How Does Payroll Outsourcing Work for a Mid-Size Company?

If you own or manage a mid-size company and are considering hiring a service to manage your payroll, how does payroll outsourcing work for a company like this?

In other words, what will your responsibilities be and what will you need to furnish them before they can begin to do their job?

What does a payroll outsourcing service need? -- When you hire a company to manage your payroll, you first need to furnish them with a variety of things before they can begin.

These include employee records with contact information, employee tax rates and information about any retirement plans your company pays into. All of this information should be broken down per employee, so that each employee's pay check can be processed correctly.

They will also need to know if payroll is by direct deposit, by check or by both, and how each employee usually receives theirs.

Paychecks are processed -- Once the payroll service has this information, it is able to go ahead and process payroll for each of your employees.

These paychecks will then be distributed to them via direct deposit or by paper check.

Filing taxes -- Any payroll outsourcing company you hire is also usually responsible for filing the company's tax information and payroll taxes.

This means they will calculate payroll taxes owed and then forward those taxes to the tax authorities.

They will also make sure these taxes are always paid on time. That way you will not be liable for fees and penalties you may have had to pay in the past due to mistakes made by your accounting department.