Accuchex Blog

What You Should Know About A Payroll Services Agreement

Posted by Leslie Ruhland on Sep 5, 2017 2:41:29 PM
Accuchex Payroll Solutions
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If you've ever considered outsourcing some or all of your payroll functions, you should understand what is involved in a payroll services agreement. 


Processing payroll every month is time-consuming and often fraught with potential issues. And, if you run a smaller business, you may not have the resources for a dedicated payroll staff.

For these reasons – and many others – having a payroll agreement with a payroll services firm can be a preferred alternative to consider. The fact is that outsourcing payroll functions can actually save you money as well as free up time and resources for more productive tasks.

Some Benefits of a Payroll Management Services Provider

For many small businesses, the cost of a payroll agreement can actually be less than keeping the payroll process in-house. And, in addition to the potential cost savings, outsourcing your payroll can reduce errors and ensure that your payroll is processed on time.

Payroll services companies must maintain dedicated resources to keep up with the frequent changes in tax rules and regulations. That function alone can be an issue for many businesses, large and small. In addition, many payroll services will pay any penalties resulting from any errors they may make.

In addition, using a quality payroll services firm will improve employee accessibility while reducing the need for paper storage and waste. And having fewer payroll functions in-house can add to a business’s bottom line with reduced operational expenses and lower personnel costs.

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Considering Your Payroll Process Options

As a business owner or payroll manager you have other options for your payroll functions. There are many software systems that can be installed in-house, as well as cloud-based programs that you could subscribe to. But the ultimate pay solution is to outsource your payroll process.

Outsourcing your payroll can save your staff time and money, and be the most cost-effective payroll solution for your business.  In addition, many payroll services offer related services like insurance solutions, retirement planning, and HR functions.

In addition to the time and dollar savings, having the peace of mind of knowing that your payroll processes are being handled competently, accurately, and on time is another great reason to consider outsourcing. 

Because you can be assured that the accountability and liability for payroll compliance rests with your vendor, this can free you from the constant pressure of having to stay informed and compliant with the ever changing payroll rules, regulations, and legislation.

Another great feature of online payroll through a vendor is that all the wages and tax payments are sent electronically and having online access allows you view, print and save all your payroll data. Employees can also have access to their wage history, typically by logging into their own portal.

Having access to their complete wage history ensures your employees will always be able to view their information at their convenience.

5 Payroll Management Mistakes Most Small Businesses Make

Choosing a Payroll Service

Evaluate a prospective payroll service provider carefully before signing a payroll agreement and determine how their fees are calculated. Typically, a payroll services vendor’s fee structure is based on the number of employees, along with some additional fees.

It’s important to get a clear description before you sign anything as to what services you will – and will not – receive, and what you are expected to pay for those services.

Also, scheduling and payroll information submission is important to know. Find out when you must provide wage and hours information. Preferably the vendor will have options for how you can “call in” your payroll information. If possible, it’s a great idea to “try out” a service before signing to a payroll agreement.

And always read the proposed contract carefully to be certain you understand your rights and your responsibilities under the payroll services agreement.

What is a Payroll Services Agreement?

Also known as simply a “payroll agreement”, it is the actual contractual arrangement between your business and a payroll management services provider. The agreement grants the payroll services firm the authority to process your employee payroll, to disburse the paychecks, and to remit all payroll taxes.

In addition, depending on the vendor, there can be optional services provided that will be detailed in the agreement. For example, a payroll service provider may take on the task of notifying the government of new hires, or offer direct deposit of employee paychecks as well as the verification of employee Social Security numbers.

As your company grows and you find that there are additional tasks you wish to outsource, these can usually be added to the existing payroll services agreement, as well.

The Responsibilities of Both Parties

A proper payroll agreement also spells out the responsibilities of both the client, or employer, and the payroll management services provider. According to most typical payroll agreements the employer is required to send regular and complete information of hours worked, any changes in pay rates, and amounts earned. This is all provided to the payroll services firm on a regular schedule.

The client, or employer, must also ensure that there are sufficient funds deposited in dedicated accounts to cover all payroll costs, as well as funds to remit all federal, state, and local payroll taxes withheld. In addition, the client must also authorize the payroll service vendor to make payments from these accounts on their behalf.

The payroll services firm is responsible for calculating the paycheck amounts and generating the checks or direct deposits. In addition, the services firm must forward all applicable payroll taxes to the appropriate federal, state and local government agencies.

Finding a Reliable Payroll Management Service

As a business owner or payroll manager you do have many options for your payroll functions. But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex can still be the best decision.

Reliability, full-service options, and reputation are the hallmarks of a quality payroll management service provider. If you are currently looking to invest in outsourcing you get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.


Topics: managed payroll services, outsourcing payroll management, online payroll, payroll services agreement, payroll agreement

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