What exactly is payrolling? Why do I need it?

What exactly is payrolling?

When most people think of the term “payrolling,” they mean outsourcing your company’s payroll. But what’s the other kind of payrolling – the kind that saves money, protects you from co-employment risks and gives your business more flexibility?

At Acara, we define payrolling as the process of placing a temporary worker on another company’s payroll. In today’s business climate, many companies have an increased need for skilled workers who can be called upon when needed.

Here are some compelling reasons to use payrolling services:

  1. Cost efficiency

Everything in business has its costs – costs that are constantly measured. For example, every CFO knows that the cost of hiring a full-time employee can add up quickly. Social Security benefits – including Social Security, Medicare, state unemployment insurance, health insurance, and 401(k) plans – can account for an additional 18% to 20% of base pay. However, if you choose to keep this resource on payroll, your company will not have to bear this cost, but it will be covered by the employer.

  1. Payroll = speed

We all know that projects are often time-sensitive, and time spent on the administrative delay of onboarding employees can cost valuable time. By hiring a payrolling provider, your company can eliminate the onboarding process altogether – significantly reducing wasted time. While your payrolling provider takes on the burden of these administrative processes, your new employees can hit the ground running.

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  1. Efficiency in day-to-day business

As companies seek to make their organizations leaner and more efficient, many HR managers and HR directors are forced to take on additional responsibilities in their daily work. Once employees are overworked, tasks can be neglected and slip through the cracks. Using their valuable time to onboard and offboard employees is probably not the best use of these critical resources. By working with a strategic payroll partner, you can eliminate these issues and free up your HR department to address more pressing business concerns.

Isolation of risks through co-employment

In today’s world, organizational compliance has proven to be critical to success in the workplace. By using a payroll provider, all paid employees are considered employees of your registered employer. This goes a long way to protecting your business from potential co-employment risks. Using payroll services can help solidify employment relationships and eliminate ambiguity about employees’ actual employers.

  1. Probationary period

Payrolling services allow you to test your resource with a short-term contract. This way you can check the quality of the work and determine the value that the person has for your company. Finally, does the person in question fit with your company’s mission, vision and culture? Some payrolling providers like Acara even offer a free conversion after 520 hours of work, allowing you to take on the paid resource as a direct employee at no cost.

Free Infographic: Employer of Record Work Flow


The many benefits associated with payroll can bring tremendous value to your business. From greater cost savings and increased operational efficiencies to protection from co-employment risks and beyond, there’s never been a better time to take over payroll for some of your temporary employees.

Payrolling can be beneficial for companies that want to work with temporary workers. With the ever-increasing complexities of health insurance, tax withholding, liability, and employment law, turning these services over to a temporary employee payroll provider can take the pressure off your business.

Below is a list of the benefits:

The Company is protected from liability by using a payroll service provider for temporary employees it hires on its own.

It saves the administrative costs, effort and risk associated with adding internal payroll.

The payroll service provider assumes the duties of the employer, including all regulatory requirements, workers’ compensation insurance, and tax withholdings.

King & Bishop’s payroll service enables our clients to identify, screen and select candidates to be paid through our payroll program.

When working with King & Bishop’s Payroll Services, you enjoy the benefit of managing hiring costs and reducing the burden on existing staff. You can also control staffing levels while complying with independent contractor regulations.

Other reasons to use payroll services for temporary workers:

You may identify a candidate you want to hire for a project and avoid the cost of third-party recruiting.

You may want to have a trial period before making a comprehensive offer.

You have a portion of the workforce that can be more effective with a flexible workforce program.

This temporary period also allows you to assess the suitability and contribution of the employee. While the employee is paid by King & Bishop, they are eligible for excellent benefits and weekly pay via direct deposit.

If you need employees but don’t want to employ them yourself, you can hire them through a payroll company. To do this, you sign a contract with a payroll company. Payroll employees are entitled to at least the same working conditions as employees directly employed by you.

Elements of Payroll:

Let me break down the elements of payroll: The payroll company acts as the employer of record. This means that in most cases the liabilities to employees and employers are with the payroll company and not with the client. The payroll company is responsible for collecting and remitting payroll taxes and paying all employer taxes such as FICA, FUTA, SUTA, Workers’ Compensation and all local payroll taxes. As a registered employer, the payroll company also offers its employees benefits such as health insurance, dental insurance, 401K plans, flexible spending and other benefits. The payroll company also offers general liability insurance. Payrolling is for contingent workers, meaning you pay temporary, seasonal, and project-based workers, but generally not your core workforce.

Payrolling firms do not usually recruit and place employees, this is done by the client or by an independent recruitment or staffing firm, which has the added benefit of allowing you to hire exactly the people you want, but still outsource the administrative functions of hiring and employment.

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