One advantage of outsourcing is that you’ll have access to many options that your own bookkeeper might not be able to provide. Payroll services aren’t limited to processing paychecks, they also perform several other services.
Tax Computation
Most payroll vendors can compute employment taxes like social security (FICA), unemployment amounts, and state and federal income tax withholding totals. Most employees elect to withhold state and federal taxes from their wages, and then get a refund when they file a tax return at the end of the year. A payroll company will compute the amount to be withheld, file the appropriate documentation, and pay taxes on the employee’s behalf. Some employees will qualify for tax credits. In these cases, the payroll company can offset these credits against tax amounts owed, and “advance” amounts according to the applicable state or federal law. Payroll companies stay up to date on tax law changes, so you’ll have the most current information available when it comes to tax calculations.
Reporting
Most payroll companies also offer reporting functions. Payroll outsourcing services offer these services to businesses that offer commissions and bonuses, or those that want to track job labor costs or employee output in relation to pay. Reports can detail costs by employee, by project, or by client, based on employee hours worked or billed. Overtime, sick leave, and holiday pay can be easily monitored using this feature. This function can be especially valuable if the vendor offers online account access. Employees can plan vacation time in advance, and have easy access to pay stubs and employment records.
Direct Deposit
Most payroll processing companies offer this feature as part of a basic payroll package. Employees appreciate this feature because it gives them faster access to pay amounts. Eliminating paper checks is also a great way to reduce waste and save time taken up by printing and signing paper documents.
Online Payroll Access
Several payroll companies store employee records electronically. This is a great option for businesses that want to cut down on paper waste, and those who want easy access to employee pay records. Employees can access their accounts online, eliminating the need to save pay stubs reports, or receipts. Employees can monitor accounts online, make changes to withholding amounts, divert funds to savings accounts, and make contributions to retirement plans very easily. Using an online payroll processing company can give employees control over their finances and provides a less wasteful storage mechanism for documents.