A payroll service is when a separate company will legally handle the payroll functions on behalf of a large organization. The main objective of companies who operate payroll services is to increase the amount of free time for the organization so that it can focus on other business ventures and operations.
The payroll services provided will handle all employee payments independently, the organization will need to set up the service initially and create a company account with the payroll vendor.
Then, the organization should provide a list of all the employees, the number of hours each of them has worked per week and their pay scale that was agreed upon in their contract, including any kind of variances.
At the end of the month, the fund will be transferred from the organization’s bank account into the payroll account. This will be followed up with payroll statements and tax reports once each employee has been paid. The main ways that they can accept their monthly funds is through either a direct deposit or a standard check.
What is the Main Purpose of a Payroll Company?
Various companies are specializing in payroll services, working with large million-dollar clients to ensure that all their employees receive payment on time and to clear any legal obligations of the employer.
With an efficient payroll system in place, the human resource department and top-level management can focus on other important organizational tasks and spend less time worrying about how to pay each employee on time. Depending on the business requirements and the number of people employed, payroll companies also provide many other types of services; some of these are listed as follows.
- To accurately calculate payroll taxes.
- To ensure that any deductions made are correct.
- Set up employee direct deposit accounts.
- To make necessary adjustments to direct deposit accounts.
- To monitor and track employee work time and hours spent at the workplace.
- To record and track employee attendance.
- To proactively monitor employees’ compensation premiums.
- To make sure that compliance with state and federal payroll laws are met.
- To provide electronic payroll (e-payroll) records to employees and employers.
The key responsibility of a payroll company is to ensure that employee attendance and work hours are easily and accurately when on the job. Initially, when payroll companies were a fledgling industry, the main mode of this was through the use of punch-in options also known as clock-in. This is when each employee was given a card that needed to be ‘punched in’ and the time the card was punched in would also be recorded.
Employees were required to do this twice a day when they entered the workplace and again at the time of leaving. Nowadays, with the advancement in technology, most companies now offer their employees with secured badges, code generators or fingerprint scanners. These employee work schedules can also be customized to account for break times and lunch hours.
Some of the leading payroll companies offer new integrated payroll services that can provide HR support services to employees as well as clients. The benefit of these services is to help employers fulfill any legal obligations as each organization has its own set of compliance procedures to follow.
Now, these integrated payroll services can automatically keep up to date on all the latest developments online for all labor laws and by doing so, HR officials and business management teams can put aside their research time for other important organizational issues at hand.
Why Do Most Businesses Choose a Payroll Service Company?
Large organizations tend to approach payroll companies to streamline their payroll services as they can eliminate the need for a payroll department in-house. Also, payroll companies ensure that when providing their services that all accountability issues and legal compliance procedures and obligations are followed.
Many business owners rather have a separate, independent company that specializes in these issues to avoid any complications or in the case of mistakes, for them to be identified and corrected as soon as possible.
From the employees’ perspective, a payroll company will always be reliable when it comes down to receiving their monthly payments. This efficient system will ensure that no delays occur and will minimize all liability concerns.
Another main reason why most businesses choose a payroll service company is because of the payroll programs on offer. If the organization’s main employer has an ever-increasing workload, he can choose to implement the management operations, retirement services, and certain administration programs within the payroll services.
Some of the most used payroll programs are the tracking of employee vacation time and duration of absence from work. Certain payroll companies also offer organizations the ability to manage various tax payments as well as assisting with labor-management issues and tax compliance procedures.
These payroll programs can also handle any necessary paperwork for employees’ paychecks including all direct deposits, pre-screening assistance and managing other expenses (employee travel expenses, corporate trips, service fees and so on).
To access these options, payroll companies will charge accordingly and the cost will vary depending on the number of employees the organization has, the types of accounts and the services rendered.