Outsourcing Payroll: The Ultimate Guide for 2023

That said, payroll outsourcing is one of the best ways to manage cash flow. Prominent companies that offer both PEO/EOR and standalone payroll outsourcing services include Rippling, Deel, ADP and Papaya Global. If you have a small administrative department and are looking to make payroll and other HR tasks simpler for them, you may want a provider that has a powerful, easy to use and integrate software platform.

• In addition to making direct deposits or sending physical checks, this should also include deducting employee tax payments and employee contributions to benefits packages.
• However, they might not have the focus of specialized payroll service providers, whose primary goal is to see to it that employees are paid accurately and on time.
• As a small business owner, one of your many responsibilities is taking care of your internal team—after all, they’re the people who keep your business in motion.

You’ll manage your company’s day-to-day business while the PEO handles HR, payroll, and benefits processing. Consider our in-depth guide to outsourced payroll to understand what it is and how it works. More importantly, follow our practical steps to get started with payroll outsourcing.

Best Payroll Services For Small Business (

In exchange for your reduced liability, you agree to follow TriNet employment policies and forfeit some control over creating them for yourself. Kelly handles all payroll-related employee issues and concerns, from supplying customized enrollment packets to fielding payroll questions. Your company continues to review employee time cards to verify hours worked. These state payroll services forms bookkeepers are usually remote and, therefore, most of your communication is done via the internet or over the phone. In addition, any documents you or your bookkeeper need to send to each other must be provided electronically. “We operate a four-eyes review principle in all our processes, coupled with extensive internal control procedures,” Portelli says.

• Most payroll providers have a tiered payment structure to cater to businesses of different sizes.
• Suppliers give the appearance of having low-cost services by selling a basic bundle of services at a low cost, and then adding high fees for additional services.
• They typically include a cloud-based portal for both employers and employees.
• There may be labor laws that do not directly affect payroll and are thus unknown to the payroll processor.

If you don’t have an accountant or bookkeeper on staff and don’t want to pay the average salary of a bookkeeper ($42,000 per year) or accountant ($55,000 per year), outsourcing makes sense. Several national bookkeeping firms offer both accounting and payroll services for small businesses. Having many aspects of your business managed in the same place often makes your business operations easier to track and stay on top of. Usually, you have access to the same services you would receive from a local firm with some extras, like year-end financials. A professional employer organization (PEO) is a co-employer, meaning you and the PEO split employment duties.

’ and ‘what are the advantages and disadvantages of outsourcing payroll? We point out the top five benefits of outsourcing payroll and offer some tips on how to find the right payroll outsourcing provider. Paychex solutions for businesses with 20–49 employees can help owners and managers save time, reduce errors & stay informed of new and changing regulations. Some platforms, like QuickBooks, allow you to select from a variety of payroll processing plans.

Outsourced Payroll Functions

To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website.

Software Updates

“Demand for outsourced payroll services has increased significantly over the past few years,” Clifford Delia, partner at KPMG’s Corporate Accounting Advisory department, says. These two factors are less critical for smaller businesses, which therefore form the core group that outsource payroll. Larger companies are more likely to retain payroll in-house, since they can process payroll at lower cost than suppliers, and can retain payroll information within their computer systems.

Why You Can Trust Forbes Advisor Small Business

Payroll outsourcing services streamline your payroll processing system. This includes calculating tax withholdings and deductions, depositing employee paychecks for each timesheet, compiling payroll reports, and producing payroll registers. Reduce risk and save time by relying on a partner to help manage your tax fulfillment needs, including  compliance, filing, and administration.

They even delegate administrative tasks to third-party service providers. For instance, they employ human resources (HR) and information technology (IT) support outsourcing. If you do move forward with an outsourced payroll provider, be sure to review their security policies and only work with reputable vendors, like QuickBooks. A big edge payroll companies have over in-house systems is that their focus is entirely on payroll solutions.

When you hire a new worker, you can invite them to self-onboard through the employee portal, so you’ll easily gather their W-4 or W-9 form and contact information, and they can sign up for relevant benefits. For pricing, we considered whether a service offers a free trial, as well as the affordability of its lowest and highest price tiers. Companies that offer upfront pricing received higher ratings here than those that require filling out a lead capture form or making a call to a sales department. Here are some of the categories we used to rank the providers that made the top of the list. The Forbes Advisor Small Business team is committed to bringing you unbiased rankings and information with full editorial independence. We use product data, strategic methodologies and expert insights to inform all of our content and guide you in making the best decisions for your business journey.

Small mom-and-pop businesses that need payroll and accounting integration could benefit most from working with a local bookkeeper. Travel is limited, and it’s a good way to keep money flowing in the local community. Bookkeepers can be more attentive when they know they’ll be seeing their clients face-to-face, so it may also encourage better service. Local bookkeepers can cost much less than hiring a full-time employee to manage your small business payroll, which is what can make it a great option for many small business owners. To run a weekly payroll for 25 employees, a national bookkeeping firm might cost $4,000 to $6,000 per year if you pay in advance.

Some businesses assign the payroll processing (hiring, onboarding, training, policy management, etc.) to an existing employee with HR responsibilities. While this can seem like a good option, even if you have an HR person on staff, it doesn’t guarantee they will have the skills to process your payroll effectively. Due to its sensitive nature, it’s important to have someone familiar with labor and tax laws in all states in which you operate. A PEO is more expensive than outsourcing payroll to a bookkeeper because you get a lot more than simple payroll processing. It can cost an employer with a staff of 25 at least $12,000 to more than $40,000 total per year.