Before going ahead with the different payroll services to implement for your business, let’s first start with what payroll is. The term payroll is the process where an employee receives payment from the organization they work for. There are various different parts, these are as follows.
- Payroll may refer to the calculation of employee paychecks as well as the distribution (electronically or physically).
- The term could also be used to refer to an employee’s financial records such as salary or employee wages, bonuses, deductions, withholdings, etc.
- Payroll may also be used to refer to the record of total earnings of all employees in an organization for a fiscal year.
There are a few terms that are related to payroll such as payroll taxes which are the taxes that are mandated to be paid directly to the state or federal tax authorities. The Internal Revenue Service (IRS) classifies payroll taxes under the Federal Insurance Contributions Act (FICA) tax law which pertains to an employee’s social security and medicare.
The other related term is payroll processing which is part of the payroll services as it includes the preparation and distribution of employee paychecks (withholding or deductions), payment of payroll taxes and other services such as using an accounting software, a bookkeeper or an advanced payroll service that includes all compliance procedures.
What Exactly is Payroll Services?
When an organization hires employees for the purpose of carrying out a specific job on a daily basis and gets paid for their work at the end of the month, it is called payroll. Depending on the organization you work for, the employees will be either paid according to a fixed rate decided upon at the time of joining or by the number of hours the employee has worked.
In the case of overtime, the employee must put in more than the required number of hours they normally work per week. The excess amount will be considered as the employee’s gross pay. One of the best payroll services is that all the calculations during the payroll process will be based on the gross pay amount and the number of overtime hours completed. Normally, in most organizations, the salaried employees are paid twice a month whereas the employees who work on an hourly basis will be paid every week.
What is the Main Purpose of a Payroll Company?
The purpose of having an effective payroll system can be highly beneficial to an organization as the employer will not have to set aside more resources and manpower for an in-house payroll service. By doing so, he can focus his attention on other business related functions, even the workload of the HR department will be reduced if the payroll service is outsourced to a company.
Now, there is a general misconception that payroll services are only limited to paying employees on time. However, it can also include many other services which are as listed below.
- A good payroll company will include the ability to record and track employee attendance.
- A payroll service company can easily initiate setting up of employee direct deposit accounts.
- A payroll company’ services will include accurately calculating employee payroll taxes.
- A payroll service company must ensure that all salary deductions made are accurate.
- A payroll company can also provide services that can monitor and track an employee’s work hours spent at office.
- A payroll service company has the ability to make any necessary adjustments to employees’ direct deposit accounts.
- A payroll company can offer service where employers can proactively monitor compensation premiums of employees.
- A payroll service company must ensure that compliance with state and federal payroll laws are met.
- A payroll service company should have the ability to provide all electronic payroll (e-payroll) records to employers and employees.
What are the Convenient Online Payroll Programs Most Companies Offer?
With the ever changing pace of modern day technology, online payroll services now have various programs that can be entirely operated from the cloud. This way, the organization and its employees can access any financial documents when needed.
Most payroll companies have services that cater not only to an organization’ employee but also to freelancers and contract based workers. Some of the main payroll programs that are most commonly used in organizations are listed as follows.
Reporting of New Hires
A good payroll program can implement a section dedicated to reporting new hires on behalf of the organization.
A good payroll program will allow employees of the organization to easily access their corporate pay stubs, Part Time Off (PTO) and leave balances as well as all the mandatory year-end tax forms directly online.
Filing of Payroll Taxes
A good payroll program will provide services that can file payroll tax reports, withhold employee taxes as well as pay the employee tax withholdings to federal and state governing agencies. These payroll programs can also issue the various employee tax forms such as form 1099 and form W-2, with most of them offering an error free guarantee.