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By Dianne Rudolph

Topics: Payroll


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Outsourcing has become more popular in recent years as business leaders have realized the many advantages of it. Why undertake time-consuming and complex tasks when you can leave them up to the experts?

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There are many different tasks within businesses that are good candidates for outsourcing. Customer service, IT, data entry, and more are popular options. Payroll management and other HR functions have also been growing in popularity as outsourced services.

If you’ve worked in HR or payroll, then you’re likely familiar with why this would be a good idea. Payroll management may seem straightforward at first glance, but it can actually be quite complex. It can also take up a good deal of your HR staff’s time.

If you’ve been considering sending your payroll out of house, you may have wondered exactly how outsourced payroll management works.

The Basics

Outsourcing payroll management is similar to outsourcing any other business task. You search out a third-party vendor and partner with them for your payroll services. They then take care of payroll while you and your HR staff get back to the tasks you truly need to focus on.

The third-party team will manage your payroll. They can look after things such as salary increases, tracking hours, remitting payroll taxes to the IRS, setting up new hires and closing old accounts, paying leaves and statutory holidays, and more.

How It Helps

The question most HR managers have about outsourced payroll management is how it helps their businesses. There are actually quite a few advantages to sending your payroll processing out of house.

The biggest advantage is often time. As mentioned, payroll seems straightforward at first glance, but it can actually be quite complex. It also has to be administered on an ongoing basis. This can take your HR staff away from other tasks that need their attention. While payroll is obviously important, so are tasks such as reviewing policies and monitoring compliance.

Other advantages include a reduction in errors, since you now have payroll experts administering your payroll, and cost savings. In short, sending your payroll management out of house can help your business in many ways.

How Do You Get It?

Once you understand how payroll management works when you send it to a third party, you might ask how you can go about adopting it for your business. It’s quite easy to get set up with a third party.

In most cases, you’ll do some research about various providers. You may get some quotes, and then you’ll select the third-party vendor you believe to be the best fit for your business needs. You’ll work out the terms of the agreement, sign a contract, and send over your payroll data.

The provider and your HR team will need to agree on policies and procedures. In addition, you may need to adopt new HR technology, such as payroll software, to assist in the administration of your payroll. You’ll then pay fees, and the vendor will deliver the service.

Selecting the Right Partner

The biggest challenge you’ll likely encounter when you want to outsource your payroll management is selecting the right vendor for your business needs. There are many different payroll providers out there. Some of them are large, and some of them are small. Most have their advantages and their disadvantages.

Think about what you need for your business. Customer service should be high up on your priority list, as should price. The technology the vendor uses may be another concern. Ask them about what services they provide. Think about flexibility and scalability. Many large vendors offer bundles, which may look like they save you money but can actually cost you if you don’t need all the services offered.

Selecting the right vendor doesn’t need to be difficult. With some careful consideration and good research, you’ll be well on your way to finding the perfect partner to help you manage payroll in your business.


Dianne Rudolph

Dianne is the Vice President of Sales and Marketing at Paymedia, LLC. She has a demonstrated history of working in the management consulting industry. Skilled in crisis management, business planning, customer acquisition, and coaching, she is a strong sales professional with 25 years of experience in the payroll industry. Through Paymedia, she offers clients results through iSolved, a platform that meets their needs today and that they won’t outgrow tomorrow. With five years' experience as an entrepreneur, Dianne has also taught herself how to launch and manage a successful business from the ground up. She lives has two grown children. As an empty nester, it gives Dianne time to pay it forward in her free time. Her mission is to help and give back. Her true inner peace is found at the beach and through yoga and massage.

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