Payroll management systems are software programmes that are designed to be able to automate and manage any and all tasks related to employee compensation.
This includes handling tasks and services relating to tracking employee work hours, calculating wages, dealing with taxes and tracking deductions. The software is able to generate payslips and ensure that employees are paid accurately and on time while simultaneously ensuring compliance with both government regulations and company policies.
Now, there’s no single type of payroll system. In fact, there are four main categories – in-house payroll, CPA/bookkeeper-managed payroll, software-managed payroll and agency-managed payroll.
Different Types of Payroll Systems
There are different reasons for using each type of payroll system, and the system chosen by a company depends on things like the size of the company, the company’s accounting department and more.
- In-HousePayroll: In-house payroll systems are managed within the company by its internal accounting and human resources (HR) teams.
- Bookkeeper/CPA-Managed Payroll: Payroll is managed by an external account or bookkeeper – a Certified Public Accountant (CPA) – in order to ensure proper compliance with tax regulations and more.
- Software-Managed Payroll: These days payroll software is able to automate almost all payroll processes in-house. This reduces errors and manual tasks while still requiring at least a bit of oversight from company employees.
- Agency-Managed Payroll: Payroll services are completely outsourced to an external payroll agency that handles everything, including tax filings, compliance and more.
So, those are the four main options when it comes to handling payroll. While they all offer different pros and cons, agency-managed payroll systems offer businesses a completely hands-off approach, entrusting all payroll-related issues to a reliable and responsible firm.
All About Agency Managed Payroll Systems
Having an agency manage your payroll means that it will take full responsibility for the management and processing of your company’s payroll.
Now, firms that manage payroll systems for other companies comprise of experts in the field whose sole responsibility is to handle payroll issues. This kind of firm takes over everything, from administrative work to deductions and bank deposits.
How Do Agency-Managed Payroll Systems Work?
There are several aspects of what agency-managed payroll systems do:
- Data Sharing: The company employing the agency provides it with all necessary employee data, including salaries, bonuses, attendance records and any deductions.
- Processing Payroll: Payroll is then processed by the agency. It calculates wages, taxes and deductions to ensure that employees are paid properly and on time.
- Compliance and Tax Filing: The agency in question takes full responsibility for making sure that tax filings are properly completed on behalf of the business so that it’s compliance with all laws and government regulations.
- Reporting and Documentation: Detailed payroll reports are issued to the business, including payslips and legal documentation for tax purposes and general company records.
In addition to the primary services offered, some payroll agencies also provide extra services like employee benefits administration, pension plans or assistance with HR functions.
Why Use An Agency-Managed Payroll System?
An agency-managed payroll system may not be ideal for all companies, but for some, it provides useful services, ensuring that businesses are compliant, up to date and accurate with all payroll-related tasks.
By hiring a specialised firm to handle payroll for you, the process will be more efficient and effective with far fewer errors. This is mostly because it’s run by experts whose sole job is to handle your company’s payroll.
Furthermore, payroll agencies have expertise in all compliance-related issues, ensuring that your business will be in check with tax laws and more.
