Payroll outsourcing is the process of shifting all the functions of payroll processing; collecting hours worked, computing employee tax information, and transferring funds to various accounts; to a third party. This is incredibly helpful for small companies who are unable to delegate time strictly to all of these HR and accounting tasks in the proper manner.
A payroll processing company has the ability to write checks, deposit funds to employee accounts, and provide W-2 forms at the end of the year. With all of the tricky and ever changing laws, rules and regulations it is great to have a full company dedicated and educated in this field handling what could, if improperly completed, devastate your small business. The company you select will request that your business has an account set up for regular or automated deposits thus allowing the company access to funds for paying employees, withholding taxes, and paying the necessary amounts to state and federal tax authorities. By doing so you can avoid any fraudulent activity with your small company and accruing penalties. They will also need all employee information as well as employee banking information if utilizing direct deposit options. One great feature is that the employees can also access their accounts online, and make changes to accounts like IRAs and Medical Savings Accounts leaving you plenty of time to complete the work needed to be done for your growing business.