The way businesses are conducted these days vary at great lengths with how businesses operate in the past. Successful businesses in the past boast of highly reliable and loyal personnel providing exemplary and efficient functions for the business, allowing for continued business growth. Businesses of recent times, on the other hand had remarkably transformed an employee-based operation into a contractor-based operation. And surprisingly, the transformation had resulted to business successes as well.
Outsourcing is defined as an act of one company entering into a contract with another company that will provide the required services that might have been provided by in-house employees. In simpler terms, it is sub-contracting specific functions to an external company. The functions delegated are functions performed by regular employees if the company chose to maintain the set of employees needed to perform such functions.
Outsourcing is driven by the financial benefits derived from the act, which of course, is favorable to the business owner. In today’s business scenario, a lot of big-bucked companies have resorted to outsourcing functions such as customer services or call center services, email services and payroll services. These functions are handled by different and individual companies that specialize in specific service and may be located locally or overseas.
One important business service that has been outsourced is the payroll service. This function is usually integrated into finance and accounting outsourcing services where other accounting tasks are also outsourced. As outsourcing is the growing global trend, many companies all over the world are migrating their employee-based operations into outsourced operations.
For most companies in Louisiana payroll service is outsourced. It has become an increasingly popular business option not only for small-scale businesses, but even for big corporations as well. The foremost benefit being reduced overhead and operating cost for the company. The need to maintain regular or permanent employees to perform the payroll functions is eliminated by having an outsourced company for the job.
The cost of outsourcing is significantly lower than the overhead expenses of salaries and benefits to the employees tasked to do the payroll service. Moreover, the payroll services are provided by highly-skilled and experienced professionals, performed accurately and delivered promptly.
Basic Payroll Services Outsourced
Payroll management is a time-consuming process as it is not limited to just writing checks and giving them to the employees or in some cases depositing it to their individual bank accounts. It involves a myriad of procedures and processes such as maintaining and checking against accurate records, tax and pay calculations, calculations of benefits, loan payments, etc. For the business owners in Louisiana, this is not a profitable department to keep in the company and as such is best left handled by an outsourcing payroll service provider. This will allow the business to focus more in income-generating activities or endeavor.
The most common services or functions included in an outsourced payroll service include:
- Processing of payroll checks
- Delivery of processed payroll checks
- Submission of payroll reports
- FUTA, FICA and SUTA payments (FUTA or Federal Unemployment tax Act and SUTA or State Unemployment Tax Authority taxes are payroll tax deductions of all W-2 employees)
- Reporting of W-2s, W-3s, and 940
- Filing of 940 and 941 payroll taxes
How It Works
With an outsourced payroll service, the company agrees to delegate the administrative part of payroll management to the payroll service provider. For every pay period, an employee of the company will provide the payroll service provider with the employees’ salary details, updates on new employees, updates on salary adjustments, and terminated or resigned employees. Most payroll service providers would require submission of salary details and other information from minimum of one and maximum of four days before distribution of paychecks to employees.
Depending on the service agreement stipulations, last-minute adjustments on payrolls will vary. Some service providers can be flexible to accept the changes while others will charge additional fee for accommodating such changes. A service level agreement (SLA) will be executed between the payroll service provider and the company, where terms and conditions are expressly defined regarding scope of services, payment terms, penalties on delays, calculation errors, financial accountability for filing errors, etc. This agreement should reflect all the specific details like schedules, delivery of checks, submission due dates, filing due dates, and many others.
For the services provided and performed the company will pay the payroll service provider a set and agreed fee for each pay period. The rate or fee will vary and depend on the number of employees’ salaries to be processed, complexity of payroll system of the company, etc. Some companies may work well with a basic plan while other businesses with more complex processes may require customized payroll services plan to meet the requirements and needs of the company.
In order for the outsourcing endeavor to be successful and beneficial for the company, it is important that the right payroll service provider for your business is chosen. As businesses vary in many terms, the payroll service provider should be able to tailor-made and customized according to the specific needs and requirements of the business. They should also have the commitment, clean track record, good reputation and credibility along with proper licenses and permits and professional qualifications to provide the required services.
Cedric Loiselle is an experienced writer who enjoys imparting useful information to many readers. The topics he usually writes about include health and fitness, as well as business and finance.