Managing payroll is a requirement for the vast majority of businesses, but there are many different ways to go about accomplishing this. What works best for one company may not work as well for another, which is why it’s worth taking a look at your current payroll service provider. Are there areas that could use improvement, or are they meeting all of your payroll needs? If so, are you getting the most competitive pricing available? With these two questions in mind, let’s take a look at a few of the common payroll services companies use to manage their payroll.
The Main Three Types of Payroll Service Providers
Generally speaking, there are three main types of service providers companies use to manage their payroll: an external service provider, an in-house team, or an online service. The first option, external providers, can consist of either an individual accountant or an entire team of specialists. The second option, an in-house approach, involves hiring dedicated payroll staff who work only for your specific company. The third option, online services, varies the most, with choices ranging from standalone services to complete online payroll solutions. Next, let’s take a look at each type of payroll system in depth.
Using an External Service Provider
As mentioned above, companies that use an external service provider may hire a single accountant or an entire team of payroll specialists. This option completely alleviates any stress from your company in regards to payroll responsibilities, but also requires complete trust in the external service provider. They manage payroll on your behalf, so it may take a while to discover any discrepancies in your payroll system should they occur. External service providers are an expensive option, though they may be cheaper than employing your own in-house payroll staff.
Employing an In-house Team of Specialists
A popular alternative to using an external service provider is for companies to employ their own dedicated, in-house payroll specialists. Managing their own team allows for detailed quality control, faster payroll adjustments, and completely personalized payroll service, although other areas may suffer. The biggest obstacle for in-house teams is often keeping up with growing payroll demands, which are due in part to ever-changing tax laws but also the onboarding of new employees. A growing business will require more in-house tax specialists, which can easily offset any net profits with new overhead expenses. Teams that rely solely on manual payroll processing are also vulnerable to accuracy issues, which can quickly escalate from a small typo to an accounting nightmare.
Managing Your Payroll Using Online Software
These days, many companies are making the switch to using online software to manage their payroll, and for good reason! Smaller businesses may only require a single employee to manage their payroll using payroll software, and even larger businesses will only require a few. This obviously provides a great advantage over employing an in-house team that uses only manual payroll processes, since the payroll staff can remain small in size (keeping overhead costs down).
Accuracy is rarely an issue with online payroll solutions since all the system’s calculations are computed by automated software. This software is frequently updated to stay current with all relevant tax laws, which is especially useful for companies that employ remote workers. Rather than manually researching all relevant tax laws for their remote employees, businesses who use online software can place their trust in the system to perform accurate deductions each and every time.
Payroll distribution is another issue that in-house teams may struggle with, but this is another problem that can easily be solved using online payroll solutions. Systems usually provide multiple distribution methods and can distribute the paychecks independently, reducing the required workload of the staff. Although you may think that all these benefits would come at a high cost, fortunately, that is rarely the case. Online payroll systems usually offer a variety of plans (ranging from basic payroll management to complete payroll solutions) and are completely customizable to the individual needs of your specific business.
Which Option Should You Choose?
For all but the smallest of businesses, online payroll systems offer a clear advantage over alternative options. Whether your business is struggling to remain compliant with the various tax laws, falling behind schedule, overextending the payroll budget, or experiencing any other common payroll problems, chances are, online payroll systems can help. To find out what benefits these payroll systems can provide for your specific business!.