Start your journey by learning which companies we consider to be the best regional and national payroll providers. If you’re considering Complete Payroll Solutions as a partner, find out what our payroll outsourcing costs are for each of our packages. That’s the only fee you’re charged for payroll processing, no matter how frequently you pay your employees each month.
Outsourcing payroll to a global provider with local expertise on the ground overcomes this challenge. Before meeting with a potential provider, prepare a list of questions about the services you are considering. A good payroll provider will spend the time necessary to explain their services, and the value they can bring to your business. Ideal payroll outsourcing partners will have rigorous contracts in place which ensure that all data is protected, errors are promptly fixed and that employment rules are followed.
Deciding to outsource payroll to an external service provider usually goes hand in hand with reducing payroll errors. Payroll services often work with payroll automation, which means less human intervention and thus less room for errors. Plus, payroll is their core business activity and a good payroll service provider is a real expert in all things payroll. And since less mistakes in payroll means happier employees, the benefit for the business is real. Companies can run the risk of an employee tampering company records, embezzlement of funds, or identity theft.
What are the different payroll outsourcing models?
Also, look for a global payroll partner with an outstanding track record. Third-party payroll platforms save organizations time and money, reduce payroll errors, and eliminate the need for payroll personnel to undergo in-house training. The timeline for outsourcing your payroll is an important step to consider.
Generally speaking, business owners aren’t experts in the complicated world of government tax regulations. At the same time, they’re legally responsible for any cases of misrepresentation or a failure to accurately report employment taxes to federal and state government agencies. Since payroll and tax responsibilities can be time-consuming and complicated — yet essential — busy owners are increasingly looking to outsource these functions.
Certain employees can be exempt from the regulations depending on the job function and the local regulating laws; certain employees can be exempt from the laws. Payroll outsourcing is when an organization collaborates with a trusted external third-party solution to handle its payroll. Payroll providers can dedicate time to resolving any queries or issues your employees may have, speeding up response times. Payroll outsourcing providers are on top of labor codes and legislations, making it easier for employers to remain compliant.
About Paychex
This means that for some employees you will be doing all the work, while for others you will rely on partners who you will manage. Payroll outsourcing also allows access to convenient and secure cloud-based solutions. You can use the app or desktop version to manage everything from direct deposits to tax withholdings.
Technology has a key role to play in managing outsourced payroll operations. Payroll technology solutions provide analytics to effectively report on payroll performance, to support better-informed business decisions and ensure greater control and consistency in global operations. A comprehensive service and technology solution is essential to providing a global payroll service that also supports accurate and timely global reporting, analytics, visibility and control of core data. Service Level Agreements (SLAs) with service providers are advisable across all business functions, and especially so with payroll outsourcing providers.
- Companies considering outsourcing their payroll should consider asking the potential provider for their position on SLAs.
- It’s no secret that payroll management can be a struggle for small businesses.
- Do your employees have access to their pay history, W-2s, and tax documents online?
- Again, this can lead to poor visibility and blurred lines of responsibility, with third-party providers potentially playing the ‘blame game’ when things go wrong.
- Or, you can jump on a call with a small business payroll specialist and let them walk you through it.
- The Covid-19 pandemic has made remote and hybrid working the norm for many companies, and prompted people to reevaluate their work–life balances.
The main goal at this stage is to ascertain what services you really need. You can download the Six Pillars of Payroll Checklist if you would like to go through this process yourself. Or, you can jump on a call with a small business payroll specialist and let them walk you through it. With this option, you would pay a base fee of about $75 and around $6 per employee, making your total charge for the month, in our example, roughly $135. According to a 2018 Deloitte survey, more than 25% of respondents indicated that their payroll staff spends most of their time running payroll. However, additional reporting is required throughout the year for state withholding, federal withholding, and unemployment wages.
How to find the best outsource payroll partner
If the answer is no—which it likely is—then it’s time to consider outsourcing payroll to experts. Your payroll solution must be flexible enough to react at the right time in the right way. Companies often do not have the in-house resources to keep on top of legislation themselves, so rely on external providers to stay up to speed… and compliant. Lack of performance in this area is a very common cause for vendor change. Your payroll provider should be an extension of your payroll team, forming a strong, flexible partnership that evolves as your business does. It should understand your business needs and approach the relationship as a partnership, based on good communication, proper Service Level Agreements (SLAs) and good local knowledge.
- Payroll outsourcing firms ensure that the responsibilities and complex challenges of processing paychecks in different regions and withholding necessary taxes are done efficiently.
- Employees are able to request changes to their withholdings, etc., without having to take any time away from running your business.
- Your payroll partner does the rest, and will advise you on local regulations and deadlines, but you need to ensure building a strong relationship with them.
- You also will not need to register as an employer in the country since as an Employer of Record, we will act as the local employer and take care of all tax filings and payments, as well as all other compliance.
- A New York- or San Francisco-based company that keeps payroll in-house, for example, must pay “big city salaries” to attract the right employees for managing payroll, just like the rest of its internal workforce.
- Direct access to the country subject matter experts and management is a huge positive.
Finally, the client shares all relevant information the provider needs to complete the payroll functions it will assume. In the early days of strategic outsourcing, companies were most comfortable hiring away low-skill tasks distant from sensitive business areas. Nowadays, many companies do the opposite and outsource critical functions such as customer service and money-management tasks. This has grown to Intro to Bookkeeping & Special Purpose Journals include many activities normally performed by administrators or human resources departments—including payroll duties. Business owners who place a high value on their time and peace of mind often end up outsourcing payroll. By partnering with a full-service provider, most of their payroll responsibilities – wage calculations, tax withholdings and deposits, reporting, etc. – are taken care of for them.
Professional employer organization (PEO)
The final major component of the process is for outsourced end-of-year tax duties. This includes both submitting documentation to tax authorities—which the provider has maintained throughout activities—and remitting the tax dollars themselves. It also includes managing information relevant to the tax process such as health insurance and workers’ compensation claims. Most payroll suppliers have the capability to issue payments to employees by direct deposit. Companies that process their payroll in-house can also do this, but only through the services of a third party that handles direct deposit. The assurance that payroll information is handled efficiently is provided by choosing a reputable payroll partner.
Additionally, the client is still responsible for tax remittance, regardless of whether it outsourced this payroll function, meaning it’s on the hook for any errors even if it’s not directly involved. Outsourcing payroll management isn’t guaranteed to be cost-effective, but many companies find it cheaper overall than keeping it in-house. When all goes well, hiring out the work can provide significant advantages and cost savings. It’s important to note that payroll outsourcing providers charge in different ways, and that they can take on some or all of the payroll process, so cost-benefit analyses will vary based on goals and budgets. The biggest multi-country payroll providers on the market include ADP and NGA, used by many of the biggest multinationals in the world.
These mistakes can negatively affect your employees and ultimately result in employer/employee strain. With payroll, there are always last-minute alterations and modifications to make. Payroll service providers invest the effort in responding to employee queries, which reduces response times.
Employee payroll taxes are withheld depending on where the work is performed and apply to employees who commute between satellite offices. Payroll outsourcing firms ensure that the responsibilities and complex challenges of processing paychecks in different regions and withholding necessary taxes are done efficiently. Navigating compliant payroll management is tricky terrain — filled with ever-changing laws differing by jurisdiction and country. By allowing an external provider to manage their payroll, companies can simplify legislative compliance and relieve their team from a large administrative burden. 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. Staying on top of ever-changing federal and state guidelines is complicated when you’re already handling payroll and HR manually.