Payroll Companies & Payroll Services in Texas (TX)

How to choose payroll companies in Texas

Where to find payroll companies in Texas, from big metros to small towns

A Texas employer has no state income tax to withhold, and that fact shapes the whole payroll market here. The paycheck math is simpler than in most states, so the value a provider adds comes from getting the Texas Workforce Commission filings right, paying on time under the Texas Payday Law, and handling employees who live or work outside the state.

Most providers cluster where the people are. Houston is the largest city, followed by San Antonio, Dallas, Fort Worth and Austin, with Fort Worth recently edging past Austin for fourth place. El Paso anchors the far west. The Dallas-Fort Worth and Houston metros hold the deepest pool of payroll firms, including bookkeepers who bundle payroll, CPA practices and specialists in construction, oilfield services, restaurants and healthcare. San Antonio and Austin have solid choice too.

Inside the DFW metro, the suburbs carry their own local firms. Grapevine, between the two big cities near DFW Airport, is a practical base for businesses in the mid-cities. Down in Johnson County, Burleson serves owners south of Fort Worth who would rather not drive into the city to meet their payroll person. Out in the Panhandle, the Valley or West Texas, expect fewer local offices. Many employers there use a regional firm based in a larger city or a national service with phone and online support.

Texas payroll rules to check before you sign with a provider

Fewer state taxes does not mean fewer state rules. These come up most when you outsource payroll.

  • Unemployment tax with the TWC. You must register with the Texas Workforce Commission within ten days of paying wages and becoming liable for unemployment tax. Ask whether the provider registers you or expects you to do it, and who files the quarterly wage report and pays the tax. Rates have recently run from 0.32% to 6.32% on the first $9,000 of each worker's wages; confirm current figures with the TWC.
  • Paydays. Employees exempt from federal overtime must be paid at least once a month. Everyone else must be paid at least twice a month, with pay periods as close to equal as possible. If you never designate paydays, the law sets them as the 1st and 15th. You also have to post your paydays at the workplace.
  • Final pay. A worker you fire or lay off must be paid in full within six calendar days. Someone who quits is paid on the next regular payday.
  • New hire reporting. New and rehired workers go to the Child Support Division of the Office of the Attorney General within 20 calendar days of the hire date. This is separate from your quarterly wage report to the TWC.

Two of these deserve a direct question on any quote. The first is off-cycle checks. Six calendar days includes weekends, so ask how fast the provider can run a single final check and whether it costs extra. The second is multi-state staff. With no state withholding at home, a Texas company can forget that a remote worker in another state brings that state's tax. The Attorney General's office also asks multi-state employers to choose Texas as their new hire reporting state, so a provider should know how to set that up.

Ordinary payroll processors and PEOs are treated differently. A professional employer organization, which co-employs your staff and often bundles benefits and workers' comp, must hold a license from the Texas Department of Licensing and Regulation. A full license requires an FBI and state background check; out-of-state PEOs with 50 or fewer Texas employees can hold a limited license. Look up any PEO on the TDLR site before you sign. For a standard payroll service, ask whether it carries a fidelity bond or crime insurance and how it holds the tax money it collects from you.

How to compare local payroll services in Texas

Start with how you want to be served. A local firm in your metro can sit down with you, pick up the phone on payday and tends to know which TWC notices matter. A national platform usually costs less per employee and has better self-service tools, but support may be a queue. Plenty of small Texas employers split the difference with a local accountant who runs payroll on a national platform.

When you meet providers, ask:

  • Who answers when a payroll is wrong, and how fast can they fix it?
  • Do they file TWC wage reports and new hire reports, or only cut checks?
  • What is the full monthly cost, including year-end W-2s, off-cycle runs and setup?
  • Who pays any penalty caused by their own filing error?

Get two or three references from clients in your industry and about your size. A 12-person roofing crew in Burleson has different needs than a 60-person dental group in Plano. Ask them about late filings and how notices were handled.

Read the contract for term length, auto-renewal, cancellation notice and what happens to your payroll records if you leave. You want your data in a usable format and copies of every TWC filing made in your name. Keep the term short until the provider has handled at least one full quarter for you.