So, you’ve decided to outsource payroll to an expert service provider in the field. This is excellent news as we’re sure you’ve seen all the benefits of taking this step. But what can you expect?
What Do Providers Do?
First things first: you might be wondering to what extent you can outsource this process. The good news is that services in this area are becoming more and more flexible. When researching the market, you’ll notice that some providers are bookkeepers, some are accountants and some are dedicated payroll companies. Furthermore, some services specifically target smaller businesses, while others have the time and resources to work with larger companies.
In a moment, we’ll go into the two main types of providers. First, we should note that all payroll companies should be able to help with:
- pay (with reimbursements and benefits)
- deductions (including retirement contributions)
- deducting employee income tax
- maintaining records
- tax assistance
- making payments to employees when expected
Source: accfingroup
Types of Payroll Services
Next, how does your agreement with the service work? This is a great question, and the answer might surprise those who are worried about paying for services they don’t need.
You can pay for a service to take over everything. Generally known as a “full-service payroll provider,” they will take full responsibility for every step from start to finish. Companies like Paycom Payroll offer full accounting and HR outsourcing. As long as you give them the green light and offer all the data they need, they do the rest. As you can probably guess, this is the most expensive option, but it’s also the one that frees the most time and releases the burden from management and owners.
For this type of relationship to work, communication is essential since information needs to pass between the business and the service. They need to be aware of any changes to the tax status or employment terms for workers, and they need to see timesheets and other necessary documents.
On the other hand, you will also find do-it-yourself services that allow you to pick and choose what options you need. If you’re happy doing basic admin, like recording attendance and times, they will do taxes, deductions and payments. With the addition of software in recent years, this has been easier to achieve. You only pay for what you need, and the business gets the help it requires.
Cost of Outsourcing Payroll
Another question you’re likely to have revolved around the cost of outsourcing payroll. What can you expect in this regard? As we’ve just seen, this is a difficult question to answer because it depends on the level of service you choose. That being said, fees can start at $20 and reach $200 per month. There are some factors that affect how much you’ll pay:
- volume
- tax requirements
- frequency of payroll
- service bundles
Elsewhere, some payroll companies charge per paycheck; for example, this might be $1 or $2 per paycheck. Also, we should note that it usually becomes more cost-effective as you grow the business.
Source: inc
Summary
With this, you should now have a better idea of what to expect when outsourcing payroll. As long as you choose the right service, they should communicate to keep the relationship as efficient and effective as possible.
On a more general note, you should expect more free time to deal with more important tasks when outsourcing payroll. What’s more, you should expect professionalism, help in a variety of areas, fewer mistakes and an optimized business!
