Payroll outsourcing may be done by a company specializing in that task, generally known as a payroll outsourcing provider or a payroll service bureau. It is also commonly done by accountancy firms and Professional Employer Organizations (PEOs) (read more about the latter in our guide How does a PEO work?). An accountancy firm with local offices may provide the greatest level of service for a company based in one jurisdiction. For others, a payroll outsourcing provider may be more attractive because they are often able to service employees in many states and countries, and may offer additional options such as full HR outsourcing. For those considering working with a PEO, one that offers payroll outsourcing services only as an option may be a good way to start the relationship before fully committing to all PEO services.

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The nature of the services, the quality of the provider and other factors play a crucial role in determining actual savings. Paycor is a comprehensive platform with a specialty in payroll, timekeeping and other HR functions. Paycor’s advanced reporting feature organizes and presents HR data from the platform for informed decision-making. Monday.com is known for its versatility and adaptability across various business functions, including HR. The strength of the platform lies in its ability to customize workflows and processes. The affordable pricing of Zenefits is in line with its simple platform.

Frequently asked questions about outsourcing payroll

45% of small businesses outsource payroll (National Small Business Association). Payroll is most often outsourced by business owners who value their time and peace of mind. The majority of payroll duties, include wage computations, journal voucher definition tax withholdings and deposits, reporting, etc., are handled for them when they work with a full-service provider. Before you choose a payroll outsourcing provider, make sure you know exactly what you’re looking for.

Payroll processing outsourcing helps expedite payments faster than a live check, and it’s also safer than creating checks that can be lost or stolen. For more advanced services, pricing can be a little higher per month—but the long-term savings in time, effort, and accuracy quickly make outsourced payroll cost-effective. The payroll service will likely need access to that information to calculate and deliver payments via payroll checks or direct deposit. If a provider handles payroll data for employees in the European Union (EU), they have to meet General Data Protection Regulation (GDPR) standards. Your provider should also have a data processing agreement (DPA), which outlines how the parties will process and store your data in compliance with the GDPR.

Choose the right provider

In many cases, companies outsource payroll because they’ve determined it to be more cost-effective than managing payroll in-house. This has historically been one of the main incentives for any kind of outsourcing, and payroll functions are no exception. Rather than having an in-house team deposit paychecks, calculate tax withholdings, and prepare quarterly tax filings, outsourced payroll handles it all behind the scenes. Plus, professional payroll services significantly reduce the chances of errors in your payroll processing.

Reduced Payroll Mistakes

Renowned investor Barbara Corcoran discusses the findings of a recent Forrester study showing the benefits that Paycom clients experienced. When a company keeps everything internal, these types of risks tend to go down. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website.

Payroll software

Pricing should be explained clearly, most likely calculated with a base service charge and additional charges per employee payroll processed, plus any additional services. Check for possible penalties for late payments or breaking the contract. How long will the contract be valid, and how long will prices be locked in at the agreed-upon rate? Ensure that your data will be kept private and that there is an acceptable legal channel to pursue of this or any other clauses in the contract. If there is an error on the part of the outsourcer that may or may not lead to a fine against the employer, are they held financially or legally responsible in any way? Compare the customer service and data access availability in the contract to the access previously discussed to ensure you have the support and availability promised.

Letting Professionals Do the Work

Their processes took a lot of time, and they lacked a network of experts to help them navigate international compliance. These laws dictate how employees can receive their compensation, when you have to pay them, and their payroll deductions, such as health insurance and social security. Outsourcing can make tax filing, calculating payroll, and other payroll-related matters easier and more efficient, whether you’re a small business owner or a payroll specialist at an enterprise company. Paycom helps businesses prevent mistakes and their staggering consequences.

The act of contracting an outside party to execute certain services that were previously done in-house is known as outsourcing. Globalization has increased its financial usefulness as a short-term cost-cutting strategy significantly by providing access to labor that is substantially less expensive initially than that of the US labor market. Prominent companies that offer both PEO/EOR and standalone payroll outsourcing services include Rippling, Deel, ADP and Papaya Global. Payroll outsourcing providers specialize in doing one set of tasks well. The success of their business relies on processing and reporting payroll correctly and professionally.

For most companies, performing payroll functions in-house amounts to nothing more than an important housekeeping duty; the company itself is expert in something entirely different. A payroll outsourcing provider or “payroll service bureau,” on the other hand, may perform payroll functions and nothing else. If it does offer other services as well, these are likely to be in similar areas. Some PEOs or Employers of Record (EORs) offer payroll outsourcing as a standalone service. If you are hiring internationally and your employees need to be hired by a local company by law, a PEO operating in the area will be able to help with employer of record services as well as payroll processing.