You’ve found your dream house—it’s everything you’ve ever wanted, right down to the price. But there’s a problem: you don't like the neighborhood.
Choosing a payroll provider is no different. You might land a platform that has all the features you need, but what if the service is terrible? What if the company just doesn’t fit with how you work?
Suddenly, you’re stuck with a payroll partner that doesn’t feel like “home.”
- Think of the national provider as living out on your own on acres of land. When an issue arises, you're going to be more responsible for figuring it out.
- An independent provider will be more like your friendly neighborhood where you know all of your neighbors by name, and your kids are best friends.
At Whirks, we have close relationships with many of our clients because we're independent. We know them by name, sometimes we know their families, and when they stop by the office, they're greeted with a warm welcome.
But this may not be what you want or need in a payroll partner. Let's explore how these two providers are different and which is the right fit for you, your team, and your time.
What's a National Payroll Provider?
National payroll partners are large, publicly traded providers. They're the most established names in the industry because they've been around the longest.
Some well-known national payroll providers include ADP, Paychex, Oracle, Intuit Quickbooks, and Sage.
Other up-and-coming national providers may not have the tenure these larger companies have, but they're noted for combining payroll, time, and benefits software into one integrated solution.
Some of these providers include Paycor, Paycom, Paylocity, iSolved, Gusto, and Zenefits.
They are best known for their cloud-based platforms, intuitive ACA and executive reporting, and employee self-service options.
Typically, they are ideal partners for companies that have between 100 and 5000 employees.
National payroll providers are set apart from their independent counterparts due to their discounts, 401k offerings, additional insurance packages, and integrations.
Because they're highly customizable, they are an ideal fit for large enterprise businesses (think FedEx and Amazon).
What's an Independent Payroll Provider?
An independent payroll provider is a smaller, locally owned, and regionally-based payroll company.
They focus on delivering white glove customer service, i.e., you're usually going to speak with one person who helps you leverage the technology and answer your questions.
These regionally-based providers normally come at a higher cost than the national payroll companies and are usually less customizable.
They stand out for their customer support since they serve fewer clients and can readily support your needs. Plus, they usually offer additional services like HR consulting, benefits administration, and other financial services integrated into one platform.
Independent payroll providers are an ideal fit if you're a small to mid-sized business and want an ongoing relationship with your support team.
The Big Differences Between Independent vs. National Providers
We've defined four main differences between independent and national providers to help you understand if they're the right fit for you and your business.
1. Company Size & Location
If you have ten employees, your priorities are different than a company with a thousand. There are various compliance issues and the data is more difficult to maintain. Here's why company size and location matter for smaller and larger businesses.
Midsize Businesses
If you're growing quickly as a midsize company, you need to consider if the payroll provider works in your industry and with your state. You may have multi-state or international employees that are easier to handle for a larger, national company.
You also may need to consider adopting the following features:
- A powerful Applicant Tracking System (ATS) for recruiting several employees
- A Learning Management System (LMS) for training your teams quickly and efficiently
- A Performance Management System for giving managers access to employee performance and setting up approval workflows
Smaller Businesses
As a small business, you might want the same advanced features larger companies use—and independent payroll providers can deliver them!
However, with fewer employees who often wear multiple hats, you’re likely still focused on getting a good grasp on the basics.
That’s where having a single point of contact becomes invaluable. An independent payroll provider can offer personalized support, guiding you through the process, answering your questions, and becoming a trusted advisor as your business grows.
Rather than complex integrations, you get practical support and a strong relationship with your provider. This can make a huge difference if you’re just starting out or need hands-on guidance as you grow.
2. Industry Needs
Different industries have specific payroll needs that require specialized knowledge. Does your payroll provider really understand your industry’s challenges? For example:
- If you're in construction, you must segment employee labor for job costing.
- If you're a federal or state government office, you may need to have certified payroll options.
- If you're a home healthcare agency, you need to manage multiple shift differentials for medicare reimbursements.
Most companies value a partner who is an expert in their industry. Be sure to ask colleagues, your CPA or business coach, and networking groups if a particular provider understands those specific needs.
Don't be afraid to ask a payroll provider for a case study in your industry, a white paper, or even an industry-specific reference if this is important to you.
3. Customer Service
It's best to ask every provider what ongoing customer service looks like and for you to decide how much support you really need.
Midsize Businesses
If you’ve got a large HR team that doesn’t need a lot of hand-holding, national providers’ automated systems and self-service options might be sufficient.
However, if you want personalized, responsive customer support, national providers can fall short. You’ll likely need to pay extra for premium service tiers, or you might find yourself frustrated by the impersonal nature of their support.
Smaller Businesses
This is where independent providers shine. If you value having a single point of contact who knows your business, independent providers are unmatched.
For small businesses without dedicated HR staff, having one point of contact is a lifesaver for small businesses, especially if you aren't seasoned in HR issues, compliance, and running payroll.
4. Pricing
By this point, you may have an idea of who would be a better fit for you. But pricing is a huge factor in your decision – so, what's the real price you'll pay?
Most independent and national providers charge the following fees:
- A monthly base fee
- A Per Employee Per Month (PEPM) fee OR a per payroll process fee
- Fees for each module you need (like payroll, time, or benefits)
- Charges for additional services (like insurance and HR services)
On paper, national providers may seem like the cheaper option due to volume discounts and package deals, but beware of additional costs. Fees can pile up as you add services like benefits administration or HR support. National providers also offer discounts for long-term contracts, but if your needs change, you could be stuck in a deal that no longer works for you.
Independent providers are usually more transparent with pricing, but they may end up costing more per month compared to national providers. However, if the personal service and peace of mind are worth it, it's an investment many small businesses are happy to make.
Find the right fit for YOU!
When you buy your dream house, you never want to think about moving again. It's everything you've wanted, but the neighborhood is what sold you. Your neighbors are friendly and always offer a helping hand.
If you're switching payroll providers, you probably want it to be the last switch you ever make. It's not an easy process, and you need to partner up with someone you can trust. To find the best fit for you, your company, and your team, you have to evaluate the national players and the lesser-known names thoroughly.
Which provider aligns with your values? Do you like their technology? Is their customer service what you want?
Independent and National providers can both fulfill your needs - but identifying which is best is the tricky part.
If you own a larger business that's growing quickly, you have to hire several employees and find a platform that will scale with you.
But if you are a startup looking to hire your first couple of employees, and you know nothing about payroll, taxes, and compliance, you may consider opting for an independent provider.
Remember to evaluate as many options as you can, enroll the help of an unbiased party, and find the payroll partner that aligns with what you need, what you want, and can help you take every step towards success.
Curious about what other questions you need to be asking? Check out our article on the Top 5 Crucial Questions to Ask a Potential Payroll Provider.
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