woodside tax services

Accounting & Payroll

Compare the Best Payroll Services for Your Business.


The Benefits of Using a Payroll Service


In the U.S., there are two common ways in which employees are paid: either by the hour, or on a salary basis. However, the set rate established by the employer to the employee may fluctuate due to one’s responsibility to pay taxes, including both federal and state tax. Because tax rates change often, employers often choose to use a comprehensive payroll service instead of using a payroll software

What is a Payroll Service?

A payroll service is an external company that understands and handles every aspect of the payroll process. For a fee, employers can provide the service company with a list of all employees, each individual’s salary or hourly pay, along with any adjustments. Once this is complete, the employer will transfer funds to the payroll service provider and the provider will pay each employee accordingly.


The Difference Between a Payroll Software and a Payroll Service

A payroll software is used when an employer wants to complete the payroll process internally. A payroll service is when the payroll process is outsourced to a third party company.

A software is often used when businesses feel they do not have the time or knowledge needed to deal with payroll taxes. Some factors to take into consideration when purchasing a payroll software include:

  • Affordability: The price of a payroll software is generally more cost-effective than paying a third party.
  • Control: Payroll is in the hands of the employer; a company does not have to rely on anyone else.
  • Accessibility: Many payroll software programs are available online, so employers can access the system from any location.
  • Security: Managing payroll internally eliminates the risk that comes with sending an employee’s personal information to an outside company.
  • Liability: Companies who choose to keep the payroll process in-house run the risk of forgetting tax payments or filling out tax documents correctly. Not only could these mistakes cost the company money, but it could also cost them their reputation if the errors are not caught in a timely manner.
  • Unexpected/Undisclosed Fees: While many software solutions offer customer support, it often comes at a price. Cancelling or upgrading the software system may cause a price increase as well.

If an employer chooses to outsource payroll to an external company, it is important to consider the following factors:

  • More Time: Outsourcing payroll frees up time for the employer since they do not have to deal with taxes; this includes researching tax updates and changes, and filling out lengthy tax documents.
  • Avoid IRS Penalties: Filing taxes incorrectly or late can cost the employer a substantial amount of money; not having to worry about fines from the IRS is a huge selling point for employers.
  • Avoid Headaches: The uncertainty of whether the software is the most up-to-date version, along with the potential IT issues that come with a software are alleviated by using a payroll service.
  • Prevent Losing Payroll Knowledge: If an employer has one person in charge of completing payroll, they run the risk of losing that employee at any given time; if the employee leaves the company, finding someone else to take his or her place would be difficult to do in a timely fashion.

Whether an employer chooses to use a payroll service or payroll software, there are risks involved. However, the amount of disadvantages associated with outsourcing payroll are far less than the disadvantages of using a payroll software. While fees may be higher when a company chooses to outsource payroll, the liability is much less. This is why we've put this comprehensive list together of the best payroll services the market has to offer. If you would like to learn more about each payroll service provider, you can take advantage of our expert reviews.


Bookkeeping and Accounting for Small Businesses


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You're a small business owner with lots to do. We're professional bookkeepers with experience serving entrepreneurs.

Let us take bookkeeping off your hands forever—so you can focus on what matters most.



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844Woodside rd .
Redwood City CA 94061

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