Highlights
- Payroll services involve outsourcing the management of employee compensation and related tasks to a specialized external provider.
- Selecting the right payroll service requires a careful evaluation of your business’s size, growth trajectory, and specific payroll needs.
- At EmPower HR, we simplify payroll for your business, by combining advanced technology with expert payroll administration services. Contact us to learn more!
Handling payroll takes time, great attention to detail, and expertise. Fortunately, there’s a wide range of solutions that can help you streamline this process and reduce the burden. What are payroll services? How can you find the right fit for your business?
From simple do-it-yourself platforms to high-end systems and experienced experts, this article gives you an overview of the main types of payroll services out there, to help you make the best choice for your business.
Let’s dive in!
What Are Payroll Services?
Payroll services are a form of outsourcing that handles the administrative tasks associated with employee compensation. Instead of managing payroll in-house, businesses can delegate these responsibilities to a specialized provider. That way, they can reduce their admin workload, while ensuring their employees get paid accurately and on time.
Typically, payroll services handle the following tasks:
- Calculating wages and salaries: Determining employee pay based on hours worked, salary, commissions, or other factors
- Withholding taxes: Accurately calculating and deducting federal, state, and local taxes
- Handling deductions: Managing employee deductions for benefits, retirement contributions, and other items
- Issuing paychecks or direct deposits: Distributing employee earnings in a timely manner
- Filing tax returns: Preparing and submitting necessary tax forms and payments.
- Complying with labor laws: Staying up-to-date with and adhering to employment regulations
Types of Payroll Services
Let’s explore the main types of payroll services available. Choosing the right option for your business will depend on your specific needs, goals, and resources.
In-House Payroll
This sounds straightforward and convenient since it’s within the organization. However, in-house payroll requires a lot of resources in terms of time, expertise, and staffing. And what if there’s an error with regulatory compliance? Your business will bear the brunt.
DIY Software Services
Do-it-yourself (DIY) payroll software is like in-house payroll, only without the payroll experts. So, you save on the cost of hiring experts in-house, which is the upside. The downside is the increased risk of errors and compliance issues that may arise due to a lack of payroll industry knowledge.
Bookkeepers and CPAs
There are accounting and bookkeeping firms that handle payroll processes in addition to doing financial audits. Their con is that they also tend to outsource the payroll tasks given to them depending on their capacity. This can lead to a potential risk of confidentiality and security issues depending on the process. Also, given the vast knowledge required across industries and business sizes, they may not know the best advice or support to give for your specific business needs.
Small Payroll Providers
These providers offer the best of both worlds, as they provide the relevant technology as well as the expertise and personalized services for your specific industry. With this option, you’ll also have a person (or persons) whom you can directly connect with when it comes to payroll questions and needs.
However, some small payroll providers can have limitations, including a:
- Limit on the number of users
- Chance of losing information due to inefficient backup options
- Risk of instability and system crashes
Medium Payroll Providers
As your business grows and expands, so will your payroll needs. As a result, you may need to engage with payroll service providers who work at a greater scale.
It’s easy to accidentally employ the services of large payroll providers at this stage, so you will need to pay close attention. Most of them offer services in bundles, and you may end up paying for services you don’t use.
However, the processes are usually efficient, tend to be more thorough, and have many HR service add-ons that may be useful. However, due to the additional and sometimes complex solutions, they can come with layers of confusion in what they’re providing.
Furthermore, these providers tend to be less personalized than the small payroll providers, as they have a broader scope and more extensive client base. Finding the provider that matches your business is critical.
Large Payroll Providers
As the name implies, large payroll providers are more applicable to sizable organizations with an employee base of more than 10,000. It’ll be more reasonable to consider them as your business continues to expand.
You’ll absolutely love the fact that they provide state-of-the-art technology and top-notch expertise. However, you may sacrifice the personal touch of smaller providers for expanded features and flexibility.
Find the Best Payroll Service for your Company
Finding the best payroll solution for your business is challenging, especially when your business is growing and expanding. It’s essential to make a decision that not only suits your current needs but also accommodates future growth. But also, you need to avoid rushing into an overly complex or expensive service that doesn’t align with your business’s current stage.
Take the time to thoroughly evaluate your options, carefully consider the providers, and understand their processes.
At EmPower HR, we provide payroll administration services to ensure your staff is paid accurately and on time, while keeping up with compliance and tax requirements. By partnering with us, you get access to a dedicated payroll specialist equipped with the latest technology, and a deep understanding of payroll regulations.
Ready to simplify your payroll process and focus on growing your business? Contact us today for a free consultation.