What are payroll services and how do payroll services operate?

Payroll is an amount of money that is paid to the employers by their company. The payroll processing is very complicated for any company or startup as payroll is one of the most important parts of expense. Payroll processing can be done every week or month but it is very time-consuming and requires proper report management. So companies and startups prefer to hire Payroll services to make this whole process easier and get the job rightly done on time.

A payroll service is an outside organization that manages to provide multiple tasks like employee’s working time calculations, tax obligations, preparing checks for payments, and managing salary reports. You can find some best payroll services for startups, San Francisco, on Google. The United States first saw payroll services in 1949 with Automated Payrolls Company who used to rely on primitive technology of electromechanical calculators at initial days and then grew to become one of the largest business outsourcing services globally. 

A payroll service will calculate the gross salary of the employees through the collected data for employers working hours, and other works like preparing employment tax filings, making direct deposits and printing checks. This will eventually reduce the expenses needed for the business and can also provide legal support for the startup company as the organizations have experts for rules and regulations of business.  

Stages of payroll service processing:

The best payroll services for startups in San Francisco offers careful planning for payroll processing. The payroll service has to monitor regular tasks and changes to withholding and security funds etc. the entire payroll service process can be simplified into three stages: 

1. Pre payroll processing: 

This stage includes activities like: 

  • Defining payroll policies

The start-up’s different policies such as pay scale policy, leave policy, and attendance policy. The first step for a payroll service company is to define all the payment factors and policies to start payroll processing.

  • Collection of inputs like employee working hours and revised mid salary structure

Payroll services interact with multiple departments and gather information like newly hired employee’s data, salary structure, payroll settlement terms, current working shifts and timings, leave policies including benefits etc. 

  • Input validation:

After the payroll services collects the data, they check for the validity of the input concerning adherence to company policies and approval matrix or is in the right format etc. Payroll service ensures that no employee is left out for salary payment. 

2. Actual payroll

This stage includes the actual calculations done for gross salary and tax payments by the start-up. After getting the input data, the payroll processing starts and the results are again verified for accuracy and to restrain from any type of errors

3. Post payroll activities

These activities include statutory compliance, payroll accounting, pay-out the employees and sharing the reports. 

Advantages of Payroll Service: 

Saves a larger amount of time:

Payroll processing is a time-consuming task for small businesses and start-up companies. Hiring the best payroll service for start-ups in San Francisco will allow the owners, the HR manager. And the accounting team to concentrate on the core business model to operate. To manage the salaries of all the workers while changing the business policies demand a huge deal of time and detail. Thus, by outsourcing payroll will ultimately save your precious time and refrain you from daily repetitive tasks as an owner.

Saves cost

Hiring a payroll service is cost-effective as compared to direct payroll processing. But obviously, big businesses can afford to hire the best payroll services for startups in San Francisco. But small businesses having in-house payroll processes increase the expenses. If your startup has more than 40 employees then you may consider outsourcing your payroll operations. 

Avoid mistakes:

Finally, payroll mistakes can be disastrous for a startup. For incorrect or late submission of taxes to the government can lead to the penalty. An experienced payroll service provider has dedicated and expert staff. In fact, they keep themselves up to date on all the changes of your payroll process. Thus outsourcing payroll service with professional payroll providers will reduce your chance of missing payment dates. Moreover, the experts working at payroll services are up to date with the latest government rules. This will help you to stay in compliance.  


As a business owner, you must identify the factors that prevent productivity and hinders your payroll process. Outsourcing payroll has its benefits provided the payroll service provider will do its job efficiently and serve the client.