What is managed payroll?
Managed payroll is a service provided by third-party organizations to handle all aspects of payroll processing and tax compliance on behalf of a business.
This payroll solution typically involves:
- Setting up the payroll system
- Collecting employee data
- Calculating gross salaries
- Ensuring compliance with tax and payroll laws and regulations
- Subtracting or adding all necessary withholdings
- Generating employee tax filings
- Making deposits to employee bank accounts
- Filling government remittances
- Generating employee pay slips
- Completing all other necessary paperwork
Instead of managing payroll in-house, an organization can outsource these tasks to a managed payroll services provider, allowing your team to focus on other strategic initiatives and operations.
How does managed payroll work?
Your experience with a managed payroll service provider will depend on their specific processes and level of client support. In general, managed payroll includes the following steps.
- Setup and integration: The business signs up with a managed payroll provider and integrates their existing systems, if any, with the provider’s payroll software. This involves sharing employee data, including hours worked, salaries, benefits, and tax information.
- Payroll processing: Each pay period, the employer submits employee work hours, bonuses, and any other compensation details to the payroll provider. The provider then calculates the gross wages, deducts taxes and other garnishments or withholdings, and arrives at the net pay for each employee.
- Tax filing and compliance: The managed payroll service handles all aspects of tax calculations and filings, ensuring compliance with local, state, and federal regulations. This includes withholding the correct tax amounts and submitting them to the appropriate tax agencies.
- Payment distribution: Once the payroll calculations are completed and verified, the managed payroll service facilitates the distribution of payments to employees, either through direct deposits into their bank accounts or by issuing checks.
- Record keeping and reporting: The service maintains detailed records of all payroll activities and provides businesses with access to reports and documentation necessary for accounting and compliance purposes.
- Support and consultation: Managed payroll providers offer ongoing support to address any payroll-related questions or issues. They also keep businesses updated on changes in payroll legislation and tax rates.
Benefits of managed payroll for businesses
Outsourcing payroll responsibilities to managed payroll services enables companies to refine their operational efficiency and diminish the potential for non-compliance with payroll regulations. This approach not only simplifies the payroll process but also brings several pivotal advantages:
Payroll automation
By automating payroll, businesses can streamline the entire payroll process from calculating wages and deductions to filing taxes and issuing payments.
This automation ensures that all steps are executed accurately and consistently, minimizing the risk of errors and saving significant time that their payroll department would otherwise spend on manual calculations and data entry.
Time and cost savings
Adopting managed payroll services can lead to considerable reductions in the time and resources dedicated to payroll management. Companies can alleviate the burden on their internal payroll operations teams, allowing them to focus on core business activities rather than administrative tasks.
This shift not only saves on the costs associated with maintaining a full-time payroll team but also on the software and technology infrastructure required for payroll processing.
Compliance and accuracy
Managed payroll providers are experts in navigating the complex landscape of payroll tax laws and regulations, which vary significantly across different jurisdictions.
They ensure that a business's payroll system is fully compliant with the latest tax requirements, including the intricate state tax laws in the US. Their expertise helps in avoiding costly penalties associated with non-compliance and ensures that all payroll activities are accurate and up to date.
Enhanced security
Security of payroll data is essential, as it includes sensitive personal and financial information of employees. Managed payroll services employ advanced security measures to safeguard this data against unauthorized access, fraud, and breaches. These providers adhere to strict data protection laws, ensuring that a company's payroll information is handled with the highest level of security.
Access to expertise
By partnering with professional payroll service providers, businesses gain access to a wealth of knowledge and expertise in payroll management. These providers are well-versed in the latest trends, technologies, and regulatory changes in the payroll field.
This access ensures that companies can adapt to new legal requirements and industry best practices, maintaining a competitive edge in managing their workforce effectively.
How much do managed payroll services cost?
There are several factors that determine the pricing models for managed payroll services, including the specific needs of your company, the number of employees you have, and how frequently you run payroll. The cost will also be influenced by the size of your business and the complexity of your payroll needs.
If you're looking to save money, you may want to consider assessing your current payroll expenses, planning for long-term scalability, and exploring potential cost savings through outsourcing your managed payroll to a global provider.
Streamline your payroll with Deel
Managing payroll is a critical aspect of any business. However, it can be time-consuming and complex, and the risks associated with errors can be significant. That's why it's crucial to consider using managed payroll services that provide enhanced security, ensure regulatory compliance, and streamline your payroll processes.
By examining your current payroll processes and opting for managed payroll services, you can enjoy the benefits of improved accuracy and time savings. This will help optimize your core business operations, freeing up resources to focus on other critical areas of your business.
Don't let payroll management hold you back. Take the first step to optimize your operations by booking a demo with Deel to learn more about our fully-managed payroll services.
