Businesses are always looking for new ways to improve efficiencies and control costs in order to stay competitive in the marketplace. Many organizations are turning to managed services to achieve these goals. In particular, managed payroll services can be an excellent choice.

If you’re considering investing in managed payroll services, you should have all of the information you need to make an informed decision. After all, it’s a big step for your company.

Here are answers to three of the most common questions about managed payroll services.

1. What exactly are managed payroll services and what do they include?

Instead of managing payroll in-house, you outsource the responsibility to a third-party service provider. Every aspect of your payroll process is handled by this outside provider; all you have to do is feed in employee data, as pay rate and hours worked, before each pay period. The payroll provider will handle the rest.

Some of these functions that will be included in your package and handled by the outside provider include setting up your system; calculating gross wages; subtracting necessary withholdings, including taxes, pensions, and benefits; ensuring on-going compliance with payroll and tax regulations; printing checks; producing pay slips for employees; making direct deposits to employee bank accounts; entering data; filing remittances to the government; preparing employee tax filings; and filling out any other necessary paperwork.

2. What are the benefits of using managed payroll services?

The benefits of using these services are varied. You’ll enjoy cost savings, for one. You won’t need to employ a payroll staff, pay for ongoing software licensing, pay for equipment and supplies, such as ink, paper, and printers, or pay for training and development.

You will also reap the rewards of time savings. You or your staff won’t be distracted by the administrative tasks that come with payroll anymore. Your time will be freed up to focus on your core business instead of overseeing in-house payroll functions.

Your company will also benefit from increased security and compliance. You won’t have to worry about staying up to date on changes in payroll or taxation legislation, ensure that you’re meeting deadlines, or make sure that you’re following the correct federal, state, and local laws for your area of operation. Additionally, because the third-party service provider will have best-in-class technology, firewalls, encryption, and myriad other security features, you can ensure that your confidential employee data and financial documents will always be safe and secure—no security breaches, fraud, or theft to worry about.

However, just because you’re handing over your payroll function to an outside party doesn’t mean you are going to lose control over the process. You will retain complete control and visibility through access to your payroll manager, the payroll software, and reports.

3. Which types of businesses should invest in these managed services?

Managed payroll services are suitable for every type of business. Large organizations that already have an existing in-house payroll department will see an immediate cost benefit, as they will no longer have to employ dedicated staff for the function or continue to pay for the expenses associated with it.

However, small and medium-sized companies with fewer than 20 employees can also really gain value from outsourced payroll services, especially for the small business owners who take care of most of their business responsibilities on their own. Payroll is a specialized function that requires extensive knowledge and experience to get right. If you do not have this type of expertise, you are far more likely to make errors and face compliance issues that can cost you in significant fines and penalties. But when you outsource, you gain access to a team of dedicated payroll professionals. Additionally, processing and administering payroll in-house can be incredibly time consuming and can be a big drain on your resources. When you move to managed payroll services, you are free to grow your business.