Other questions to ask and things to watch out for:

1. What does your basic service include?
2. How quickly can you re-run a payroll if there is a mistake?
3. How long does the average client stay with you?
4. If I use your tax filing service, do you cover the penalties and/or interest charges?
5. Do you provide filing assistance for local taxes?
6. What is the cost to file taxes for multiple states?
7. What is the cost for your service for one year, including year-end W-2 forms?
8. How long are these rates in effect? What rate increase should I expect after that?
9. If there are payroll data mistakes, how long will it take to reconcile the errors and what will it cost?
10. Look for a stable provider.
    If a firm's only business is payroll, make sure to check the number of clients it supports and look for payroll service providers who have been in business for some time. This does not translate into “the more clients the better.” The large national payroll providers have hundreds of thousands of customers, yet historically they rank much lower in customer satisfaction surveys, due primarily to the fact they just do not historically provide that extra “personal touch” that most business owners want and often need. The big, national firms also have shareholders to please, so they must be focused on quarterly earnings reports. In other words, they must focus on sales at any cost and customer service is often secondary. Some national firms have double-digit attrition rates even though they show great quarterly sales numbers. Ask your representative how their company reports customer turnover and what the turnover rate means.
11. Double-check the math when switching.
    Transitioning to a new payroll firm can be challenging. Work diligently with your new service provider and be available for questions. Be especially thorough in reviewing the first payroll reports and checks issued through the service as well as the money paid to cover tax obligations. Reconciliation and audits are key.
12. Watch prices over time.
    Do not be swayed by services that waive charges upon sign-up. Often rates go up or charges start accruing after six months to a year of service.

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