As the workforce becomes increasingly flexible, with more employees working remotely or on flexible schedules, payroll outsourcing is becoming an essential solution for businesses of all sizes. When things go wrong with payroll processing, a speedy and skillful resolution is critical, and oftentimes having an expert around to handle it is key. In-house payroll teams deal with a lot of sensitive information and employee data, including bank accounts, birthdates, and Social Security details. So when it comes to processing your payroll in-house, compliance and accuracy are of the utmost importance. Hiring an individual who’s unfamiliar with or just learning compliance rules could pose problems for your finances and employee relations. In addition to payroll outsourcing, Horizons can become the Employer of Record, or ‘Global PEO’, for your international workforce, taking over all employer obligations and liabilities on behalf of clients.
- Payroll processing may also be bundled with a number of other HR or accounting services.
- Payroll is the process of more than just giving your workers their wages on time.
- While many cloud-based programs for payroll data management use encrypted servers and firewalls for security, they are juicy targets for malicious activity.
- Payroll outsourcing, in the most simple sense, is hiring a third party to process employee payroll distribution and record keeping.
Payroll outsourcing services streamline your payroll processing system. This includes calculating tax withholdings and deductions, depositing employee paychecks for each timesheet, compiling payroll reports, and producing payroll registers. Payroll software is more of a DIY tool rather than an outsourcing service, but many offer full-service solutions with customer support. Payroll software can be a great solution for business owners who are open to keeping part of the payroll process in-house and can often be one of the cheapest options. Outsourcing makes sense for businesses that don’t have staff with the time or experience to do payroll.
What Payroll Functions Can Be Outsourced?
As you know by now, there are many benefits to using an in-house payroll system, but there are just as many drawbacks to consider. Let’s take a look at the potential negatives of in-house payroll solutions. Remember, employers are ultimately responsible for the payment of income tax withheld and of both the employer and employee portions of social security and Medicare taxes. Explore Beti to learn why it’s the ideal choice for outsourcing payroll to Paycom.
At a bare minimum, the outsourcer will notify the employer or key stakeholders when payment goes out. Let’s explore what it entails and how it gives businesses like yours an edge. To save even more money, consider using a free payroll software solution.
Depending on the pay structure of your organization, you may distribute paychecks or direct deposit funds to your employees on a weekly or every two weeks basis. Payroll processing is often handled by your internal human resources or financial department. Alternatively, you can outsource your payroll by hiring a third-party payroll provider. There’s no guarantee outsourcing will be cost-effective, but many companies choosing to outsource find it cheaper overall than keeping payroll management fully in-house.
Nowadays, many companies do the opposite and outsource critical functions such as customer service and money-management tasks. This has grown to include many activities normally performed by administrators or human resources departments—including payroll duties. The process of managing employee payroll is often time-consuming—unless, that is, another company is hired to take care of it instead.
Support
Depending on your business operations, you may want to consider outsourcing all of your HR and payroll functions to a professional employer organization (PEO) like Rippling. Doing so can free you and other team members to focus more on growing the business and less on complying with payroll and employment-related legislation. Is there any aspect of payroll, tax, and employee benefits management that you know you want to keep in-house? Be sure to answer these questions as you look for the right payroll service provider for your organization.
Advantages of outsourcing payroll
Since PEOs act as employer of record, liability and responsibility for following local regulations sits with them rather than with the client. For businesses who want iron-clad assurance that the third party agency has sole compliance liability for payroll they can engage a PEO that has been certified by the IRS. Outsourcing payroll saves time and money, reduces errors, ensures compliance with tax laws, and allows businesses to focus on core operations. Payroll outsourcing is the process of partially or fully handing off payroll processing duties to a third-party company or service provider.
What Are Payroll Services?
Once you’ve found a payroll outsourcing provider, take a look at the contract. Pricing should be explained clearly, most likely calculated with a base service charge and additional charges per employee payroll processed, plus any additional services. Check for possible penalties for late payments or breaking the contract. How long will the contract be valid, and how long will prices be locked in at the agreed-upon rate? Ensure that your data will be kept private and that there is an acceptable legal channel to pursue of this or any other clauses in the contract.
Choose the right payroll service
Think about managing it, too, and finding ways of automating different processes. You need to collate and enter worker information and learn about a whole lot of other things to do it accurately. Once you’ve selected a payroll provider, you can begin the real onboarding process.
In addition to making direct deposits or sending physical checks, this should also include deducting employee tax payments and employee contributions to benefits packages. The payroll outsourcing provider should be able to process payroll in compliance with local regulations, though the employer is still liable for any breach of compliance. Some PEOs or Employers of Record (EORs) offer payroll outsourcing as a standalone service. Payroll outsourcing can do the work of a full-time salaried employee, or in larger companies, a whole department. Payroll outsourcers stay in business because they are able to offer these services at a high level of professionalism and at a lower cost than in-house processing would be. In startups, the resources may simply not be there to hire an in-house professional.
Paychex Flex
Making last-minute changes or resolving issues can be more efficient than connecting with a payroll company. As a small business owner, one of your many responsibilities is taking care of your internal team—after all, they’re the people how to calculate shares outstanding who keep your business in motion. Ensuring that your team gets paid accurately and on time should be among your top priorities as a manager. Outsourcing payroll means engaging a third party to process the payments to your employees.
Outsourcing payroll is a good option for companies of a range of different sizes. It saves money, time, and ensures full compliance with payroll laws and regulations. To learn more about which payroll company you should consider outsourcing to, check out our breakdown of the top ten payroll outsourcing companies. If you are or will be operating in multiple regions either nationally or internationally, only look into payroll outsourcing services that operate in those jurisdictions.
To find out more about outsourcing the payment of independent and international contractors see How to Increase Revenue through Contractor Management Outsourcing. Renowned investor Barbara Corcoran discusses the findings of a recent Forrester study showing the benefits that Paycom clients experienced. Christie Schmidt and Sarah Johnson join Morgan Beard to highlight industry-first technology and why it’s vital to millions of employees. To further evaluate your payroll needs, answer these ten questions about your business and its payroll system. Here are some of the categories we used to rank the providers that made the top of the list.
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