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How to Choose the Right Payroll Company

  • 11 minutes ago
  • 7 min read

Payroll sounds straightforward until you're actually running it. Then you realize there are federal and state tax deadlines to track, contractor classifications to manage, garnishments to process, and benefit deductions to get exactly right every single pay period. Miss a step, and you're looking at IRS penalties, unhappy staff, or both. For physicians opening or running a private practice or with a side gig where they employ others, payroll is one of those operational details that medical school never covered, but essential to keeping the lights on. The good news: with the right payroll company, this is one area where you can genuinely set it and (mostly) forget it.


If your accountant is not automatically using a particular vendor (and many accountants no longer want to deal with the hassles of payroll), you’ll have to pick one yourself. We often see posts on our online physician communities of physicians navigating this process of picking a payroll vendor. The challenge is that a "payroll company" covers a wide range of options, from bare-bones software that automates direct deposit to full-service providers that handle HR, benefits, workers' comp, and tax filings on your behalf. Knowing what to look for before you commit to a vendor can save you significant time and money down the line. Below, we break down the most important factors to evaluate when choosing a payroll company for your practice or business.


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8 things to look for in a payroll company


Learn if the company handles payroll needs specific to your business or medical practice


Not all payroll platforms are built the same, and you’ll want to make sure that the company you choose has the features you need for your medical practice or business. It doesn’t necessarily need to be industry specific, but it does need to handle nuances without requiring complex workarounds on your end. For example, you may need:


  • Different package sizes depending on the number of people being paid: Some side gigs or solo practices are S-corps only running payroll for you, or for a small handful of people. Ideally you’re not paying the same price as a business that has many more people or complexity

  • 1099 contractors vs. W-2 employees: Many practices use a mix of employed staff and contracted providers. Your payroll platform should support both without confusion.

  • Different pay schedules or structures: You might pay your front desk staff biweekly and your contractors monthly or on a per diem basis. Confirm that the platform can handle this cleanly.

  • Benefits integration: If you're offering health insurance, retirement plans, or FSAs, look for a provider that either integrates with your benefits administrator or handles benefits in-house.


PSG Perk: Gusto is the payroll platform which many physicians in our community use and consistently recommend. New customers can get their first month free through our affiliate link.



Ask if the payroll company manages tax compliance and filing


This is likely a non-negotiable for most busy physicians. Payroll tax errors (late filings, miscalculated withholdings, incorrect employee classifications) can trigger IRS penalties that far exceed whatever you might save by going with a cheaper provider. Ask any payroll company you're evaluating the following:


  • Do you handle federal, state, and local tax filings automatically? A full-service provider should file and pay payroll taxes on your behalf, not just calculate them.

  • Will you handle W-2s and 1099s at year-end, and is there an extra charge for this? Ideally, this should be included, not an add-on, especially if you’re a practice that has many employees, or charges will add up fast.

  • What happens if there's an error? Reputable providers will have an error guarantee, meaning they cover penalties resulting from their mistakes.



Make sure the platform or tool is easy to use without a dedicated HR team


Many smaller practices or side gigs/side businesses don't have an HR department. That means you, your office manager, or your practice administrator may be the one running payroll. Without dedicated expertise in these things, you’ll want the platform to be as easy as possible to navigate. Look for:


  • A clean, intuitive interface that doesn't require a lengthy manual to navigate

  • Onboarding support that walks you through setup 

  • Mobile access so you're not tied to a desktop when you need to review something

  • Employee self-service so your staff can update their own information, access pay stubs, and manage W-4s without involving you


Platforms that are built for small businesses tend to score better here than enterprise-level systems, which are often overkill for a smaller practice or business.



Identify the tools that the company integrates with that you’re already using


While your payroll system can live in isolation, many times it needs to integrate with other information, like your accountant or accounting software or your benefits and time-tracking tools. Fragmented systems that don't talk to each other mean manual data entry – and manual data entry can mean errors. The fewer manual steps between systems, the fewer opportunities for something to go wrong. Before committing to a payroll provider, confirm the following platform integrations:


  • Accounting integrations: QuickBooks, Xero, and FreshBooks are the most common. Verify that the integration is bidirectional, not just a one-way export.

  • Time tracking: If you track hourly staff hours, does the payroll system pull that data in automatically? Whether you’re using Microsoft Excel or something else, you should have data bidirectionality in your timesheets. 

  • Benefits and HR: If you're using a third-party benefits administrator, check whether the payroll platform can sync deductions and contributions without manual reconciliation. You can save a lot of headache if the platform already integrates this information.



Weigh in all of the costs, and what’s included


Payroll pricing is rarely as simple as the headline number suggests. A platform might advertise $40 per month, but by the time you add per-employee fees, year-end filing, HR features, and contractor payments, the number looks different. When comparing providers, make sure you can get a full picture of the following:


  • Base subscription fee

  • Per-employee or per-contractor fees

  • Year-end tax form fees (W-2s and 1099s should ideally be included)

  • Add-on costs for things like same-day or next-day direct deposit, benefits administration, or HR tools


Some providers charge more for off-cycle payroll runs. If you occasionally need to run payroll outside your normal schedule (for example, a bonus or one-off contractor payment) that could all add up, so ask the payroll company upfront.



Ask what their customer support looks like


You're not going to think about payroll support until you need it urgently, usually around a deadline. At that point, your response time matters, so here are some questions to ask before you sign up:


  • What channels are available? Phone, chat, and email are the basics. Some providers offer dedicated account managers, which is worth the premium if you're frequently running into questions.

  • What are the support hours? If you're running payroll on a Friday afternoon, you want to know someone is reachable.

  • Is there a knowledge base or help center? A well-documented platform means you can often answer your own questions without waiting on hold.


Check recent reviews, specifically looking at what users say about support responsiveness. A platform that looks great in a demo can fall short when it comes to actually resolving issues.



Determine if the company can scale with your practice


You might be the only one on payroll, or only hiring one employee now, but a year from now, you could be growing to five or ten employees. Choose a payroll provider that can grow with you, without requiring you to switch platforms and migrate all your data. The cost of switching payroll systems mid-stride is time vetting and onboarding, adjusting to the learning curve, and any complications associated with the risk of something going wrong in the transition. Consider the following questions to ask:


  • Does the pricing scale reasonably as you add employees, or does it get prohibitively expensive?

  • Can the platform handle increasing complexity?

  • Does it offer HR tools you might need later (offer letters, onboarding workflows, PTO tracking, compliance support) even if you don't need them today?



See if other physicians are using the company


Your community is genuinely useful when it comes to evaluating a payroll company. In our online physician communities, we regularly see members share their payroll setups and what's working for them. The right platform depends on your practice's specific setup. A solo-owner S-corp has different needs than a five-provider group practice. Before committing, ask colleagues in similar practice structures what they're using and what they'd change.



Conclusion


Choosing a payroll company isn't the most exciting part of running a practice, but it's one of the decisions that pays off quietly in the background every two weeks. That’s when your staff gets paid accurately and on time, your taxes are filed without drama, and you're free to focus on patients. Here are a few practical steps before you decide:


  1. List your non-negotiables (tax filing, integrations, support hours, contractor support, etc.)

  2. Get quotes from two or three providers and compare the total cost, not just the base fee

  3. Trial the platform if possible before committing (most offer a free trial period)

  4. Ask in our community (members share real-world experience with payroll tools regularly!)



If you're just starting out and want a solid, physician-friendly option used widely in our community, here’s a quick reminder that Gusto offers our members a free first month through our affiliate link.



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