name alongside those two phrases before you sign. Keep in mind that an incident may not have affected the specific provider you are looking at, but you want to know either way.

9. Assuming all payroll platforms have the same features

They differ a great deal. Platforms can look alike in a demo, so confirm the specific features you need are included. Some platforms handle the payroll process very differently. Not all are smartphone friendly. Get it in writing.

10. Assuming the new provider will do things the way your current one does

Trust, but verify. Have the new provider describe the entire payroll process for one cycle, step by step, in detail. If something you are used to has not been addressed, ask. A good example is the ACH policy: when funds are pulled, how far in advance, and what happens if a payroll is late. Never assume it matches what you have now.

Not sure outsourcing is right for you yet? Read how payroll outsourcing works and why a payroll service should do your payroll first. If you are weighing an HCM platform instead, the 11 HCM mistakes is the companion piece.

The common thread

Every one of these mistakes comes from letting someone else, a vendor, an ad, a lead gen site, drive the decision. The fix is to define your needs first and evaluate against them. A broker makes that easier since we already know which providers are strong on which points and which ones to avoid.

Frequently asked questions

How many payroll providers should I compare?
Three is usually right. It gives you real comparison without demo fatigue.

Is switching payroll providers hard?
Not with the right timing. Quarter start is easiest, and a good provider handles the data conversion and parallel testing.

Does a payroll broker cost me money?
No. PayThrive is paid by the providers. You get vetted options and negotiated pricing at no charge.

Skip the mistakes

PayThrive matches businesses with vetted payroll providers and negotiates on their behalf. Call (844) 244-9480 or take the two minute quiz on our Get Started page.