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Payroll Service Basics

Theres more to payroll than cutting checks. Payroll covers the accounting and administration of paying employees, in compliance with a range of legal requirements. Businesses can save time, hassle, and money by outsourcing payroll to a payroll preparation service.

Why Pay a Payroll Service?

Between financial reporting and tax requirements, payroll can quickly escalate into a complicated enterprise. Small businesses can find themselves in a thicket of legal regulations as they build their workforce. Payroll services are especially well suited to serve the small and mid-sized market. The typical client of a service bureau, according to a leading service provider, is "a small business--one just large enough for payroll to be complicated to the point of a hassle, but one still small enough not to merit its own full-time payroll department."

Third-party payroll services help businesses navigate employee compensation laws and regulations. Standard payroll services include:

  • Calculating employee earnings and withholding the proper amount for taxes and other deductions
  • Reporting all payroll activities to federal, state, and local tax agencies
  • Preparing required tax returns
  • Managing employee personal and payroll information
  • Complying with accounting and administrative requirements mandated by government regulations

Payroll management requires specialized knowledge, particularly when businesses span multiple state and international jurisdictions. An experienced payroll service makes sure the job is done right, freeing businesses to focus on their core competencies instead.

Payroll Administration

In addition to drawing on a third-party payroll companys expertise, businesses can avoid the hassle of day-to-day administrative functions. Payroll administration services may take care of tasks such as:

  • Printing and delivering employee paychecks on time
  • Direct deposit of pay into employee bank accounts
  • Filing necessary paperwork such as quarterly and annual reports with regulatory agencies
  • Submitting withheld funds to tax authorities
  • Printing and delivering annual employee tax documents, such as Form W-2

Benefits of Signing on with a Payroll Service

The primary benefits of a third-party service are convenience and accuracy. A payroll company employs account specialists with expertise in payroll tax and regulatory requirements. Their accuracy and professionalism helps clients avoid fines due to accounting errors or late tax deposits.

Additional benefits of outsourcing the payroll function include:

  • Reduction of legal risk. Most payroll companies assume partial or full responsibility for their work, reducing the clients liability in case of accounting errors
  • Scalability. A payroll company has the capacity to scale administrative services instantly, enabling growing businesses to bring new employees on board quickly
  • International payroll. A payroll specialist is equipped to navigate the accounting and regulatory hurdles of hiring and paying international employees

Financial reporting requirements have been growing more and more complicated, challenging businesses to keep up. To ensure efficient and accurate payroll administration, many businesses are turning to professional payroll services. Payroll services have the resources and expertise to get the job done right, empowering clients to focus on their core business.

Sources

Qqest

Intuit.com



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