How to Choose the Right Payment System for Your Gig Workers?

If you decide to work with a payroll provider to pay your gig workers, you should evaluate the payroll providers on the following factors:

• Ease of use

  • Let us say you are starting out with a few W2 employees and a large number of contractors and you know that down the road you will have to convert your contractors to W2 employees, you should make sure that your payroll provider uses one system for paying both contractors and W2 employees. If that is the case, it will be much easier to convert contractors to employees. However if your provider has completely different systems to pay contractors versus the employees, when the time comes to convert the contractors to employees, it will be a heavy lift because all the information from one system will have to be transferred to another system. This can lead to delayed payments, errors etc.

• Cost

  • Many payroll providers have different pricing mechanisms for paying contractors versus W2 employees. Contractors might be getting paid daily, weekly, biweekly or monthly. W2 employees typically do not get paid daily.  Some payroll providers charge on “per pay check basis” whereas others charge on PEPM (Per Employee Per Month) basis where they allow you to run as many payroll as you want within a month for a fixed fee per employee. Depending on the number of employees and the frequency of payment, it might be better for you to work with payroll providers who use PEPM based pricing.

• Need for Billing 

  • In many industries who employ gig workers or freelancers, the amount paid to the contractor is an exact fraction of the amount charged to the end client by the company. For example, you may be running a tutoring service which provides qualified tutors to families. You charge families by the hour, for example $100/hour for every hour of tutoring provided. You also pay the tutor you have hired on an hourly basis, for example $50/hour. Because you will pay your tutor for the hours she worked and you will also charge the family for the same number of hours, you should look for a payroll provider who lets you pay your tutor for the hours she worked and use the same hours to generate a bill which you can submit to your end client. By combining the two functions into one system, you will avoid duplicity of data, errors and also potentially save on cost.

• Need for integration with a hiring system

  • Industries which employ a lot of contractors or freelancers typically see high turnover of workers. The employers are constantly hiring. When choosing a payment system, you should make sure that the system easily integrates with an Application Tracking System (ATS). These systems allow you to easily post jobs, manage the interview process, do background checks, make offers etc. You want to make sure that your ATS system easily integrates with your payroll system. It will save you lots of time and avoid errors. Otherwise your staff will spend countless hours copying and pasting data from your ATS system to your Payroll system. UZIO payroll platform seamlessly integrates with ZOHO Recruit which is a system used by lots of companies who hire contractors and temp employees. 

• Need for integration with an accounting system

  • Similar to the need for integration with ATS, you want to make sure the payroll system you choose also integrates with the accounting system you are using.  For example UZIO payroll system seamlessly integrates Quickbooks online system so that when you run your payroll, the needed data is seamlessly transferred to Quickbooks.