Why Do Companies Outsource Payroll?

How does payroll outsourcing work?

Simply put, payroll outsourcing means exporting some or all of your payroll administration to a specialist third-party organization.

The payroll package you choose will integrate with your existing business infrastructure, including your HR department, and deliver its services each pay cycle..

What is an example of a payroll fee?

On the income statement, payroll expenses are part of labor costs. They include employee salaries, employer payments for health insurance or similar benefits, payroll taxes paid by the employer, bonuses, commissions and similar expenses.

Is payroll an HR or accounting function?

Payroll spans across both the HR and finance departments.

What is the easiest payroll software to use?

Basic for payroll + HR: RUN Powered by ADP. … Simplest setup: OnPay. … Best customer service: SurePayroll. … Best for contract work: Square Payroll. … Most affordable accounting software integration: Wave Payroll. … Most affordable self-service: Patriot Software. … Most user-friendly: Wagepoint. … Best interface: QuickBooks Payroll.More items…

How do I sell outsourcing payroll?

Introduce your company to your target market through a direct marketing letter and a brochure that spells out the benefits of using your payroll service. List the services you provide, including payroll processing, taxes, direct deposit transactions and tax withholding.

What percentage of companies outsource payroll?

Forty-seven percent of U.S. companies and 47% of Canadian companies reported outsourcing payroll. The largest companies are more likely to outsource payroll, as 73% of U.S. companies in the survey with revenues of $5 billion or more outsourced this function.

What are the disadvantages of outsourcing?

Disadvantages of OutsourcingYou Lose Some Control. … There are Hidden Costs. … There are Security Risks. … You Reduce Quality Control. … You Share Financial Burdens. … You Risk Public Backlash. … You Shift Time Frames. … You Can Lose Your Focus.More items…•

What do payroll services do?

A payroll service provider is a company that automatically processes payroll calculations, payroll tax statements, year-end taxes and more. Many employers prefer to use payroll service providers to help ensure their employees and taxes are paid accurately and on-time. … It will also file federal, state and local taxes.

How much does ADP charge to run payroll?

The basic package starts at $10 per employee, per month, with fees typically paid each time you pay your employees (bi-monthly, every two weeks, etc.). More advanced plans cost around $23 per employee, per month. On average, you can expect to pay around $160 per month for 10 to 15 employees.

What is the best payroll service for small business?

The Best Payroll Services for Small BusinessGusto. … Intuit QuickBooks Payroll. … Square Payroll. … Paychex. … ADP. … OnPay. … PrimePay. … Wagepoint.More items…•

What does it cost to outsource payroll?

Basic Payroll Outsourcing Costs The vast majority of outsourced payroll companies charge a basic package fee, ranging from $20 to $250 per month. The cost of outsourced payroll includes direct deposit, paycheck processing, standard tax filing, and an online portal accessible by both employers and employees.

Is it better to outsource payroll?

Reduce costs The direct costs of processing payroll can be greatly reduced by working with a payroll provider. Big businesses can afford to maintain robust payroll departments. … If your business has fewer than 30 employees, there’s a very good chance that you can save money by outsourcing your payroll operations.

Is it cheaper to outsource payroll?

Outsourcing payroll is costly. Wrong. For many companies, handling payroll in-house can be more expensive than outsourcing. With the amount of time and people it can take to handle payroll tasks, many companies have found that outsourcing payroll has been a better way to steward company resources.

What does it mean to outsource payroll?

Payroll outsourcing is simply the use of a service provider to handle the administrative and compliance functions of paying employees. It is important to note that payroll services are only that, and do not offer a local employer of record for the foreign company.

What are the pros and cons of outsourcing a company’s payroll function?

Before handing over the responsibility for the paychecks to an outside service, weigh the pros and cons.Pro: It’s a Time Saver. … Pro: It Calculates Taxes Accurately. … Con: The Wrong Company Can Produce Errors. … Con: Business Owners Ultimately are Responsible. … Con: Paying for Services Businesses Don’t Need.