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Payroll processing services: The procedures

Payroll processing services

One great thing about the outsourcing industry is that businesses are given a wide array of services to choose from to support their operations. 

Through outsourcing, organizations are able to expand their workforce. More so, acquire the right expertise they usually lack in different areas of their business. Payroll processing per se, is one critical function of human resources. 

If your payroll processing is not done right, it will not only affect your employees but also your entire organization. It can lead to serious repercussions such as penalties, late fees, and legal troubles. 

How does outsourcing employee payroll processing work?

To put things in perspective, payroll processing involves more than counting employees’ working hours, writing checks, or making deposits. 

BPOs that specialize in the payroll process undertake specific tasks such as:

  • Calculating payroll taxes and accounting for the correct deductions being made.
  • Integrating third-party 401(k) and benefits plans.
  • Managing electronic payroll records for both employers and employees.
  • Upholding compliance with all state and federal laws as regards payroll.

Employees typically log their work hours through bandy clocks, punch cards, fingerprint scans, or online accounts. This signals the beginning and end of their working day. 

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The payroll services provider is tasked with collecting that information from the company. On top of that, it is also the job of outsourced payroll staff to:

  • calculate gross wages, withholding and deductions
  • print checks
  • make direct deposit
  • arrange everything needed for employment tax filing procedures

All this complicated information is made easy for payroll providers with the usage of payroll software

Your hired personnel will take charge of assessing calculations and withholdings with their chosen software. 

The calculations can be specific to each employee paycheck as it comes along—a listing of the deduction (for example, for the purpose of 401[k] contribution). The parameter to be met (in percentage, in dollars), and the total amount to be withheld. 

Often, your payroll providers will also receive automatic updates from the software whenever there are changes to the tax laws of the areas they service.

The accessibility and ease of handling information is extended to the client, with the help of real-time technologies. They won’t have to make numerous calls to the payroll service just to receive updates about wages and hours. 

Client companies also have the option to log into the online payroll system, record the hours for the pay period, and the data for the payroll account will be updated immediately, in real-time.

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Payroll processing services to outsource

You can either choose to farm out your entire payroll processing or the following payroll processing services: 

Preparation of paychecks

Your payroll specialist will handle all the duties in the timely and accurate payment of wages for your employees. This includes the calculation of work hours, overtime rates, tax deduction, and the like.

Payroll processing services the procedures
Preparation of paychecks

Preparation of financial statements

Your payroll service provider should accompany each service with reports on how this affects your company’s budget and expenses.This allows you to receive an accurate picture of the company’s financial health.

Payroll processing services the procedures
Preparation of financial statements

Tax documentation

Crucially, your payroll provider should be on top of all things tax-related. Especially with regard to everything from completing W-2 distribution, assessing annual tax withholdings. 

Your outsourced team should also make sure all your tax payments are made on time to the relevant authorities.

Payroll processing services the procedures
Tax documentation

Skills, technology, and scaling up

One of the best arguments for choosing a payroll provider is the idea that they will help you transition smoothly. Gone are the days of pen-and-paper accounting, outsourcing means you will have accurate and up-to-date digital channels. 

If your business looks to expand, hiring an outsourced provider with the skills and technology at hand is a great investment—essentially one for a partnership in scaling up.

No need to worry about looking for the right outsourcing provider for payroll processing services. Feel free to browse our BPO Directory, we currently have over 900+ outsourcing companies featured on our page. 

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About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

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Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 3,000+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.