Payroll errors can negatively impact your workers, disrupting their budgets and lives and causing unnecessary stress. Payroll mistakes and delays can also dilute their trust and positive perception of your organization and lead them to question your financial status and management capabilities. Paycom helps businesses prevent mistakes and their staggering consequences. For instance, a tight-knit company experiencing overnight growth might not be prepared — or even know how — to compensate new employees fairly. An objective third party, however, won’t fall for favoritism or ethical dilemmas, because the right provider determines that with a merit matrix that rewards employees for performance. The advantages to using payroll outsourcing companies stretch further than just a phase of your business’s growth.

• You need to hire the right people with the right skills, invest in extensive and ongoing training, and have a plan to ensure business continuity at all times.
• We’ll break down the process and important considerations to keep in mind.
• A professional payroll company employs individuals who know payroll processing inside and out.
• If they have any issues about their pay, the provider should have a clear resolution strategy.
• 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.
• Auto Payroll’s AI-driven technology learns companies’ payroll trends and histories, enabling it to spot any irregularities or abnormalities.

By outsourcing payroll, you’re entrusting a third party with the data that matters most to employees. They should know what’s happening and have an opportunity to ask questions. If they have any issues about their pay, the provider should have a clear resolution strategy. Despite fewer employees, it’s still hard on tight HR teams — some made up of just one person — to accurately run a small business’s payroll.

This includes calculating tax withholdings and deductions, depositing employee paychecks for each timesheet, compiling payroll reports, and producing payroll registers. There are a few signs it may be time to think about outsourcing your payroll solution. If your current system causes frequent mistakes, this could become a liability. You may also have a hard time complying with IRS or labor laws, and employees may experience frustration due to long wait times for paychecks. As mentioned before, these are further areas where a misstep by a payroll outsourcing provider can become a problem for both the provider and the client company.

In addition, these records must be securely maintained for tax and reporting purposes. Each pay period, employees must have their hours totaled, verified for accuracy, and multiplied by their designated pay rate(s). Then the appropriate amount of taxes must be calculated and subtracted from the gross pay to determine a net amount. Other companies such as Payoneer and ADP Global Payroll don’t have set pricing.

Be sure to answer these questions as you look for the right payroll service provider for your organization. In an attempt to give the best service possible, some providers include benefits that may not apply to the average business. However, if you are not getting value out of these benefits, you’re spending extra. It’s vital to complete tax-related tasks accurately and make payments on time, whether to the state or your employees. That’s why the first thing you should consider when hiring a payroll outsourcing provider is establishing trust.

Payroll Expertise

Explore Beti to learn why it’s the ideal choice for outsourcing payroll to Paycom. This doesn’t mean you need to see every piece of the process, but you should never be cut out of it entirely. As the world continues to change rapidly, so do the needs of your business. Whether your organization is in a growth phase or your business model is evolving, change will impact your payroll function. Outsourcing gives you access to the right expertise to handle spikes in demand, support restructuring, or undergo a merger or acquisition.

If many hours of work can instead be assumed by third-party employees somewhere with a lower cost of living, the outsourced functions tend to become cheaper to perform. Typically, providers report to the client on a regular, predetermined basis, confirming services rendered and detailing performance. For the client, this is an opportunity to ensure everything is going according to plan.

Renowned investor Barbara Corcoran discusses the findings of a recent Forrester study showing the benefits that Paycom clients experienced. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website.

Outsourced Payroll Functions

This doesn’t mean run your own payroll while you’re outsourcing it. For instance, run a mock payroll for an employee who has a more complex situation. Then, whenever you’re asked to approve payroll, check how the vendor processed the employee in question. Different figures doesn’t automatically mean they’re wrong; you just need to determine who’s right. Outsourcing payroll also translates to a lower risk of errors and compliance violations.

See Why Approximately 740,000 Businesses Use Paychex

“It’s our commitment to make payroll as effortless as possible and puts us one step closer to our vision of fast pay for every employee.” Auto Payroll’s AI-driven technology learns companies’ payroll trends and histories, enabling it to spot any irregularities or abnormalities. It analyzes each employee’s past payment history and establishes what a typical payment is for that specific worker using a statistical algorithm to assess payment ranges. From there, it automatically flags any discrepancies for real-time review, ensuring that every paycheck is accurate. If no abnormalities exist, payroll runs automatically – all without the need to log in or perform any manual approval tasks. “At Everee, we’re not just trying to make payroll less painful, we want to take running payroll off a company’s to-do list entirely,” said Brett Barlow, Everee CEO.

Outsourcing Payroll: All You Need to Know

These providers help ensure compliance with the IRS filing and deposit requirements. In the event of default by a third party, the employer remains responsible for the deposit of the federal tax liabilities and timely filing of returns. You will work with the service providers to get them all the information they need to set up your payroll processing. This includes tax forms, job examples of key journal entries applications, worker information, payment amounts, benefits information, time sheets, and bank information for direct deposits. If you’re considering outsourcing your payroll services, chances are you’ve asked yourself “how much does a payroll company cost? ” Despite the additional cost for your business, many companies find that outsourcing payroll saves them both time and money.

What Is Outsourcing?

Finding a trustworthy third-party provider goes a long way, but a company can’t just pass off any payroll mistakes that arise as the fault of its provider and move on. At the end of the day, the company is still responsible for properly compensating its employees, and problems created or left unresolved by the provider will continue to cost time and money until they’re addressed. The client company also remains liable for tax remittance whether or not it has outsourced this particular payroll function, meaning it’s on the hook for any errors even if it’s not immediately responsible. 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 include many activities normally performed by administrators or human resources departments—including payroll duties.

Taxpayer Identification Number (TIN) Matching

They likely use employees with task-specific training and have all the necessary software on hand. Finally, the client shares all relevant information the provider needs to complete the payroll functions it will assume. In 2023, a wide selection of “payroll outsourcing providers” are to be found both domestically and internationally. While different companies will have different criteria for evaluating a good match, they all must ensure a provider maintains adequate protections for employee data and complies with relevant regulations. Don’t hesitate to negotiate contract terms with your payroll service provider.