| Outsourced Payroll Services Firms Can Help Increase Your Revenue and Profit Streams |
Businesses probably find payroll processing the most arduous of all the business functions. Changing taxation rules, turnover, dispersed workforce and employee expectations make payroll management an overwhelming task for in-house staff as they do not always have the necessary knowledge or expertise to process payroll efficiently or accurately.
Payroll providers bring cost savings for companies by creating timeliness, compliance and accuracy into the system. They also offer add-on benefits such as direct deposit, web reporting applications for employees, and management reporting, making them a worthwhile investment for every business.
Why should you outsource payroll services?
Payroll services companies take over the responsibilities of tracking employee hours, maintaining personnel records, paycheck calculation and distribution, and tax filing, enabling businesses to divert valuable employee hours towards profitable ventures for business development and growth. In addition, hiring payroll services companies is more economical than training and equipping in-house staff, and updating them in taxation laws and legislations.
Payroll services are professionals and they have the necessary expertise, technology and tools to manage payroll tasks efficiently, accurately, and in much lesser time. Their add-on services add value to business processes and improve the employee-employer relationship.
What services do payroll service providers offer?
Payroll service providers offer much more than payroll processing. They take over the administrative tasks surrounding payroll management and can offer some or all of the following services:
Recording employee hours
Payroll providers equip the business with a system that validates employee check-ins and time-offs. This prevents timecard fraud. Employees working away from office can also use online applications to enter the hours worked. The system also records vacation time, sick leaves, overtime and other elements that are accounted in payroll calculations.
Compliance with tax rules
The IRS penalizes businesses for the smallest transgressions in tax payments. Payroll providers ensure adherence to local, state and international tax obligations in payroll calculations and file tax within deadlines. They hold back money at the start of the year to build interest before submitting it to the government at tax time.
Timely and accurate paychecks
Payroll providers ensure that tax deductions and other adjustments are made to paychecks well in time for printing and distribution on the pay dates. Providers also offer direct deposit services for the convenience of employees.
Processing W-2 forms, 401K or retirement plans
Payroll service providers process year end W-2 tax forms and mail them to the employees. If the business offers a retirement plan like 401K, they also process deductions and send them over to the company managing the retirement plans.
Setting up and maintaining personnel accounts
Having a payroll service that sets up new accounts speedily allows businesses to bring new employees on board immediately. Payroll providers also maintain personnel records by adding and removing employee details.
Establishing industry best practices
Payroll services can spot inadvertent mistakes, made by business owners, before final submission. Too many errors can invite the undue attention of regulators and auditors. Sometimes businesses have to re-execute the whole payroll process because of errors in employee records. Payroll providers can avoid loss of time and money by imbibing industry best practices into the payroll management system.
Reporting tools
Payroll providers can provide three types of reporting. There are online reports for employees to view their pay sheets, benefits and verify tax deductions. Internal accounting reports allow business owners to keep track of payroll processing and business tax deductions, and take budgetary decisions. Reports related to audits and legal oversights enable third parties to process requests from lawyers and regulators.
Improving employee experience
Payroll providers can offer a number of services for the employee's convenience – direct deposit, online reports to view and print payroll and tax information, self-service applications, assisting with 401k and mutual fund plans, and processing W-2 forms.
Advanced human resource functions
Some payroll service providers go further and offer HR services such as conducting background checks and insurance verification on new hires, track compliance of corporate policies within organizations, track participation in employee benefit programs, verify and enroll exiting employees in healthcare plans, and advise employees on smart investments.
What do payroll services cost?
Charges for payroll services vary dramatically across providers. Many providers charge an initial setup fee and a flat fee for each pay cycle. Services like direct deposit and issue of pay stubs can incur a charge per employee. Postage cost for delivering live checks may also be collected.
As payroll service providers take on more bookkeeping responsibilities they also come up with new compensation models. Some providers charge an annual flat fee per employee or a collective charge based on the services selected by the business.
What to look for in a payroll services provider?
There are many payroll providers in the market and companies should examine their services carefully before hiring.. Businesses should consider the following points:
Businesses should execute intense quality assurance checks on the first paychecks that come through the payroll provider. Mistakes should be addressed at the earliest to avoid costly fixes later.
Outsourcing payroll services is a smart business decision that relieves the pressure of payroll and administrative tasks from business owners and brings in accuracy, efficiency, compliance and timeliness into the payroll system.
