How Does Payroll Outsourcing Work?

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Executive Summary

Payroll can be prepared by employees within a company, or it can be outsourced to a payroll service. Many businesses have discovered that outsourcing payroll to a professional service actually saves the company time and money. When a company opts to prepare its payroll in-house, there are employee expenses for the preparer, such as payroll, social security and Medicare contributions, worker's compensation insurance, possible medical or retirement benefits and training. When a company hires an employee to handle a company's payroll, that employee must be trained in accounting and be able to calculate payroll and deductions, along with preparing payroll reports and making timely tax deposits. A company will be responsible for any of the errors made by the employee.

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