This article is part of a larger series on Hiring.
Payroll professionals—be it a specialist or a manager—handle your company’s payroll and ensure your employees are paid correctly and on time. They work closely with your accounting and human resources (HR) teams to ensure tax remittances are correctly processed and employee benefits deductions are made accurately.
For small businesses, these duties typically fall on you or another employee that’s already wearing too many hats. As you grow, adding a payroll professional to your team can ensure the accuracy of your payroll and take some of the burden off your shoulders. Learning how to hire a payroll specialist or manager will allow you to efficiently find an employee that’s a strong fit for your company.
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Step 1: Determine the Type of Payroll Professional You Need
Not all payroll professionals are the same—some oversee all aspects of payroll, while others focus more on paying employees. Typically, your first payroll hire will be a payroll specialist, and then you might add a payroll manager later down the road.
Payroll Specialist vs Payroll Manager
Companies often use different job titles for payroll professionals—making it hard for you to tell specifically what an employee’s skills are—but they are often variations of these two. There are stark differences between these two positions, and understanding these can point you to which type of professional you need.
A payroll specialist’s primary function is to do payroll. They calculate total employee hours, gross pay, taxes, net pay, and benefits deductions and ensure that every employee receives their paycheck on time and correctly.
Meanwhile, a payroll manager oversees payroll operations, ensuring processes and procedures are followed to ensure accurate and timely payroll. They will also work to ensure compliance with federal, state, and local HR and employment laws. While this is an important role, this is most often a secondary hire after your payroll specialist.
Although most payroll managers are capable of doing everything that a specialist can do, their starting salaries are typically higher than a specialist’s. As such, smaller businesses may find that hiring a manager right off the bat can be too taxing for their administrative budget, especially if they simply need more straightforward payroll tasks done.
When to hire
First payroll hire; best for small businesses with straightforward payroll needs
Subsequent payroll hire; best for growing businesses with a more robust payroll process
Average Salary Based on Indeed
Average pay of $24.12 per hour or $39,390 per year
Average pay of $38.75 per hour or $72,271 per year
Skills To Look For
Hiring employees can be broken into just a few simple steps—but you have to know the skills to look out for, especially when hiring a payroll professional. The most important skill a payroll specialist needs, for example, is attention to detail. When mistakes are made in payroll, not only will it affect employee morale and loyalty, but it can have potential legal consequences too. A payroll manager, on the other hand, needs strong people and process management skills.
You should also look for a payroll employee with the following skills:
- Advanced payroll knowledge
- Understanding of garnishments and deductions
- Basic understanding of payroll laws
- Critical thinking
- Basic knowledge of payroll accounting
- Excellent communication and customer service
- Data entry
- Human resources information system (HRIS) experience
- Intermediary or advanced Excel knowledge
- Ability to collaborate with a team
- Ability to review time sheets and calculate overtime
You may also want to look for special certifications. For example, the American Payroll Association (APA) offers two types of certification, the Fundamental Payroll Certification (FPC) and the Certified Payroll Professional (CPP) certification. The FPC provides training for entry- or mid-level positions, where the employee will handle most payroll duties. On the other hand, the CPP certification requires prior payroll experience and is an enhanced and more detailed payroll certification than FPC, which is often used by payroll managers. If you hire an employee without these certifications, you can always send them for training after you hire them.
Check out our guide on how to get the best payroll training for more ideas on how to train your payroll employee(s).
Step 2: Write the Job Description
The skills above should be the basis for your job description. You’ll want a payroll professional who meets those requirements, so you can be confident that your company’s needs are met.
When writing your payroll specialist or manager job description, pay close attention to the duties you need performed. While you may not know exactly what their daily work may look like, you can give applicants a good idea of the tasks they’ll perform.
It’s also a good idea to note on your internal job description how you’re classifying this employee. You can make them a full-time or part-time employee. Make sure you understand how to classify your workers correctly (full-time employees tend to work 35-40 hours weekly). This will help with HR matters and ensure that you’ll be paying the employee overtime if they’re a nonexempt employee.
Your job description should also sell your company. You’re going to use this as the basis for your public job advertisement, so answer some questions applicants may have:
- Why would someone want to work for your company?
- What benefits do you offer?
- What makes your business unique?
Proactively answering these questions gives potential candidates a better idea of your company culture and whether they’d be a good match.
Need help creating a job description? Check out our guide on how to write a job description and download our template to have an easier time.
Step 3: Create a Job Ad & Screen Applicants
Once you’ve written your job description, you need to post the job ad. Besides posting the opening on your company website, there are many sites where you can post a job for free to broaden your network. Be sure to check out our top recommended free job posting sites and use our tips on how to advertise a job to find qualified applicants for your open role.
Compliance Tip: If your business is hiring a payroll professional in certain states, you may need to put your target salary range in your public job posting. Check your state laws to see if you need to comply. Verify whether asking about a candidate’s past salary is allowed in your state as well.
When you post your job, be ready to receive applicants right away. Especially for an entry-level payroll specialist position, you’re likely to get applicants within a few hours. The more junior your position, the more candidates you should expect to receive.
We recommend creating a must-have list for your payroll professional role. No applicant will match up perfectly, so creating a must-haves list will allow you to compare applicants with your list and filter your candidates quickly.
Reviewing applicants will take time, but it is absolutely essential. Reduce all the applicants down to about a dozen that you want to interview. If you select too many, you’ll end up spending too much time interviewing unqualified candidates.
Step 4: Conduct Interviews
It’s crucial to find someone who knows how to handle payroll, which is why interviewing is an important part of the process when finding your payroll professional. There are laws and regulations around payroll, so you’ll need to make sure the individual you hire has at least a baseline understanding of these laws and how to handle complex situations.
When you schedule your interviews, you could email candidates—but we recommend calling them to schedule the formal interview and conduct a quick phone interview. This will allow you to speak with them for a few minutes, ask them a couple of quick screening questions, and get a feel for their communication skills and interest in the position.
During the formal interviews, we recommend using a structured interview process. Using this type of interview process, you’ll ask each candidate the same questions, ensuring a fair approach that lets you evaluate and compare their answers.
Here are some sample questions to ask during your payroll professional interviews:
- What HRIS or payroll software have you previously used?
- What is your typical payroll process?
- How do you collaborate with HR to ensure benefits deductions are correct?
- What payroll laws do you specifically watch out for during payroll runs?
- How would you improve payroll operations?
- What’s the most complex payroll situation you’ve faced and how did you handle it?
- When you’ve made a payroll mistake, how did you discover the issue and how did you fix it?
- How do you handle an angry employee who received the wrong pay?
These questions help you gauge each applicant’s ability to handle complex payroll situations. They also give you some insight into their behavior and whether they’d be a good fit for your company culture. In small businesses, payroll professionals work closely with many other employees and have a direct impact on every single employee. It’s important to know that the person you hire has the ability to work in a collaborative and respectful environment.
Step 5: Call References & Run a Background Check
After completing all the interviews, review your notes and compare the candidate’s answers. This exercise will help you further narrow down your candidate list. Ideally, you hope to have one standout candidate, but try to keep your final list to no more than three.
Ask each candidate for at least three supervisory references so you can do a reference check. Make sure you speak with at least two previous managers, as they can give you wonderful insight into how the applicant did their job and what it was like to manage them. If you’re hiring for an entry-level position, where someone may not have held a previous job, ask about any internships or college courses they took and see if you can speak with a professor.
You will have limited time with each reference, so ask direct questions, such as:
- Did this person make routine payroll mistakes? What about one-off mistakes?
- Could you depend on this employee to have payroll done on time, every time?
- Was the employee punctual and dependable?
- Tell me about the biggest challenge with managing this person.
- Why did they leave your company and would you work with them again?
You should also run a background check when you’ve decided on a final candidate. Not all positions require one, but for a job that views confidential and financial information like a payroll specialist or manager, you should absolutely conduct a thorough check. Before proceeding, make sure to get the candidate’s approval first. If you partner with a background check company, they can give you a template form to send the candidate.
Compliance Tip: Check your state laws. Some states require that companies run background checks after a job offer has been accepted.
Step 6: Make an Offer
After finishing all the above steps, you’ll hopefully have a solid candidate ready to fill your payroll professional position. Call them to give them the good news so you can gauge their excitement level and discuss any final details, like salary and start date.
Once you and the candidate have agreed to all the terms, write a formal offer letter. Make sure the letter includes:
- Job title
- Salary and pay frequency
- Start date
- Reporting structure
Include the full job description with the offer letter. Having the candidate sign off on their ability to handle the duties of the job lets you more easily hold them accountable if they fail to meet your expectations. Send the offer letter to the candidate and give them several days to review, sign, and send it back. Once you’ve received the signed offer letter back, it’s time to begin the onboarding process.
When Should Small Businesses Hire a Payroll Professional?
As your small business grows, you’ll need to hire more administrative staff to help manage the day-to-day operations of your business—and payroll is one of the most crucial aspects to have help in.
There is no hard and fast rule about when you should hire a payroll professional; it really depends on your specific needs. For instance, if you have commissioned employees working in several different states, you may need a payroll specialist sooner than a retail store with one location would. As such, you need to examine your payroll needs and weigh the benefits and costs associated with hiring a payroll specialist or manager.
Besides that, know that you don’t have to grow to a certain size to justify hiring a payroll professional—you can hire one on a part-time basis. Even a part-time payroll professional will help ease the burden on the rest of your team and work to ensure accuracy and compliance in every move.
Knowing how to hire a payroll specialist or manager is crucial to keeping your employees happy and your company compliant and making sure all taxes and deductions are accurate. To continue growing your organization, you need a payroll professional who can handle these duties for you. Following a structured process like the one we’ve provided will ensure you hire the right one for your small business.