Ask the Expert: Is your data secure with a payroll service?

Will a payroll service really keep my confidential data secure?

Short answer: they'd better!

There are plenty of qualified payroll services out there, from the big names to smaller but eager companies who would be happy for your business. If your private payroll data isn't being handled safely, it's time to consider switching providers.

There are three times to consider security of your data: before, during, and after you transmit your payroll. The first situation is entirely up to you — you can't blame the payroll service if you leave your filing cabinet unlocked. Make sure you take basic computer and physical security measures to keep payroll data safe within your office.

• Small companies can phone in their information. This is extremely secure — if your competitors are tapping your phones, you've got bigger problems than data security.
• Online data entry is the most common method today. If your payroll service provides a secure web site with secure sockets layer (SSL) encryption, you can feel confident that your data is protected.
• Email is not a completely secure option. While it's extremely unlikely that hackers are reading all your email, email can be intercepted. If you really prefer email for transmitting payroll information, your best defense is to use PGP encryption, a free method of "sealing" your email so only the intended recipient can open it. (Learn how to install PGP here.)

No matter what precautions are in place to ensure the security of your information as you upload it, the provider has to take care of security on their end, as well. You don't want to wind up with the next PayMaxx — an online payroll company that was forced to close its doors after a security breach was exposed that could have allowed hackers to collect confidential information on thousands of customers.

When choosing a payroll service, ask what precautions they take with your data. They should have top-notch data centers with redundant firewalls and expert staff ready to prevent hackers.

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