What does an online payroll service do?

Online payroll services automate payroll processes for businesses. They handle basic tasks like calculating wages, processing direct deposits, and managing more complex functions such as tax withholdings and year-end tax forms.

What features do online payroll services include?

Typically, online payroll services include features that help employers calculate, file, and pay payroll taxes for all employees. Some even include the option to pay employees or contractors in other countries. Employers can also generate and e-file year-end forms like W-2s and 1099s.

Detailed reporting tools help employers track labor costs, monitor tax payments, and generate reports for accounting purposes. These offer employers a fuller picture of finances associated with their workforce.

How do online payroll services work?

Employees can be paid after their salary or hourly rate, tax status, and bank details for direct deposit are entered into the online payroll platform. Hourly workers' total pay is based on time-tracked shifts, while salaried employees are paid according to their annual pay rate. After deductions for taxes, benefits payments, and any other withholdings are made, payments are processed and paid out to employees.

What are common payroll terms to know?

Here are the essential terms you'll need to understand when using online payroll services:

• Gross Pay: The total amount an employee earns before any money is taken out

• Net Pay: The total amount an employee is paid after deductions

• Pay Period: A recurring time when an employee is paid

• Direct Deposit: Electronic deposit of funds directly into a bank account

• Tax Withholdings: Money taken out of paychecks for federal, state, and local taxes

• Pay Stub: A record that shows employee earnings and deductions

• Year-End Forms: Tax documents (W-2s and 1099s) that show annual earnings and taxes