Top 5 Questions to Ask a Potential Payroll Tax Provider

5 questions to ask a potential payroll tax provider.

If you're trying to process payroll taxes in-house, you know just how challenging and complex it can be. If you're thinking about making a change to outsource your payroll tax process, ask potential providers these five questions. Their answers will help you compare apples to apples so you can make the right choice.

Payroll tax filing, remittance and reporting are already challenging and complex. You may be trying to process your organization's payroll taxes with a lean team, and it's becoming increasingly complex with remote and hybrid workers. You have to track, understand and implement multiple local, state and federal tax laws and regulations with accuracy, so you can proactively avoid penalties, interest and potential legal action.

Some companies prefer to handle the disbursement, filing and reporting with their internal payroll tax team. It might work for you, but it can be easier.

Outsourcing the process relieves some of the burden on your team. If you're considering outsourcing your payroll tax tasks, you can save time and money by asking the right questions. The right partner can help you by:

  • Monitoring and implementing the latest tax legislation through an experienced tax compliance team
  • Using automated business rules to detect and flag errors in your tax information
  • Automating quarterly and annual tax deposits and filings – for federal, state and local jurisdictions
  • Providing dedicated support and expert service

Here are five key questions to ask potential payroll tax providers during the evaluation process:

1. What specific payroll tax services do they offer?

Payroll tax processing is complex, so you'll want to be sure that any provider you plan to work with can provide end-to-end services to make the entire process easier. Before meeting with anyone, be clear about your needs so you're prepared to ask the right questions.

  • Can they provide end-to-end automated services, including tax deposits and filings, monitoring the latest tax legislation, researching and responding to agency notices, and correcting reconciliation errors?
  • Do they give you detailed and actionable reporting?
  • Do they have workflows that help reduce the risk of penalties by identifying issues and errors before they happen?

This is important because you want to choose the provider that offers the most comprehensive outsourced services to simplify the burden on your payroll team.

2. What types of protection are in place for my data?

In the world of data breaches, dealing with sensitive employee information requires you to have strong security protocols. You want to make sure you're dealing with a provider that can help ensure that you have privacy precautions in place. Be sure to ask any provider you're evaluating what security measures, certifications, reviews and other processes they have, such as:

  • ISO Certification
  • SOC 1 Type 2 reports
  • SOC 2 Type 2 reports
  • Regular business continuity and redundancy hardening and testing
  • Best practices based upon HIPAA and PCI standards for service and operations

Today's security threats and breaches are real, so the provider you choose needs to keep evolving its tools and technologies to ensure that your data is protected at all times.

You should judge a provider's security based on its ability to protect employee data from unauthorized access, use, disclosure or modification. By implementing robust security measures and complying with industry standards and regulations, providers can help protect their customers' data and maintain their trust.

3. How do they help ensure compliance for their clients?

Compliance is a major consideration. How do you ensure that the providers you're evaluating are staying up to date with the latest tax legislation? How does the provider ensure that they are staying on top of changes in tax requirements in every jurisdiction?

  • What is their track record or experience in helping clients avoid penalties and interest?
  • Does the provider have proven regulatory expertise?
  • Do they have existing relationships with the proper agencies?

Select a payroll tax provider that can help ensure compliance based on their process and platform. You're hiring a payroll tax provider to reduce your risk of non-compliance and avoid fines and penalties.

4. What is their service model?

Having an experienced and dedicated support team available to answer questions in real-time is critical when you need help. You'll want to ask about their service model:

  • Does their model include a responsive team of dedicated specialists who function as an extension of your team?
  • Can your questions be answered promptly and thoroughly through live channels like phone and email?

When you need support, you need it now. You want a provider that treats you like the priority you are.

5. Do they use intelligent payroll tax technology?

The technology that the payroll tax provider uses needs to be comprehensive and up-to-date. So ask:

  • Are they using intelligent analytics to automate calculations, file taxes, and identify and flag any potential errors or compliance issues?
  • Can their technology easily integrate with your systems?
  • Is their technology constantly monitored and updated as legislation changes?

Using the right technology for payroll tax can help improve accuracy, efficiency and compliance with regulations while also reducing the risk of errors, fraud and penalties for non-compliance.

Be sure to look at a potential payroll tax provider's reviews on Trust Radius and G2 to see what others are saying about them.

Asking the right questions when evaluating a payroll tax provider can help ensure that you're choosing a partner that can help your organization remain compliant and reduce your team's workload while reducing risk, lowering costs and creating greater efficiency in your processes.

Want to learn more about the importance of having the right payroll tax provider as your partner? Download "Key Considerations to Reduce Organizational Risk With Payroll Tax Management" today!