While this article spells out many details about Managed Payroll, and we highly recommend you read about all of them, here is a quick list of the topics and questions this article explores:
- What is Managed Payroll?
- Does Payroll Sit With HR or Finance?
- What Are the Risks Associated With Managed Payroll?
- How Much Does Outsourcing Payroll Cost?
- What Advantages Can a Managed Payroll Provider Bring to Your Company?
What Is Managed Payroll?
Managed payroll is outsourcing the responsibility of managing in-house payroll to a third-party managed services provider. Companies outsource the responsibility of managing payroll more than any other function due to the numerous benefits. A payroll outsourcing provider streamlines and automates your payroll process with a web-based solution that follows tight internal controls while delivering significant savings.
Does Payroll Sit With HR or Finance?
The payroll department can either be part of the human resources (HR) or finance/accounting department. In most companies, it is in the finance/accounting department.
Most of the inputs to payroll are from the HR department in terms of new hires and terminations, pay rates/salaries, and so on. But because payroll deals with complex tax laws and because it is a highly transactional process, it generally falls under the finance/accounting department.
What Are the Risks Associated With Managed Payroll?
Managed payroll outsourcing has all of the risks that are inherent in any financial process. Payroll can either be performed correctly or incorrectly. The risks for payroll are larger than other processes because the CEO, CFO and/or owner of the company are personally, financially liable if employees and/or payroll taxes are not paid correctly and on time.
In general, outsourcing payroll reduces risk because the outsourced payroll provider has sophisticated software to help ensure that payroll is calculated correctly, employees are paid on time and taxes filed correctly and timely. They also have resources to help if there are any problems and can take steps to correct them quickly.
When using an outsourced managed payroll company, it is best practice to run what is known as a Payroll Preview. This is a report of the payroll just as if it was processed fully, but without the actual payment. The company can review this report to ensure the payroll is correct. After review the payroll can be filed, employees and taxes paid.
How Much Does Outsourcing Managed Payroll Cost?
The cost of outsourcing managed payroll can vary depending on your company’s size and needs as well as which service provider you outsource with, but the cost generally tends to be lower than the cost of handling payroll in-house.
It costs more to handle payroll in-house because companies have to recruit, hire, and train onsite staff; pay for salary, insurance, benefits, and time off; and buy and maintain payroll software. Experienced outsourcing professionals can do the same job at a lower cost and in less time. Since the outsourced professionals you will be working with are highly trained in accounting, the time that it takes for them to payroll is less than what it would take for an in-house team. Your company will also save the time required to recruit and train a new employee.
What Advantages Can a Managed Payroll Provider Bring to Your Company?
With a managed payroll provider, your company can:
- Keep current on rules and regulations at all levels
- Benefit from increased security and compliance
- Process new hires and terminations more efficiently
- Provide more accurate data
- Coordinate timely paycheck delivery
- Answer employee questions
- Quickly and accurately resolve issues
- Save money on in-house costs such as licensing software and payroll employees
IQ BackOffice Is A Leader in Managed Payroll Outsourcing
Whether it’s new hire paperwork, salary increases or terminations, IQ BackOffice’s state-of-the-art technology creates digital images of each payroll transaction and routes them electronically via a secure website for your approval. We will work with your payroll processor to process and mail checks, authorize direct deposits and electronic pay cards, manage tax filings, deduct garnishments and provide instant reporting.
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