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Home » Articles » Payroll processing services: The procedures

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, they acquire the right expertise they usually lack in different areas of their business. One of these is payroll services.

If your payroll processes are 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.

Therefore, it is time to consider outsourcing payroll services to the experts.

How does outsourcing payroll processing work?

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

Outsourcing companies that process payroll data undertake specific tasks such as:

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  • Calculating payroll taxes and accounting for the correct deductions being made
  • Integrating third-party 401(k), employee benefits administration, and health insurance
  • Managing online payroll records for per employee and employer
  • Upholding compliance with all state and federal laws as regards payroll-related data

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.

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:

  • Conduct tax filing (calculating gross wages, withholding, and deductions)
  • Print checks
  • Direct deposit
  • Ensure compliance regarding employment tax filing procedures

All this complicated information is made easy for payroll providers with the usage of all-in-one payroll software, which helps process payroll services for small businesses or large enterprises.

Your hired personnel takes charge of assessing calculations, withholdings, and employee benefits administration with their chosen software.

The calculations can be specific per 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 payroll software whenever there are changes to the payroll tax laws of the areas they service.

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

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

How does outsourcing employee payroll processing work

3 payroll processing services to outsource

Your third-party payroll service company can handle your entire payroll procedure or specific payroll services only.

Here are some common payroll and HR services that small business owners can outsource:

1. 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 deductions, and the like.

2. Preparation of financial statements

Your payroll service provider should accompany each service with reports on how this affects your company’s budget and expenses.

These reports may include various tax forms, pay stubs, or direct deposit forms. This allows you to receive an accurate picture of the company’s financial health.

3. Tax documentation

Crucially, your payroll provider should be on top of all things related to payroll and tax. They manage everything from tax documents to distributing required tax forms like Form W-2.

Additionally, they ensure proper tax filing and assessment of tax annual tax withholdings. They also inform employees of any tax penalties.

Your outsourced team ensures all your tax payments are made on time to the relevant authorities. This can be done with the help of automated tax payments and payroll software.

Payroll services for skills, technology, and scaling up

One of the best arguments for choosing a payroll provider is the idea that they will help you accomplish all payroll services smoothly.

Gone are the days of pen-and-paper accounting, as 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 services. Feel free to browse our BPO Directory, we currently have over 900+ outsourcing companies featured on our page.

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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, 450+ podcast episodes, and a comprehensive directory with 3,900+ 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.

“Excellent service for outsourcing advice and expertise for my business.”

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