A payroll service provider is a third-party (outsourcing) company hired to process a client company’s payroll.

Payroll services provide payroll processing service, prepare payroll or deposit checks using the client’s bank accounts; and may be contracted to forward the tax payments to state and federal tax authorities.  Payroll service providers may track PTO benefits (including time-off, sick time or vacation time) as well as offer timekeeping solutions for the purpose of collecting hours and submitting payroll.

While the above accurately describes the traditional role of a payroll service provider, some payroll providers have begun to expand their services model.  Even some insurance brokers and general bookkeeping firms are offering some form of payroll services.  Bottom line, it is not difficult to find payroll service vendors.

Your company should engage a payroll service when you need help with payroll processing / payroll cycle management – and that’s it.  For example, you may be a small or mid-sized business with employees who are mostly part-time (and do not earn benefits), and your company simply needs an outsourced service to collect time sheets, track hours and cut paychecks in a timely manner.

Payroll service providers are a perfect fit if your business just needs to record time worked, process payroll and calculate tax payments.  All of these are essential to any business, and having a provider that is stable, dependable and who offers the right technology platform and expertise is ideal.

What is the difference between a Payroll Provider and a PEO / ASO?

• A payroll provider’s core expertise is payroll; and although they may branch out into other areas of HR, they are not structured (or licensed) to be experts in specialty areas of HR like PEO or ASO models.
• Payroll service providers handle payroll; not the full range of HR services handled by a PEO or ASO. Unlike a PEO or ASO, their solution for heading off employee problems is limited.  They assume no liability and therefore only process the payroll you submit.  PEOs and ASOs are well trained in wage and hour laws and deal with 60+ government compliance laws, rules and regulations every day.
• When you contract with a payroll service provider, you typically only get one service – – payroll processing. The quote you normally get from a payroll provider will be “just for payroll” and not all of the payroll-related services that you would naturally expect to be included, such as:
  • Custom Payroll Reports
  • Responding to Government inquiries
  • Lost or duplicate payroll checks
  • Lost or duplicate payroll check stubs
  • Draft standard policies and procedures
  • Personalized emails
  • Lost or duplicate W-2s
  • Custom Emails or US postage
  • Documents to Employee’s Vendors / Lenders
  • and several other payroll and payroll tax add-on services.

  These costs are normally billed separately and will add up fast – especially when (1) these add-on services can be requested by anyone; and, (2) nobody is paying attention to who is ordering additional services and (3) how fast these costs add up!  At the end of the year, you will be shocked at how much money your employees actually spent on  “payroll services”.

• Payroll Providers are not co-employers like a PEO; which means they are not as invested in the success of your business as a PEO; sharing certain legal responsibilities and liabilities with a client company.
• Remember, a PEO and ASO handles a wide range of HR services including payroll processing, As your business continues to grow; ask yourself, will your payroll service be up to able to provide you with the expert  HR services you really need…….and, at the time you need it most?

A PEO is a payroll service provider on steroids.
A comprehensive, cost-effective service that assumes the liability and the processing of customized payroll….and more!

If your business wants to have its payroll and HR experts all under one technology, then dmDickason’s PEO services offer the perfect solution.