Payroll compliance is an essential but complex aspect of all business operations. An overview of the payroll processing options available to US firms and organizations.
An overview of the payroll processing options available to US firms and organizations.
Payroll compliance is an essential but complex aspect of all business operations. This information below provides an overview of the payroll processing options available to US firms and organizations.
Payroll Companies in the United States
Many US-based firms decide to outsource their payroll services. Outsourcing is a good option for businesses that do not have the resources or human capital needed to create an in-house payroll department, but also for companies that generate a high sales volume. It is generally agreed that firms whose annual sales exceed $1 million can benefit from outsourcing their payroll department.
In the United States, outsourced payroll services (also known as managed payroll solutions) can be classified into three types:
- Payroll Service Providers (often referred to as PSPs) have the necessary expertise to help businesses prepare and file their corporate tax returns, but also offer business owners the option to sign and send off the documents
- Reporting Agents (abbreviated to RA or RAF) are also qualified to help with tax return preparation and can sign and file documents on behalf of their clients. Both PSPs and RAs have the authority to deposit and pay all relevant tax liabilities on behalf of their clients. In the majority of states, RAs are required to file tax returns electronically
- Section 3504 Agents, which are different from PSPs and RAs in that they can act as if they were the employer and assume liabilities on their behalf
In addition, full-service payroll management providers offer a comprehensive range of services that is not only limited to payroll procession, but also include human resources management.
Choosing a reputable payroll specialist is as important as choosing the right type of payroll company, since every year the IRS issues fines worth billions of dollars. This is why firms are advised to choose a company that can offer certified payroll services, as this is a way of ensuring that payroll procession operations will be fully compliant with the laws and regulations imposed by each state. Recommended payroll service providers include:
- Bank of America offers a payroll and tax preparation service to companies that bank with this financial entity. A special online payroll solution is available to small businesses thanks to Bank of America's partnership with Intuit
- ADP, a New Jersey-based firm that has been in the payroll business since 1949. ADP has received numerous awards, including the 2009 25 Most Influential Technology Vendors Award and the 2010 America's Most Admired Companies in the Financial Data Services sector
- Paychex offers payroll, human resources, and tax filing services to companies large and small. A cloud-based payroll processing platform is also available
- MyPayrollHR offers an innovative approach to payroll procession called co-sourcing, a solution that combines the advantages of in-house and outsourced payroll services
Other Payroll Solutions
Online Payroll Options
Over the past decade, new technologies have enabled the growth of effective online payroll platforms, which include both cloud-based and traditional software solutions. These online payroll options are mostly preferred by small and medium-sized businesses, although their features and sophistication levels are constantly improving and therefore making them an option for larger companies too.
Business owners who are considering using this type of payroll solution should pay special attention to things like the following:
- Whether the service can be easily integrated with existing accounting software, such as QuickBooks
- Whether a contract is required
- Monthly costs, as these vary greatly and range from $35 to $200 or more
- The variety of payment methods available
- The availability of special features, such as use tracking, PTO accrual, employee self-service, and mobile access
- Which customer support options are available (live chat, telephone, online guides, etc.)
Recommended online and payroll software solutions include:
- PayUSA, one of the most widely used online solutions that offers full payroll processing and tax filing services
- OnPay, an online payroll solution targeting small businesses and offering unlimited pay runs
- FuseWorkforce, a cloud-based payroll and HR solution that offers a range of customisable features and easy access to real-time data
- Wagepoint, which offers quick set-up and employee self-access along with low base fees
- SAGE Payroll, which has dedicated online platforms for small and large firms and offers a long list of useful features