Outsourcing Your Payroll

Typically, employers have two basic payroll processing options — use an in-house method or outsource the work to an independent payroll service.

In-House Methods
Payroll can be processed in-house using either a manual process or a payroll software program. Employee payroll obligations, payroll deductions, and payroll tax obligations are calculated, checks are written or generated, and payroll-related information is recorded or updated to the general ledger. In most cases, taxes are filed manually. Some employers hire an accountant who specializes in payroll, sometimes only for the purposes of calculating or filing payroll taxes.

Independent Payroll Processors
Payroll service bureaus provide payroll functions that range from basic calculating of employee payroll and tax obligations, producing checks, and preparing management reports to optional services such as filing payroll taxes and preparing W-2s.

What Method is Right for You?
The payroll method that's right for you depends, in large part, on the complexity of your payroll and the actual time and resources it takes to prepare it. Here are some factors to consider for each method:

Independent Payroll Processors
 
•Have trained personnel to perform payroll-related responsibilities.
•Perform wage and hour calculations.
•Perform federal and state tax calculations.
•Post payroll data to the general ledger.
•Track payroll tax deposit due dates.
•Research changes in federal and state payroll tax rules and legislation.
•Calculate ongoing tax liabilities.
•Calculate and file payroll tax returns.
•Provide other services (e.g., automated tax payment service, direct deposit, Internet access to payroll information, and human resource services including employee benefits).

In-House Methods
•Use personnel for payroll versus other business tasks.
•Entail software-related costs (i.e., purchasing and upgrading).
•Involve costs to train personnel to use software.
•Involve costs associated with hardware (less depreciation) and related maintenance if using a dedicated or shared payroll computer system.

Advantages of Using an Independent Payroll Processor
 
Focus
By using an independent payroll service, an employer can better focus on what they do best — running their business.

Accuracy
A top priority of any payroll service is ensuring the accuracy of the payrolls they process. Staying current with tax laws and tax computations is a vital part of their business.

Confidentiality
Payroll services reduce the risk of exposing confidential payroll information to unauthorized personnel.

Convenience
Outsourcing makes payroll fast and easy. In general, all an employer has to do is gather and communicate payroll information to the payroll service.

Flexibility
An employer has access to a greater number of services. This has become increasingly important, as the administration of other functions (e.g., insurance, retirement plans, and direct deposit) has become part of the payroll process.

For more information about our products and services, contact a Nazpay representative at 1-866-629-7295, Monday through Friday from 9:00 a.m. to 6:00 p.m. ET. Use our form for a no-obligation quote or get an online quote now.


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