Payroll Service Comparison: National vs local payroll providers
The payroll process is one of the foundational pieces of any business. This is where you will pay your employees timely and accurately to keep them engaged and retained, as well as keep your business in compliance with federal and state payroll tax obligations. One of the most important decisions that a business must make is whether or not they have the resources to process payroll in-house or if they need to outsource this process to a payroll vendor. When a business decides to outsource their payroll to a third party vendor, there is no shortage of options available including both national and local providers. In this article, we will look at a comparison of some of the national versus Paper Trails, a local payroll provider.
What is a third party payroll service provider?
First, let’s establish what a payroll vendor does. A payroll vendor takes on the entire responsibility of paying a business’ employees. Typically, through automated software, a vendor will:
- pay employees via live check or direct deposit
- withhold proper payroll taxes
- make necessary pre-tax and post-tax deductions
- manage wage garnishments
- file appropriate taxes with the IRS
Additionally, some payroll vendors can provide additional services to businesses. These services can include:
- timekeeping and time off tracking
- applicant tracking
- employee onboarding and offboarding
- benefit administration
- expense management
- and more
What are some of the national services providers?
When looking at national payroll providers, there are numerous choices out there for businesses. Let’s take a look at some of the big ones that include ADP, Paycheck and Paylocity.
ADP is a comprehensive global provider of cloud-based Human Capital Management solutions and Business Process Outsourcing (BPO) services, analytics and compliance expertise.
- Brand recognition and a strong brand portfolio.
- Reputation as a leading provider of HR services, including data-driven workforce planning and management.
- Global presence to provide custom HCM solutions to each market.
- Skilled and motivated workforce through successful training and learning programs.
- ADP Total Source which is a certified PEO offering.
- Efficient onboarding via digital tools that automate implementation processes.
- Real-time digital support, automated or interactive, for faster resolution.
- Frequent website and technology updates can wreak havoc with clients, as they may require continual training/learning.
- Several class action lawsuits for allegations involving its’ payroll services, violation of local laws, and alleged discriminatory practices.
- FAQ section is not very helpful, requiring clients to contact customer service for their queries customer service coupled with long wait times.
- Poor implementation support with no dedicated customer service reps to walk through set-up.
- Prioritization of customer service for larger vis-à-vis smaller organizations.
- Lack of pricing transparency with hidden fees that are not disclosed.
- Integration with other software like QuickBooks is not optimized.
Paychex is a global company founded in 1971, with HR solutions to fit the needs of any business, from do-it-yourself payroll to comprehensive HR outsourcing.
- Well suited for distributed workforces, with remote-friendly features.
- E-learning courses for remote training.
- User-friendly mobile app with strong employee self-service features.
- Regulatory tools are also helpful for employers that must juggle compliance requirements across different cities and states.
- Paychex can manage any kind of payroll compliance issues, from local taxes to shift differentials to customized reporting.
- Good online payroll service for larger businesses, as it can manage payroll from 50 to 1,000+ employees.
- Flexible pay options, including same-day ACH functionality.
- Low client retention rate of 84%; most of the major industry players have retention 90%.
- Paychex is best for organizations with bookkeeping/accounting staff to oversee the service – can be a problem for customers who do not have specialized staff.
- Not very suitable for small businesses on a tight budget.
- Their offering is too broad for small (1-10EE) businesses needing a simple payroll system.
- Excessive turnover detrimentally affects customer service.
- Platform is not built for growing companies and they struggle to make the necessary customizations and configurations as companies get more complex.
- Pricing not very transparent due to extra costs which are not very clearly stated at the outset.
Paylocity is a leading provider of cloud-based payroll and HCM software solutions to businesses under 5000 employees.
- Comprehensive payroll and HCM cloud-based suite on a single platform.
- Software can be operated by a single administrator without the support of an in-house IT department.
- Ability to innovate and respond to client needs rapidly.
- Intuitive self-service functionality for employees and managers, combined with integration across all solutions to increase employee engagement.
- Provides a modern, intuitive and consumer-oriented user experience – built to connect with today’s workforce.
- On-demand and/or in-class training is also provided to clients.
- Comprehensive security programs, designed to ensure security & integrity of client and employee data, protect against security threats or data breaches and prevent unauthorized access.
- Although Paylocity claims to have a single database, they have disconnected databases beyond core HR and payroll.
- Timekeeping is separate, and data transfer between Payroll and Time is often fraught with issues as the systems do not speak well with one another.
- A homegrown software platform with a strong team of software developers, programmers, software engineers and technological staffers that don’t have the required HR, payroll and tax related expertise.
- While Paylocity ”demos well”, customers are frequently disappointed by the reality of what can be delivered vs. demo’ed.
- Very lengthy setup as long as 90 days for a small business of 40-50 employees.
- Payroll features were initially designed with accountants and HR directors in mind and those without any skill in payroll might not find the program simple enough.
- For small businesses that don’t need upgraded HR services, Paylocity can be cost-prohibitive.
What is Paper Trails?
Paper Trails is a local payroll provider serving clients mainly located in the Northeast. Paper Trails uses isolved as its’ HCM software. isolved is a dynamic HR platform providing people-first human capital management and payroll services. This platform assists Paper Trails and its’ clients in automating human resource tasks to help employers manage employees. Based in Salt Lake City, Utah, isolved is a leading software provider for small-to-midsized companies, serving 5 million employees and 145,000+ employers.
Let’s take a look at the stengths and weaknesses of isolved and Paper Trails.
Paper Trails’ Strengths
- Small business feel focusing on providing excellent customer service. A live person will answer your call, email or text same day to get you the answers you need.
- Provides consistent trainings and education via monthly webinars, customized one-on-one training, frequently updated blog and more.
- A team of local and knowledgeable payroll and HR experts ready and willing to assist your business with all the latest payroll and HR compliance challenges.
- Competitive pricing with no hidden fees.
- Experience working with businesses across most industries.
- Caters to small and medium sized businesses, predominantly companies with less than 250 employees.
- Well-integrated payroll and time and attendance features.
- Learn & Grow is a comprehensive learning management system with courses, user instructions, guides and video tutorials. This allows for self-paced, on-demand learning reducing the burden on managers for training and education.
- People Services provides comprehensive service packages to make organizations of all sizes and across all industries more productive.
- Strong mobile friendly employee self-service portal. Allows employees to manage their payroll and HR needs including updating direct deposit information, printing paystubs and W2’s, clocking in and out, requesting time off, enrolling in benefits, submitting expense reimbursements, and more!
Paper Trails’ Weaknesses
- Limited experience with working with clients over 500 employees.
- Expertise in payroll and HR laws in most but not all states.
- Focuses more on payroll and core HR (hiring, onboarding, benefits) needs as opposed to full workforce planning and management.
- Does not offer a free trial.
- Currently no international capabilities.
- More small business and mid-market focused, as opposed to large business or enterprise focused.
- Being a budding player on the HCM scene, brand awareness is not as strong.