Many business owners have to dedicate more time than they care to admit for administrative tasks like payroll. When you have multiple contractors or employees working for you, bookkeeping takes significantly more time than when it used to. Using payroll outsourcing companies can save you time and money so you can focus on growing your business.
Whether you handle payroll yourself in your spare time or you want to simplify your virtual assistant’s workload, automating your payroll can be one of the wisest business moves you make this year. If you have a 1-800 business phone number, outsourcing your payroll might be the next step to taking your business to the next level.
After all, one key to having a successful business is providing excellent service to your customers and employees. Timely payments keep your employees happy and the time you save running payroll can be used to interact with your customers instead.
Benefits of Using Payroll Outsourcing Companies
Payroll outsourcing companies also offer the following conveniences that make paying the bills stress-free:
- Direct Deposit
- Automatic withholding for payroll taxes and employee benefits
- Year-End W-2s for employees and independent contractors
- Customized payroll reports
- HR services including new hire onboarding paperwork
Depending on how many employees you have, you can choose a basic payroll company if you only hire independent contractors or have a few employees. As your business grows, you can always upgrade to a more extensive service to cover your growing payroll demands.
Try These Payroll Outsourcing Companies First
There are many different payroll outsourcing companies to choose from, you might try to give these services a try first.
Paychex is one of the largest outsourcing companies as they are responsible for the payroll services for 8% of U.S. private sector workers. You will want to choose the corresponding platform based on your current company size:
- 1 to 9 employees
- 10 to 49 employees
- 50 to 1,000+ employees
For small businesses with nine or fewer employees, the two most popular options are the Express Payroll and Paychex Flex Select.
With Express Payroll, you can enjoy the following perks:
- Direct Deposit
- Payroll tax administration
- New hire reporting
- 24/7 phone and chat support
- Free mobile app
Paychex will automatically calculate, pay, and file the appropriate local, state, and federal taxes for each employee. When you hire a new employee or contractor, Paychex also automatically reports all new hires to the appropriate state registry to spare you a headache too.
Upgrading to the Flex Select plan gives you access to a full-time payroll specialist and you also have the capability to print paper checks and print labor compliance posters too.
Regarding perks for your employees, they can easily access their payment history on the Paychex website. And, they can access the Paychex financial wellness program which provides several financial tools to help them improve their financial well-being.
2. Intuit Quickbooks
If you already track your business transactions on Intuit Quickbooks, a natural next step can be using their Enhanced Payroll or Full Service Payroll option. This option is available with any of their three small business plans:
- Simple Start
With Quickbooks Enhanced Payroll, you can enter the number of hours, overtime, and deductions for up to 50 employees and contractors. You have access to free 24/7 direct deposit and QuickBooks will calculate the W-2 tax forms for you. Quickbooks also calculates and pays any payroll taxes. Plus, you have access to a live payroll expert anytime you need help too.
For a complete HR Suite, you can also upgrade to the Full-Service Payroll option too.
Some of the additional benefits include:
- Same-day direct deposit
- Experts help you set up your payroll, file, and pay your taxes for you
- New hire forms
- No-penalty guarantee
One of the coolest reasons to consider the full-service payroll is the no-penalty guarantee. If you get hit with a tax penalty or fee because of a Quickbooks miscalculation, they will pay the fee for you!
Gusto is another payroll service that’s building an online presence that maybe you haven’t heard of yet. You can use one of their standalone plans, or you can add their free app to your FreshBooks account. Or, you can integrate Gusto with your Quickbooks or Xero account too.
The three Gusto payroll plans offer basic to extensive HR services:
All of the Gusto plans are competitively priced and can be more affordable than some of the other payroll services for future services. In some cases, Gusto includes several benefits administration features in their basic Core plan that other outsourcing companies only begin to offer in their mid-tier plan.
Some of the reasons why you can probably do just fine with the Core plan for the following reasons:
- New hires can e-sign I-9s and W-4s
- Automatically pay state and federal unemployment insurance
- Wage garnishments
- Paid-time-off tracking
- Health benefits administration (ACA, HIPAA, and ERISA compliance)
- Workers’ Comp administration
You will need to consider upgrading to either the Complete or Concierge plan if you need the following services:
- Online offer letters
- Customized employee documents
- Manage paid-time-off requests and approvals
- Employee directory
- Certified HR Pros
If you enroll in Gusto’s Concierge plan, you can access their HR benefits which let you quickly administer and track any employee training, creating employee handbooks and HR guidebooks, plus a dedicated Gusto support team.
ADP is probably the largest payroll outsourcing company in the United States. Although they tend to be more expensive than some of the other options, ADP has a solid reputation and high customer service ratings.
Depending on your payroll needs, you can select from one of the following ADP plans:
- Essential Payroll
- Enhanced Payroll
- Complete Payroll + HR
ADP’s basic Essential Payroll plan is sufficient when you only need to submit direct deposit payments for 1099 contractors or W-2 employees. Another neat feature is that you can compare your current HR practices to the industry-leading HR standards for free too.
When you need to collect state unemployment insurance or wage garnishments, you need to use their Enhanced Payroll plan. You also need this mid-tier plan to write paper checks or offer prepaid payment cards too.
For full-service HR solutions, ADP offers several options that you might appreciate:
- Post job opening to over 100 online boards using ZipRecruiter
- Background checks
- New hire onboarding
- HR forms, training, and compliance database
If you like ADP, you may also like Paychex which offers similar services for basic and full service payroll.
Another affordable and extensive payroll solution is OnPay. For a flat monthly fee of $36 plus $5 per employee, you can enjoy these unlimited benefits:
- Paper checks or prepaid cards at no additional cost
- New employee self-onboarding
- New hire reporting
- Lifetime access for previous employees
- Employees can digitally print W-2 tax documents for free
One of the main reasons why you might use OnPay is that you don’t have to pay extra for printed checks or payment cards. These two physical payment options are usually an extra charge or only included in upper-level plans for other payroll outsourcing companies. Direct deposit is the quickest and most convenient, but it’s still nice to have this option when it’s easier to write a check.
You can also use OnPay for 401k contributions and health benefits too. Both of these add-ons cost extra, but it can still be cheaper than going with another payroll outsourcing company when you’re ready to pay either of these employee benefits.
SurePayroll specializes in offering online payroll solutions for business with up to 10 employees. You can easily submit payroll using SurePayroll’s following amenities:
- Mobile Payroll App
- Integration with most bookkeeping programs including Intuit Quickbooks
- Federal and State Labor Law Compliance
- Time Clock Integration
Two other reasons to consider SurePayroll include their A+ Better Business Bureau rating and they also have a U.S.-based support team to answer your payroll questions. Some discount payroll companies cut corners in the support area to offer rock-bottom prices.
With SurePayroll, you can either submit payroll online or with their mobile app. SurePayoll automatically calculates your withholding taxes at the local, state, and national levels automatically.
PayUSA offers payroll services for up to 1,000 employees. With direct deposit, your employees have the opportunity to deposit their check into one bank account or several bank accounts at the same time. If you prefer paper checks, PayUSA also offers check stuffing services and will automatically print your signature on each check.
Like other online payroll companies, you can use PayUSA for the following services:
- New Hire Reporting
- ACA Compliance
- Workers’ Compensation
- Tax Reporting
You might like PayUSA because of it’s customized payroll services that you might not get from other online-based payroll services.
AmCheck offers basic to full-service payroll solutions. You can also track employee time and attendance, plus AmCheck also offers multiple portals for the following company positions:
- Insurance brokers or agents
With role-based access controls, you can easily make sure that each department gets the necessary payroll information they need to make sure your employee needs are addressed. And, you’re not overwhelming a particular department by giving them too much information or responsibility at once.
For a full-service suite of payroll and HR benefits, you might enjoy AmCheck.
While other payroll companies focus on outsourcing your payroll services, MyPayrollHR brings a “co-sourcing” solution. MyPayrollHR does this by offering many payroll services for a flat rate that cost extra with other companies. If you plan on using these services, paying a flat fee instead of “a la carte” pricing can be cheaper.
With MyPayrollHR, you have 24/7 access to many payroll features:
- Time Sheet Entry
- Direct Deposit
- Payroll Processing
- Deductions and Contributions
- General Ledger Tracking
You can also add new employees for free which can also save you money as many other platforms charge a per employee fee. Your employees can also access a self-service platform to easily view and print pay stubs and year-to-date pay information.
You can use Paycor for the following business services:
- HR Support
- Tax Services
The payroll system is clean and efficient. It’s easy to monitor your business goals with the progress bars and you can also General Ledger files to make accounting easy. Paycor can also send you notification alerts when it notices a potential red flag to ensure you don’t pay an employee an incorrect amount or you have to pay an unexpected fee or penalty.
Direct deposit is the standard payment method, but you can also offer paper checks or prepaid cards as an additional service to your employees. Paycor also integrates with every 401k plan and health benefits administration too.
In addition to using Paycor to automatically calculate employee tax withholdings and deductions, you can also use the Paycor tax software to pay your own payroll taxes. And, the payroll tax services also help you claim tax credits that can minimize your business tax liability.
Paylocity is a cloud-based payroll platform. This is convenient if you don’t want to download the software to a single device and be responsible for downloading software updates.
You can also use Paylocity for 180-degree and 360-degree integration with over 300 third-party software programs. With 180-degree integration, all of the information you enter into your program (like Quickbooks) automatically uploads to Paylocity. As you might guess with 360-degree integration, information submitted via Paylocity automatically transfers to your third-party platform and vice versa.
Payroll is easy with Paylocity as you can quickly submit your information because of the third-party integrations and the customizable forms. If customization is important to you, Paylocity also quick edit HR templates and custom checklists that make it easy to onboard employees and make sure payroll executes smoothly.
Sage is another payroll outsourcing company that cloud-based payroll services. It’s possible to track payroll, inventory, and payments by integrating with your Office 365 account. This means if you currently track your business finances with Office365, Sage might be your best option.
Even if you don’t use Office 365, you can still integrate with many other major third-party applications with the Sage50 or Sage 100 plans.
Because your information is cloud-based, you can access payroll 24/7 from any web browser or mobile device. Like other payroll companies, Sage handles your local, state, and federal taxes. They also take it a step further and handle any government notices for you; talk about convenience!
When you need payroll support, you will chat with an American Payroll Association (FPC) certified payroll expert!
Maybe you already use Upwork to hire freelancers to complete your one-time or recurring business tasks.
When you need to hire W-2 employees, Upwork also offers payroll solutions if you need to hire online-based employees through Upwork. For example, you can use Upwork to remain in IRS regulations and even comply with the ACA healthcare regulations your W-2 employees. According to Upwork, using their payroll services can also be cheaper than using a traditional staffing agency.
In addition to paying the employees you find through Upwork, you can also bring your current non-Upwork employees onboard and pay their salaries through Upwork Payroll too.
While other online payroll companies charge a flat fee per employee on top of the monthly plan fee, Upwork’s payroll fee is 23% of the employee’s pay. You can use this figure to run some quick calculations to determine if Upwork can save you money and time compared to your current payroll method.
14. Bank of America
If you keep your business bank account with Bank of America, you can qualify for their in-house payroll services. With a Business Advantage Relationship Rewards account, B of A will even waive the payroll fees! To begin receiving the refund, you will need to maintain a minimum $20,000 balance in your business account.
Bank of America partners with ADP and Intuit Quickbooks to provide payroll solutions. Besides receiving a discount on full-service payroll services, you can also enjoy these bank perks:
- 5% Interest Rate Booster
- Priority Client Services
- Waived bank fees
- Cash rewards on merchant services payments
What is Payroll Outsourcing?
Payroll outsourcing is a common practice by most small businesses. It’s more cost-effective to use a third-party payroll program to pay independent contractors and employees than paying a full-time payroll professional or on-site human resources manager.
Choosing a payroll outsourcing company goes beyond making sure your employees get paid on schedule. When you hire new employees or independent contractors, these companies also notify the appropriate state government agencies so wages can automatically be garnished or withheld.
If you’re the business owner, you only have to enter the number of employee hours or their fixed salary into the payroll software. On payday, the outsourcing company handles the direct deposit and tax withholding for you.
Are Payroll Outsourcing and a PEO the Same Thing?
Payroll outsourcing companies and PEOs (Professional Employer Organizations) are similar, but not exactly the same thing. Most outsourcing companies offer PEO services like HR services and benefits for W-2 employees.
If you need a PEO service, Paychex is one of your best options for full-circle payroll and HR benefits.
What Common Traits Do the Best Payroll Outsourcing Companies Share?
There are several payroll companies you can use, but you should only consider companies that share these traits:
- Licensed to handle tax withholdings and payments for all 50 states and U.S. territories
- 24/7 Direct Deposit (and mailed checks or prepaid cards if you offer physical payment too)
- Transparent fee structure
- Mobile payroll capability (so you can schedule payments when you travel)
- Certified CFP expert payroll support
- Support with tax fees and penalties
- Ability to offer healthcare and 401k benefits
As you might hire independent contractors or W-2 employees that live in several states, you need to make sure your payroll outsourcing company can automatically calculate and withhold the proper amount for taxes, deductions, and benefits. You may also have to pay local taxes for each employee too. Using a licensed payroll company protects you from any legal headaches that you might not be aware of.
Maybe you don’t have W-2 employees yet, but you plan on hiring these types of employees as you scale your business. To avoid switching payroll companies and learning an entirely new platform, you should opt for a platform that offers health benefits administration and retirement plan administration if you plan on offering these services in the near future.
Can You Use Payroll Outsourcing Companies to Pay Independent Contractors?
Yes! Maybe you currently pay your independent contractors with a paper check or PayPal. If your business has grown so that you need a full-fledged payroll platform, you can pay your independent contractors via direct deposit. Because you don’t have to offer traditional workplace benefits or human resources services that a W-2 employee needs, you can pay less for payroll outsourcing than other businesses.
Do Payroll Outsourcing Companies Offer Tax Guarantees?
Just like you file your taxes with an accountant to enjoy additional support if you’re audited by the IRS, many payroll outsourcing companies offer a tax protection guarantee too. After all, one reason why you’re outsourcing payroll is to prevent potential accounting and tax headaches. If the payroll software miscalculates tax withholding and you end up withholding too much from an employee’s check or underpaying your own payroll taxes, the company will pay any applicable fees from their error.
Some platforms offer this guarantee with their basic and full-service platform. Other companies only offer this guarantee if you use the full-service platform if you pay additional benefits to W-2 employees or use HR benefits too. Like any service, you need to read the tax guarantee terms and conditions before you enroll to ensure your plan is covered.
Payroll can be one of the most time-consuming administrative tasks you’re currently handling yourself. To make better use of your time, you can use a payroll outsourcing company to pay your employees and automatically handle the tax and benefit withholdings too. Whether you only have independent contractors to pay or a staff of W-2 employees, outsourcing payroll is a great decision when you’re spending too much time keeping books instead of growing your business.