Your Company’s Guide to Payroll Services
Managing payroll for your company is a complex task with many repetitious steps involved. Even simple payroll tasks can become daunting for startup businesses that don’t have a dedicated staff member with experience in HR, payroll, and benefits management. For larger companies with a large workforce, temporary or seasonal workers, and freelancer or independent contractors, payroll administration can quickly become a complicated management task requiring several employees to perform specific tasks.
The cost to administer payroll is significant expenditure and can greatly affect your bottom line. Related payroll costs include:
- Wages for payroll department employees.
- Office space, supplies, and equipment.
- Employer contributions for Medicare and Social Security, employee benefits, and unemployment and worker’s compensation premiums.
Payroll Tasks Every Employer Must Perform
- Setting up employee files including W-4 or W-9 federal and I-9 state forms, and insurance and retirement plan paperwork
- Reporting hours, salaries, or bonuses earned for each pay period
- Withholding federal, state, local taxes, and Social Security and Medicare contributions for each employee
- Managing employee wage garnishments including child support payments
- Calculating contributions for healthcare premiums and matching for 401K contributions
- Disbursing withheld funds, premium payments, and contributions to tax authorities and benefits plans
- Preparing payroll checks
- Initiating direct deposits
- Preparing and distributing year-end W2 or 1099 forms
- Updating information whenever employees change withholding status or make voluntary changes to their benefits plans
You can save valuable management time and reduce the administrative costs of your employee payroll system by outsourcing some or all the related functions. Here’s a look at the types of companies that offer outsourced payroll services, the benefits they can provide your company, and the expected costs of payroll services.
Options for Payroll Outsourcing
Companies that offer payroll processing service include:
- Bookkeepers and CPA firms - Working with a bookkeeper or CPA, you can customize services to include payroll checks, direct deposits, and filing quarterly tax withholding forms.
- Payroll service companies - Full-service payroll companies, like Paychex and ADP, offer a variety of services to choose from. You can include a benefits hub where your employees can manage their withholdings and benefits online, as well as view pay stubs and year-end W2 and 1099 forms.
- Online subscription-based software - If you use accounting software, they may offer a cloud-based payroll subscription service that allows you to automate most of your payroll functions.
How Payroll Outsourcing Works
Payroll outsourcing involves contracting with another company to perform some or all your payroll-related tasks, usually off-site. {' '}