Processing employee payroll can be complicated, time consuming, and difficult to do correctly. By law, employers are required to withhold portions of employee wages for payment of federal and state taxes. These tax amounts aren’t always the same for every employee, or even the same every pay period. Amounts can change from month to month depending on the employee’s situation. Having a baby, moving, getting married, and inheriting money can all change an employee’s tax status and have an impact on how much should be withheld. Changes in state and federal legislation and amendments to tax codes can also complicate matters even further.
If you miss a filing deadline or compute amounts incorrectly, you can be hit with expensive penalties and fines.
Payroll services offer a solution to these concerns. Companies that specialize in calculating employee tax, allocating funds to employee accounts, and job and project cost reporting can be a valuable resource to any business struggling with these functions. Payroll companies calculate withholding amounts, process payments, and provide required forms, likeW-2s, at the end of the year. Some companies even offer online account access for employees, eliminating the need to save pay stubs or bank receipts.
A payroll outsourcing company can also calculate labor costs for each job or client, allowing business owners to make strategic decisions about future staffing needs. Payroll processing companies are used by businesses of all sizes to keep track of labor costs, offer employee payment services, and compute and pay employment taxes.
This guide provides information on the ins and outs of payroll outsourcing. Make sure you know the terms of the trade, how outsourcing can save your business money, and some of the features you can use before you start shopping for a vendor. Using our tips, you can choose the best outsourcing company for your business.