A payroll service provider is a company that automatically processes payroll calculations, payroll tax statements, year-end taxes and more. Many employers prefer to use payroll service providers to help ensure their employees and taxes are paid accurately and on-time. A payroll service provider can help employers meet filing deadlines and deposit requirements and streamline business operations.

A full-service payroll provider goes beyond the basics of payroll calculations. It will handle deposits and withdrawals, withholding and paying garnishments, and new-hire reporting. It will also file federal, state and local taxes. Most full-service payroll providers integrate time and attendance and benefits administration.

An online payroll system makes the process of paying employees (whether they are full-time or part-time) or independent contractors, such as freelance workers—simpler and more convenient. Online payroll services operate in the cloud and don’t require users to install or download any software, allowing businesses to manage and run payroll from anywhere. Many online payroll services automatically calculate how much employees should be paid each pay period. The systems can account for shift differentials, overtime, holiday pay and taxes, as well as Social Security and benefit deductions.