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How Does Payroll Outsourcing Work?

How does payroll outsourcing work and should your company do it?

If you feel the payroll department in your company is both labor-intensive and not particularly cost-effective, it may be time to look into payroll outsourcing.

What is payroll outsourcing, how does it work and should your company do it? Read on to find out.

What is payroll outsourcing? -- This is when a business pays a third-party service to handle all the payroll requirements of their company. This includes both issuing salaries and handling tax paperwork.

How does payroll outsourcing work? -- Once you have decided on the third-party service that will be handling your payroll, you will need to send them all information needed to process payroll.

This includes the salary of each employee, employee W-4 forms and your own company's tax details.

Several days before salaries are due, you will then need to contact the service and tell them how many hours each employee has worked. You will also need to tell them if overtime payment is due and for how many hours per employee.

The service will then calculate salaries and deductions, and then authorize payments to be made to each employee. The federal tax deposit for your company will also be made at the same time.

End of the year services -- The service will also be responsible for filing the required quarterly tax reports, and for issuing all your employees' W-2 forms and 1099s.

Should your company outsource your payroll? -- If you are paying several employees to deal with payroll, it can often be cheaper to pay a service to do it.

If you find yourself close to being late paying employees' salaries every month, hiring a service to do them can also ensure your staff is never paid late. It also ensures that paychecks will always be correct. Read on payroll outsourcing companies for more ideas.

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