When any business is set up that does have many employees, these persons will all need to be paid at fixed intervals that are normally weekly or monthly. For making these payments payrolls must be made detailing the number of days worked, the payments due based on agreed salaries, and deductions made for taxes or any other dues.
The preparation of payrolls requires a fair amount of work that must be accurate, based on attendance and other records. Businesses find that this requires deputing personnel to the required work, for a few days in a month. Keeping personnel specifically for this job may not keep them fully occupied, and if they are diverted from other work, those jobs may suffer. This is where payroll services that are outside companies can undertake, for a fee, all the work that is required.
In a basic payroll service, the outside company that has been given the work will collect all wage information including days worked and wages agreed on and will make all the necessary calculations, including required tax deductions, and any other deductions, and prepare the payroll. Their services can also include printing and delivering checks, or paying directly into bank accounts, and paying any required taxes to government bodies.
Taxes are often calculated based on the number of dependents a person has, and this requires the payroll services provider to be given the personal information about each employee. These can be federal, state, local, social security and any taxes for medical care. Some of the deductions require a matching contribution from the employer, and it can be the responsibility of the payroll service provider to maintain the records for each employee and make the required contributions to the designated authorities. Many people set up retirement funds as per any rules that a company may have in place and maintaining the records for this and making the needed payments may also be part of the services that they offer.
Payroll services can also offer to take over responsibilities that are normally handled by human resources staff, like administrating leave records and any benefits or retirement programs. While earlier, all the required information needed to be prepared in companies and sent to the payroll services company, the internet has allowed all this to be sent directly through web-based payroll accounts, where the details are constantly being updated by the company and are simultaneously available to the payroll service provider. The introduction of payroll software has made the entire process even simpler.