What should I ask about the software a payroll service company runs on?

Start with the stack. Ask the owner to list every tool: the calculation engine, the client portal, the time-capture link, the document storage and the connection to banks. For each, find out who the contract is with, when it renews, and whether it is in the firm’s name or in the owner’s personal name.

Then ask about change of control. Some vendor agreements limit transfers or require consent. Ask your lawyer to read them. Ask how pricing is set, what happens if rates rise, and how many other systems depend on this one. A payroll firm tied to one vendor, with no tested alternative, carries a concentration risk you inherit.

Finally, ask about daily use. Who configures the tool, who understands its quirks, and where are those settings written down? How are updates tested before they reach live payrolls? Request the vendor’s support history and any outages that affected clients, along with how the firm explained them. If the system is old or heavily customized, ask what a move to a newer one would involve, and whether the staff could cope with it.

Key takeaways

• List every tool and check who holds each contract, and whether it sits in the firm’s name.
• Have your lawyer read what the contracts say about a change of owner.
• Ask how updates are tested and who understands the settings.
• Learn what an exit from the vendor would involve, including time, cost and client disruption.