What Are the Responsibilities of a Payroll Service Provider?

A payroll service offers many benefits over in-house payroll processing. The biggest benefit is, of course, the savings. A payroll service offers payroll processing, tax preparation, electronic timesheet administration and more for businesses large and small. Most full-service payroll services integrate year-end payroll administration with financial management. This includes payroll deposit, electronic access control, secure online transaction processing and more.

Full service payroll service providers typically offer direct deposit, electronic time sheet processing, and employee benefits administration. They also have a mobile workforce and use automated processing equipment to process payroll transactions. Many providers automatically reconcile their data base and deposits to the electronic database on regular business hours. They generally allow the use of funds from the direct deposit account or other funds kept in a separate account.

In today’s business world, it is essential to have payroll services and systems integrated. Automated processing, accuracy and timeliness are vital. Many service providers provide their clients with an integrated system designed to meet the payroll needs of the business. These systems make managing payroll more efficient and easier. Some systems even have tools to help the business leaders maintain and track their payroll accounts and reports.

Payroll services, whether outsourced or in-house, have a variety of options available to meet the payroll needs of the business leader and their employees. One option is direct deposit. This service transfers the employees’ federal income taxes directly to their bank account on payday. This helps the employees to manage and budget their own money. It also eliminates the need for the employees to write a check every two weeks or every six weeks to the government for their taxes.

Many payroll services also provide members with informational resources such as web sites, handbooks and publications that provide them with legal information regarding their rights and obligations under federal and state labor laws. Many payroll companies also offer seminars and professional development workshops to help employers meet payroll compliance requirements. The workshops can help employers to devise and implement an effective compensation and benefit package for their employees. They can also train their staff to handle claims and appeals under federal and state labor laws. Most payroll companies also have a skilled labor attorney on hand to advise employers on interpreting employment and labor laws.

An important function of payroll services is to provide federal payroll taxes, social security numbers and a host of other documents to employees on a timely basis. Many payroll services also provide data entry functions related to handling federal tax laws and collecting the necessary payroll taxes from workers and employers. For example, the data entry functions may assist an employer in determining the appropriate tax rate to charge to his employees for working under the National Minimum Wage Act (NMWA) and its subsequent amendments. The data entry functions also help the employer to comply with various state labor laws.

A third function typically performed by payroll services is electronic, federal tax filing. Electronic federal tax filing provides employees with the option of submitting their federal tax returns electronically via the Internet rather than in the traditional paper form. As most taxpayers are now electronically savvy, they prefer to submit their tax returns online using a payroll service rather than in paper form. The majority of states allow for electronic federal tax filing through e-file. Therefore, utilizing electronic forms will ensure better compliance with both state and federal tax laws.

The payroll service provider needs to be fully licensed, insured, and bonded in order to provide professional payroll services. A comprehensive list of the state license requirements can be obtained from the Texas Department of State Health Services. In addition, the payroll service provider must meet all state and federal tax filing requirements and conform to the provisions of the EFCRA and Fair Credit Reporting Act (FCRA). It is the responsibility of the payroll service provider to investigate all potential claims of errors or late filing and notify its clients when these issues are brought to their attention.

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