A basic payroll service will collect wage and hour information from the employer and use that information to calculate gross wages, subtract all pertinent withholdings and deductions, print checks, make direct deposits and prepare all employment tax filings.
Some payroll services offer more comprehensive help. They can take over some of the responsibilities typically handled internally by human resources, like administering a company’s retirement accounts and benefits programs. They can file new employee forms with the state and help comply with any court-ordered wage garnishment programs.
Payroll service providers have been a blessing in disguise for companies that do not prepare payroll as their primary occupation. These services are useful for your business because of their specialization. Knowing how payroll services work will help you to make an informed decision regarding which company can best fit your needs.
The need for payroll services:
Payroll is a complex process that is needed for businesses of all natures. There is more to paying employees than simply signing a check for the number of hours worked. Deductions must be made for taxes, as well as benefits and occasionally union dues. Outsourcing your payroll accounting to professionals who specialize in this field of accounting can save a lot of headaches.
How do payroll services work:
- Keep detailed records of how many hours each of your employees work.
- Submit all information to the payroll company, such as contributions to group health care plans, pension plans and other deductions made from employee paychecks.
- The payroll service will then process the information in compliance with a deadline that you set for payment.
- Correctly compute and deduct taxes as per each individual employee’s tax bracket
In addition to processing your payroll, there are specific details related to payroll processing that the service will take care of for you:
Payroll services often print and send out checks to your employees as well as processing the payments.
● Payroll Taxes:
Your payroll service will process costs related to your payroll, such as payroll taxes, including making deposits with the Internal Revenue Service.
● Withholding Taxes:
Similarly, the payroll service will deduct income taxes from your employees’ checks and deposit these withdrawals with the IRS.
● Direct Deposit:
As physical paychecks become less and less common, a payroll service can handle direct deposits in lieu of the old style paychecks.
Payroll services track your data, meaning that they can easily process your quarterly and annual payroll reports.
● Benefit Management:
In addition to making deductions for benefits, a payroll service can also manage certain benefit programs, such as retirement plans.
● Workers’ Compensation:
Payroll services do not provide workers’ compensation insurance. They can, however, liaise with your workers’ compensation insurance and act as an intermediary.
The biggest benefit of opting payroll services is that all of the work including payroll calculations, payroll tax payments, year-end tax forms, etc. is done without hassles. With the use of these systems, payroll management can become a piece of cake. Finding a payroll company that offers all the services that your business needs is more important now than ever before.