A CMO provider makes payments in international currencies, ensures that applicable taxes (such as Value-Added Tax or Goods & Services Tax) are processed, and streamlines the contractor invoicing process. Payroll outsourcing may occur within country (domestic payroll processing), or internationally (global payroll processing). Making sure that payroll is delivered accurately and on time is among your most important priorities as an employer.
For some organizations, hiring a payroll expert just isn’t feasible, even as a part-time agreement. We’ve been providing centralized payroll services to organizations of all sizes for more than 20 years—so no matter what your needs are, we have a solution. It’s impossible to know which payroll processing software is right for your company without doing solid research beforehand. Your research should involve asking questions like the ones listed above, then seeing what each platform offers. Only 17% of US businesses outsource payroll—it’s common to not know when to make the switch. By outsourcing payroll, you’re entrusting a third party with the data that matters most to employees.
- It takes care of payroll tax payment and filing in 14 states (and growing), and offers a self-service employee portal for easy access to tax documents and banking and contact updates.
- Gusto is designed with dynamic startups and small businesses in mind, and it specifically targets the solutions these types of companies need that weren’t previously available on other platforms.
- A basic payroll solution helps you pay employees and, on some platforms, contractors.
- The process begins with the integration of employees into a payroll system and extends through end-of-year tax responsibilities.
You can have both regular employees and independent contractors on your payroll. Additionally, you might pay your employees a fixed monthly salary, hourly wages or a base wage plus commissions or tips. Based on our market research and the categories listed above, we also ranked additional criteria from customer reviews such as ease of use, any stand-out features, popularity and value for the price. We researched reviews from real users to gauge their opinion of each platform. This entailed ranking both the overall score from customers and the number of reviews for these scores to give the fullest picture of reality and reduce bias.
Frequently asked questions about payroll outsourcing
Technological developments can provide data thieves with more tools, driving the need for increased security from company owners. When information is held off-site, as in the case of payroll outsourcing, there is increased exposure to the risk of a data breach. If a payroll outsourcing provider is hacked, the client may not even be aware that their employee data has been stolen. Finally, the outsourced payroll processor must integrate with the time-keeping system used by the client. This may take the form of data punch cards, fingerprint scans, software systems, data provided by HR, or a combination.
- Payroll outsourcing is the use of an external provider to handle the administration of your company’s payroll.
- Like a full-service payroll company, there may be upcharges for extras like processing a garnishment or running an off-cycle payroll for year-end bonuses.
- Some payroll services are part of comprehensive HR platforms that include not only pay and benefits but also employee development, education and coaching programs.
Paycor is a full-service HR platform that supports companies from recruiting to termination. Through this so-called co-employment relationship, TriNet bears some of the legal liability as an employer, which can save you some headaches in case of employment issues. It also takes on 100% of your HR duties, so you don’t have to hire an HR or legal expert in-house.
They typically present themselves as holistic solutions because of the broad range of services on offer, from managing cash flows to running payroll and fine-tuning budget plans. Payroll outsourcing providers take this raw data, calculate withholdings, and ensure that wages are paid out promptly—whether that’s through direct deposit or sending out paychecks. It is becoming increasingly common for businesses to engage independent contractors or freelancers, rather than employees, especially when operating across international borders. Payment processing for contractors can also be outsourced, much like payroll. Outsourced payroll solutions typically include access to a support team or sometimes, a designated individual assigned to your account.
Find a payroll outsourcer that aligns with your company
In all cases, communication protocols ensure high confidentiality and compliance with GDPR requirements. KPMG is aware that payroll is a very sensitive area which businesses might wish to keep under close observation. Yet this does not mean an outsourced solution does not allow for close scrutiny. A supplier calculates all payroll taxes and remits what exactly is accounting them to the government without the company having to be involved. The savings from avoided tax remittance penalties may pay for the entire cost of the supplier. Each state government requires a company to report the hiring of new employees to them, so that they can determine if there are any garnishments outstanding against these individuals.
The benefits of in-house payroll
To process payroll, both in-house teams and outsourced payroll companies need access to a certain amount of sensitive information, like employee bank account details, schedules, etc. Forwarding these details to a third-party vendor can potentially increase your risk of a security breach. Like in-house solutions, outsourced payroll has its own respective benefits.
Is outsourcing payroll cost-effective?
Deloitte reported that 78% of companies use global shared services for standardization and efficiency. Service providers hire third-party experts to handle payroll and use automation to accelerate the process. Payroll outsourcing lets you make the most of a service package, which is more affordable than building an in-house team. Your contracted provider employs professionals and resources for your payroll.
Most payroll suppliers have the capability to issue payments to employees by direct deposit. Companies that process their payroll in-house can also do this, but only through the services of a third party that handles direct deposit. Businesses have long capitalized on the benefits of front-office and back-end outsourcing.
What is included in payroll outsourcing?
Nothing is more frustrating than getting paid improperly for services rendered. It is even worse if employees get less than the amount employers owe them. Such circumstances happen when payroll officers fail to update employee information or commit errors in calculations. Given this market growth, consider investing in software technology for your payroll. Work with a third-party payroll provider for access to advanced technology to ease operations.
For businesses who want iron-clad assurance that the third party agency has sole compliance liability for payroll they can engage a PEO that has been certified by the IRS. While payroll outsourcing can help ensure that compliance with local regulations is met, the responsibility for compliance still falls on the employer, not the payroll processor. In some jurisdictions outsourcing payroll may not be all that needs to be done in order to ensure that all local regulations are being met.
According to Deloitte, cost reduction is the top reason for outsourcing. Investments in automated software and other payroll resources can also be expensive. When it comes to processing payroll, there’s nothing like great customer service, too. With Hourly, you can talk to a real person whenever you need a question answered.