According to Forbes, 12% of organizations worldwide fully outsourced payroll functions in 2019, while 26% of organizations co-outsourced payroll—meaning they outsourced some (but not all) payroll functions. Once considered strictly for large corporations only, today, outsourcing payroll processing is becoming increasingly common among small business owners and finance department leaders. Why? Because businesses of all sizes are finding it more necessary to gain efficiencies and manage appropriate taxing—and they don’t have the resources or expertise to do it alone.Businesses of all sizes are finding it more necessary to gain efficiencies and manage appropriate taxing—and they don’t have the resources or expertise to do it alone. Click To Tweet
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What is payroll processing outsourcing?
When a business hires an external partner to handle all payroll-related functions of their company, it is outsourcing its payroll processing. At GenesisHR, we help our clients handle their payroll processing by providing the following:
- Single and multi-state payroll management.
- Online processing.
- Time clock feed options
- Holiday, sick, vacation, and other time off accrual management.
- Transparent payroll reporting.
- Miscellaneous deductions and garnishment management.
- W-2 preparation and distribution.
- State unemployment insurance tax account (SUTA) management.
- Employer tax deposits and filing management; Form 940, Form 941, and W-3 transmittal—our tax engine uses your ZIP code to calculate correct tax info, so we know the exact amount to tax your employees.
Processing payroll doesn’t have to be complicated or expensive if you have the right partner and process.
This clear, thorough guide will walk you through the entire payroll process for small businesses.
Why should companies consider outsourcing payroll?
It allows you to manage appropriate taxing and stay compliant.
- Businesses may hire an external firm to handle all payroll functions to save time and money, reducing the need for in-house trained payroll staff, purchasing and maintaining appropriate software packages, and staying compliant with updated PAYE legislation.
- Tools for mid-market companies that help them with “DIY” taxing may not have the functionality needed to manage appropriate taxing. Outsourcing to a payroll partner takes care of tax compliance. The outsourcer will make sure employee benefits, voluntary benefits, extra savings plans, and pre-tax and post-tax plans flow correctly through to employees’ paychecks so the right amounts are withheld.
- Payroll outsourcing services compute and remit taxes on behalf of clients. If done incorrectly or submitted too late, your company could get pegged with huge fines.
It allows you to easily administer direct deposit transactions.
Accurate and timely direct deposits are a win for both employees and employers. 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.
It allows you to keep thorough, accurate records.
- Payroll systems managed by a partner like GenesisHR bring automation and record keeping tools to your organization.
- Managing the appropriate administration of PTO policies is important to a business. An outsourced payroll service has a web-based connection that makes it easy for employees and employers to request and manage time off accruals.
- Reports give a detailed ledger by employee for each pay period with data for wages and deductions. In some cases, that data needs to go into the accounting system for the company’s general ledger.
How do you know if a payroll outsourcing service will benefit your organization?
Business owners and managers need to ask themselves if the people they’ve hired on staff to build and operate their organization actually add value to the payroll process. If the answer is no—which it likely is—then it’s time to consider outsourcing payroll to experts.Business owners and managers need to ask themselves if the people they’ve hired on staff to build and operate their organization actually add value to the payroll process. Click To Tweet
Other signs: If you’re having problems with accuracy, compliance, or record keeping, you need a payroll partner. Particularly, the Department of Labor’s Wage and Hour Division has specific standards for recordkeeping that most employers aren’t completely aware of—penalties and fines exist for not following these standards.
How do you find a qualified payroll outsourcing partner?
- Talk to your other trusted advisors, like an outside accounting firm or attorney. They may be able to assist you in providing a recommendation.
- Ask for references from any potential partner you interview.
- Look for a partner who is easy to work with; has a feature-rich, user-friendly platform; and is readily available to speak with you and provide help if you have a problem with the tools.
- Look for a company whose payroll system can integrate with your existing time and attendance tools.
At GenesisHR, the payroll function of our company is truly our foundation. Our model and service approach is all about providing expertise and one-on-one support to serve our partners and their employees.
Want to take the complexity out of payroll processing and tax administration? We’re glad to help. Click here to get in touch with us about how we may be able to help you!