Payroll services: what to know

What the job involves, what changes the price, and what to ask a pro.

What payroll services is

A provider calculates wages, withholds taxes, issues pay and pay stubs, and files payroll reports so your employees are paid correctly and on time. Business owners use one when payroll takes too much time or the rules feel risky. This is general information, not tax advice.

Signs you need it

  • You are doing payroll by hand and worry about errors
  • You are hiring your first employee
  • You missed a payroll deadline or received a notice
  • You pay both employees and contractors and are unsure how to classify them
  • You operate in more than one state
  • You need pay stubs, year end forms and reports without the extra work

What the pro does

  • Collect employee details, pay rates, schedules and required tax forms
  • Set up wages, deductions and benefits in the payroll system
  • Calculate gross pay, withholdings and net pay each cycle
  • Issue pay by direct deposit or check and provide pay stubs
  • Prepare and file payroll tax reports and deposits on schedule
  • Provide year end forms for employees and contractors

What changes the price

Every job is different, so we do not publish prices. These are the things that move the quote up or down.

  • Number of employees
  • How often you run payroll
  • Hourly versus salaried workers and tip or commission pay
  • Number of states or localities
  • Whether benefits and deductions are managed
  • Whether tax filings and deposits are included
  • Whether time tracking is connected

What a written quote should spell out

  • Whether tax filings and deposits are included
  • Year end forms included
  • Setup help for new accounts
  • Support hours and who you contact
  • Any additional charges for off cycle runs, described in words

Questions to ask before you hire

  • Do you file and deposit payroll taxes on my behalf?
  • Who is responsible if a filing is wrong or late?
  • How do you handle multiple states?
  • What forms will I receive at year end?
  • How do you protect employee data?
  • How do I get my data if I leave?
  • Can you help me classify workers correctly or should I ask an attorney or CPA?

Red flags

  • A provider who holds funds without clear terms
  • No written statement of who is responsible for filings
  • Pressure to classify workers a certain way without review
  • Missing or late tax notices that you only learn about months later
  • A provider that cannot explain what happens if a filing is late

What you can do yourself

Small employers can use payroll software and follow agency guidance, but errors can lead to penalties. Gather employee tax forms, pay records and your tax account numbers. Call a provider, CPA or enrolled agent when you grow, add states or receive notices.

Licenses and permits

Payroll services generally do not need a license. Ask who is responsible for filings and deposits, check references, and ask about any credential such as a payroll certification.

Payroll services questions

Does a payroll provider handle my taxes?

Many do the filings and deposits, but not all. Confirm in writing.

Who is liable if a filing is wrong?

Terms differ. Ask for the answer in writing.

Are contractors on payroll?

Usually not as employees, but they may receive year end forms. A CPA or attorney can help with classification.

Pro reviewers

Pros who offer payroll services remotely can improve this guide, like Wikipedia. We check every edit before it goes live. Every approved edit is credited in the edit history and on the pro's profile.

Edit history

How guide reviews work

How it works

  1. 1. Describe the job

    Pick the service, add your ZIP and a sentence about what is going on.

  2. 2. Pick the pros you want

    See screened pros who serve your ZIP and choose who you want to hear from.

  3. 3. They reach out

    They contact you the way you chose: phone, email or in-app messages.

More accounting, tax and finance guides

Find a pro near you

Find a pro

About this guide

Request payroll services