What Is Online Payroll?

Put simply, Payroll is the total of all wages, compensation, and benefits received by your employees. Payroll includes employees paid hourly and those who are salaried. All compensation is calculated by multiplying pay wage by hours worked, and then categorizing and subtracting all standard deductions such as FICA, medical and dental insurance and tax deductions. The net balance is then distributed to the employee in the form of a check. All calculations are tallied annually for the fiscal year.

How Does Payroll Get Done?

These functions are performed either by an internal employee, an outside payroll firm or, increasingly, by an online payroll service. There are pros and cons to each method, so it’s important to evaluate your payroll needs and choose accordingly. Let’s take a look at those methods.

Internal Employee


  • Instant in-person access during the work day
  • No extra expense beyond salary


  • Additional salary to pay. As of 2010, the average annual mean wage for a Payroll Services Clerk was $36,720
  • Human work means the potential for human error. Approximately 40% of American small business are hit with IRS penalties averaging $845 annually.
  • Cross-training additional employees

Outside Payroll Firm


  • The work is performed by experts, ensuring accuracy and full compliance with all tax regulations


  • Expensive. Most brick and mortar payroll firms charge from $1 – $8 per document or more. For a small business, this can add up quickly.
  • Nobody on site for immediate assistance

Online Payroll Service


  • Online Payroll offers the best of both worlds: 24/7 access to a staff of experts without the overhead expense of a dedicated payroll employee in-house
  • Online Payroll provides instant access from anywhere – important in today’s mobile world
  • Online Payroll is more cost-effective than outsourcing to an outside payroll firm. An online payroll service offers a flat monthly fee, including such fees as tax filing, direct deposit, and/or paper checks and telephone and e-mail support


  • None that we’re aware of

What is Online Payroll?

With an online payroll service, all payroll functions are automated on a secure external site. Outsourcing payroll to an online payroll service means that the service performs the following functions for you automatically and securely:

  • Payroll Generation: The online payroll service calculates all wage figures for each employee, then deducts all taxes, benefits and other withholdings.
  • Paying Taxes: The online payroll service calculates all taxes owed to local, state and federal government according to all current tax regulations, ensuring that you will be in full compliance.
  • Filing: The online payroll service automatically files all forms with all appropriate tax offices. No more rifling through your drawers looking for a stamp.