Their experience and expertise are invaluable, and they will be able to spot and avoid potential problems before they happen. Before handing over your payroll data, take the time to review it for accuracy and clarity, and clear up any discrepancies or outdated information. Alternatively, to make things easier again, you can simply partner with an all-in-one global HR provider, like Remote, and have everything under one roof. As discussed, non-compliance — whether accidental or otherwise — can land your business in hot water. You’re also paying for expert hands to manage a diverse set of payroll needs with fewer expensive errors, access to advanced tech, and the flexibility to scale easily. As mentioned, the potential cost savings of outsourcing can be significant — depending on the size of your business and your circumstances.

A lot goes into choosing the right payroll outsourcing partner. Doing business with someone you trust is important, so find a payroll company with a good reputation. If you’re co-sourcing, you’ll need a partner willing to share the workload. An outsourced payroll company will need access to your business bank account and employee time tracking system. This requires trust between the company contracting the payroll service and the service itself. A legally binding service agreement outlining the payroll outsourcing company’s terms, conditions, and expectations solidifies that trust.

1. Worst of all, paying employees or contractors too little can cause major friction with your team.
2. A high-quality payroll outsourcing service provides you with a suite of features for running payroll efficiently.
3. For example, if turnover is high, you may have additional expenses tied to hiring, onboarding and offboarding staff.
4. Enhance employee benefits offerings (at no cost to the employer).
5. Whether that means hunkering down with a calculator and a notepad or going with a payroll outsourcing solution, we hope you have the information you need to get on the right path.

Why should a business outsource payroll?

This has historically been one of the main incentives for any kind of outsourcing, and payroll functions are no exception. You should be able to find a solution that can do anything from calculating your payroll to paying employees to filing taxes for you. Some software even handles benefits and HR or integrates with your accounting software. Once you enter employees’ and contractors’ wage information each pay period, good outsourced payroll software should do everything else automatically. Employers are ultimately responsible for paying payroll taxes, even if they outsource payroll to a third-party provider.

Plan the transition

Now that you’ve weighed the pros and cons of outsourcing payroll, let’s break down some common features to keep an eye out for in payroll outsourcing services. Following these best practices will help make the search for a provider and the transition smoother. Form a team at your company to investigate payroll outsourcing, then take a moment to review these and the “Frequently Asked Questions” section below. IRS correspondence is always sent to the primary business, not the third-party provider. You can change your address to the payroll company, but the IRS does not recommend that.

Outsourcing comes with a payroll support team

Depending on the agreement between the primary business and the payroll provider, the provider can be responsible for all or just some of the payroll tasks. Examples of payroll tasks are verifying wages, deducting and depositing payroll taxes, and printing paychecks. Finding a trustworthy third-party provider goes a long way, but a company can’t just pass off any payroll mistakes that arise as the fault of its provider and move on.

As a result, the chances of making a mistake are lower than with an in-house accounting team. If your business is growing, you need a payroll provider that can grow with you. By outsourcing tasks, you can ensure your payroll is getting the attention to detail it requires to run smoothly. Your in-house accounting team can instead focus on core tasks to support your team as you grow. Paying your workers—whether domestic or foreign—doesn’t only involve giving them their salary at activity based budgeting the end of the month. Today’s payroll processes can be time-consuming and stressful, which is why 73% of organizations have turned to payroll outsourcing.

Small businesses may benefit from working with a contractor as it’s less costly. If you choose this option, ensure your contract with the accountant is clear to avoid potential employee misclassification issues. These laws dictate how employees can receive their compensation, when you have to pay them, and their payroll deductions, such as health insurance and social security.

Paychex Flex® Makes It Easy

For example, they should comply with data protection laws such as the GDPR. Reduce costs, manage taxes, administer benefits, and stay globally compliant when you consolidate payroll with Remote. If you only plan to hire and pay team members in one country, it may make sense to partner with a payroll provider in that country. Clarify from the start what exactly is covered under the provider’s base fee, and what (if anything) is going to cost extra. Cover your bases, ask about hypothetical scenarios, and don’t just focus on standard payroll operations costs. For instance, some providers incorporate hidden termination fees when an employee leaves, or charge sizable sums to transfer to a new provider.