Is your Payroll Provider on the Up and Up?
This week, a disturbing news story emerged on the front page of the LA Times, in which a partner at LA Payroll, a small payroll firm in Los Angeles, CA, allegedly stole clients’ tax funds to the tune of millions of dollars.
So, how does a business protect itself from situations like these? Fortunately, there are several best practices that most legitimate payroll providers follow. Below are key recommendations every business should consider when selecting a payroll provider.
Find a payroll provider who:
- Has a crime bond. Just like any other type of service provider, bonding protects not only your business as a client but also the payroll provider’s business. Many smaller payroll providers will skip or skimp on bonding to save money, where else are they cutting corners to save a buck? SBS Payroll maintains a fifty million dollar bond and has never had a claim on the bond in all of our years in business.
- Undergoes independent annual internal control and financial audits. SSAE 16 audits are the industry standard for payroll providers and provide clients with an added guarantee that the company maintains strict internal controls for managing payroll funds, tax impound accounts, and sensitive client/employee data, with internal checks and balances. Like SBS Payroll, your provider should complete an annual SSAE 16 audit in addition to annual independent and semi-annual internal audits to improve accuracy and timeliness and to reduce client risk.
- Conducts background checks on all their employees. Ensure that your payroll provider knows who is working for them. Any business that deals in financial transactions should conduct a thorough screening process on all their own employees, to include criminal background checks, credit checks and reference checks.
- Has internal procedural checks and balances in place. Even the most automated payroll systems leave room for errors. Make sure your payroll provider follows procedures for internal controls for all aspects of payroll processing. Your provider should also encourage checks and balances within your organization. A secure payroll system should restrict access to only those individuals who are authorized to complete any given portion of the payroll process.
- Allows you to conduct a site visit to their place of business.Verify that you are dealing with a legitimate company by asking to take a tour of your payroll provider’s facilities. They should be a brick and mortar business and have the following security features at their location; secured access to the building and/or offices, secured access to areas containing sensitive materials like check stock and employee/client business data, segregated responsibilities to protect client/employee funds, and make note whether or not employees lock their computers when they leave their desks.
As long as you have done your due diligence and used the above tips, your business will typically enjoy better pricing and more attentive customer service by using an independent payroll provider.
SBS Payroll (SBS) employs multiple safeguards to protect our company and our clients from fraud at all levels of the organization. We have a history of successfully helping clients who have been affected by fraudulent payroll providers. With our “clients come first” philosophy, SBS has also assisted disgruntled clients who have encountered lackluster servicing with the “big box” payroll providers. SBS Payroll has several flexible payroll solutions, receives annual SSAE 16 Audits, and the security of a fifty million dollar Crime Bond, to protect all its clients. SBS Payroll offers businesses the ability to process payroll safely and affordably so they can get back to their core business.