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It also helps to fight beloved laziness. Some smaller businesses conduct their payroll using a manual system. While inexpensive, this method may increase the chances of errors and could prove time-consuming for companies with more than a few employees. With a computerized system, the employer can utilize payroll software to process its payroll on-site. Some larger companies can afford the computer systems and staff to process payroll on their own.
Because they spread their costs over a large workforce, they experience lower per-check expenses than smaller firms. Outsourcing takes place when a business hires a third-party payroll service master thesis in learning design to process its payroll.
Such firms typically can handle all aspects of the payroll cycle as well as other reporting services. With an external system, the employer sends payroll data to a service provider to process payments for the upcoming payday. This data includes hours worked as well as benefits, taxes and withholding information. Online payroll service providers offer companies the ability to manage employee payroll accounts and create reports online.
However, a company that outsources its payroll to a third-party provider always should review its output for errors to avoid punishment by regulatory agencies should a mistake occur.
Some businesses utilize a hybrid method that takes advantage of elements from both in-house and outsourced payroll systems. This allows employers to split the payroll functions between themselves and the vendor, keeping outsourcing costs lower and allowing for more internal control over payroll data. Typically businesses using the hybrid method calculate pay and distribute paychecks themselves while having the third-party payroll service handle tax filings, direct deposits and the actual printing of the checks.
John DuBois is a copywriter based in Portland, Ore. He earned a B. Skip to main content. Payroll Process Overview The payroll process typically includes calculating employee pay, recording payroll transactions and determining and paying payroll taxes.
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