Payroll management is an essential part of running a business and one of the biggest expenses for any organization. Even the most savvy of companies find managing payroll time-consuming and complicated.
Payroll management software, whether you do it every week or monthly, involves calculating salaries, ensuring compliance with regulations, and deducting taxes, insurance, and pension plans. All while ensuring your business pays employees on time and correctly.
It gets even more complicated when you add in the contingent workforce payroll of your company. It is challenging to manage non-permanent workers' payrolls. This leaves the risk of errors high. Many in-house staff hired to manage contingent worker payrolls must gain the skills and expertise to do it successfully.
What is a Managed Payroll Service?
Outsourcing the responsibility for managing payroll to a third party is managed payroll.
Managed payroll services and managed outsourced payroll management. It means the company handles all your payroll tasks, including labor and administration.
Payroll options include a variety of other types.
In-House
Hiring an internal accounting department is a great option for large companies with many employees. Accounting employees are familiar with your business's culture and inner workings and will be able to adapt and grow along with it. Also, they're available immediately in case of an urgent situation or a change at short notice.
Bookkeepers
A bookkeeper prepares and maintains your financial records. This is an option for small businesses with few employees. Your bookkeeper may be a full-time employee, or you can be one of many clients.
Online Payroll
You can choose from a variety of online services to handle your payroll. You'll need to spend more time on this option since you will be entering all the data and processing your payroll.
Software
Payroll software is similar to an online service in that you must enter all the data. The software offers automated options that save you time compared to processing all the data. However, it is still necessary to maintain and check the software results to ensure there are no errors.
What Services Does Payroll Software Offer?
Cloud-based online payroll services are available. You don't need to install software and can run and manage your payroll anywhere. This type of software can be used to pay both full-time and contract workers and part-time and full-time employees.
Online payroll includes a wide range of services.
Payroll Processing
Online payroll services calculate the amount employees should receive each pay period. These systems consider wage rates, overtime pay, holiday pay, and taxes. They also include Social Security and other benefits. Then, they pay employees via direct deposit, debit cards, or checks.
Paying and Filing Payroll Taxes
They can also file quarterly payroll tax returns and pay the tax withheld by their employees to the appropriate local, state, and federal agencies. These services also provide W-2 and 1099 employee forms at the end of the year. Some services offer an error-free warranty. These payroll companies will pay for any fines and interest if an error is made.
New-Hire Reporting
Most payroll services will report new employees to the government for you.
Integrations
Online payroll services can be integrated with many payroll-related software programs that businesses use. These include accounting software, time-tracking systems, and human resource software.
PTO Management
These services track the vacation and sick days your employees have accrued and used. Some payroll solutions facilitate the time off request and approval processes.
Employee Self Service
Employees can view their online PTO balances, year-end tax forms, and pay stubs.
Mobile Access
You can manage your payroll using mobile apps and mobile-friendly sites.
Payroll Reports
Your service's detailed wage and labor reports can help you better understand how your business functions.
Online payroll services are the best because they do all your work. They calculate payroll, pay payroll taxes, and complete year-end tax returns. These systems allow you to run your payroll in minutes.
Online payroll services are more expensive than doing payroll yourself. Your payroll provider is also responsible for getting everything right. You may be faced with a wave of angry employees or even a fine by the government if the payroll provider makes an error.
Payroll Services vs. Payroll Software
Businesses should consider several factors when deciding whether to use payroll services or software.
Budget
Payroll services are much more expensive than software. Payroll software is the best option for businesses with a limited budget or struggling to control their costs.
Headcount
When choosing a payroll management method, the number of employees is also a factor to consider. Payroll companies charge per employee. Once the number of employees exceeds a certain threshold, hiring a payroll expert on a full-time basis to handle payroll internally is better.
In-House Expertise
The payroll software can do all the calculations and generate payslips. It can also summarize payroll liabilities. But it cannot replace a lack of expertise. The person who operates the payroll software within the organization should have a basic knowledge of the various payroll compliance requirements. Payroll services are different. The payroll company is responsible for compliance.
Available Resource
Payroll software is much more efficient than manually processing payroll. Even with good software for managing and processing payroll, it is still a huge amount of work. If the HR, Accounting, or Finance teams need more capacity to manage payroll and their other tasks, outsourcing payroll may be best.
Service Requirements
Depending on internal capabilities and expertise, different businesses will have varying service needs when managing their payroll. Hiring a payroll company is often the best option for those who need additional help with payroll tasks.
Contractors
Many organizations do not rely solely on full-time staff but use independent contractors and freelancing. Although it may not be part of the official payroll process to approve and issue payments to these workers, they still need to be done. Businesses should use a payroll system that includes freelancers and contractors to avoid spending much time managing payments.
Payroll Services Benefits for Business
Managed payroll services are a great way to save money and improve the efficiency of your external payroll.
Compliance Risk Management
Payrolling external workers is complicated. Therefore, It is necessary to have specialized skills to comply with the current legislation. An MSP can provide you with the expertise to help your company comply with current legislation, privacy, data protection, and any other advice needed to keep your organization on track.
No Work Hassle
This includes various tax reporting documents managed by the managed service provider for the company paying the employee (such as the form W-A). You can then focus on other aspects of managing your small company.
Managed payroll services will handle these tasks efficiently and accurately without your input.
Excellent Customer Service
Do you need help understanding written communication? Great advice and excellent customer service are only a phone call, text, or email away! You care about your clients as a small business owner - you probably care more than corporations would. We are the same.
Kenz Innovation HCM offers a dedicated, small team to support you. You won't have to explain your unique situation to new contacts constantly.
For businesses in the Twin Cities metro area, the presence of local payroll experts to set up your account personally will help eliminate errors from the beginning. You can get immediate answers to any questions or concerns, and your partner is invested in the success of your business.
Cost-Effective
Payroll is a significant expense for small businesses. Payroll can be a major headache if it needs to be done correctly. A professional payroll provider can help you avoid penalties by staying on top of every change in laws and regulations.
Outsourcing payroll can help you save money if your bookkeeping skills need to be stronger or you can't do payroll yourself. Is it time to outsource your payroll? We handle all the details, including reporting on new hires filing local, state, and federal taxes at year-end, quarterly, and quarterly.
You'll also be charged a "subscription" fee by the biggest names in finance for software updates that offer very little change. And you'll waste your money if you need help understanding how to make the most of it! Local accounting and payroll firms are friendlier, less expensive, and easier to work with.
Compliance Risk Management
Understanding and keeping up with the constant changes in payroll and tax regulations can take time. The software providers provide tax tables. However, the input and calculation configuration for labor and tax regulations is left to the individual organization. Businesses that continue to manage payroll internally risk falling victim to these rules. These businesses are more at risk if they have limited payroll expertise or non-payroll-certified staff in-house.
The right partner can provide security, privacy, government regulations, and legislation expertise. Kenz Innovation HCM ensures its managed payroll service is confidential, accurate, efficient, and secure. They also have certified payroll professionals who ensure compliance with best practices, regulations, and industry standards. This helps secure your data against payroll fraud and theft.
Enhanced Accuracy
Paying contingent workers can be complex, especially for employees who need help understanding the subject. Your organization could be in serious trouble with the government if you get your external worker payroll figures wrong. It can also frustrate contractors and non-permanent employees. Managed payroll services provide the expertise to ensure that external workers are paid promptly and correctly.
Protect from Internal Revenue Service Penalties
Many small and large businesses are subject to significant IRS penalties each year. According to the Internal Revenue Service, $845 is an average penalty for incomplete or late filings. Payroll mistakes should be noticed because they irritate staff and create suspicion. These errors can lead to unfavorable events like audits or harsh punishments.
It's also nearly impossible for small businesses to stay current with the latest state and federal tax law changes.
Professional service providers can manage calculations and filings at the lowest cost and with maximum convenience. If you did it yourself, you would have to spend countless hours of work and pay fines, as they must constantly keep up with federal and state regulations.
The Key Takeaway
No matter the size of your organization, managed payroll services are an excellent option for you. The most significant cost savings will be realized by large organizations that already have a payroll department in-house.
Large organizations will no longer be required to hire dedicated staff or pay for the high costs of their current payroll process.
When deciding what approach to payroll will work best for your company, there are many factors to consider. Outsourcing payroll will help you reduce risk, increase the visibility of pay activities, and redirect your team's efforts to strategic initiatives. Find out how managed payroll supports your business continuity plan and can create space for you to grow.
