What Exactly Is Payrolling

What Exactly Is Payrolling? Why Do I Need It?

What Exactly Is Payrolling? Why Do I Need It?

A growing number of businesses are utilizing temporary staff to meet fluctuations in demand. And while these resources are necessary for your company to hit its revenue and production goals, they also come with a cost: more employees for your human resources department to keep track of.  

Payrolling services, often referred to as employer of record services, can reduce burdens on internal HR teams and help companies manage their contingent workers more efficiently.  

What is an Employer of Record? 

An employer of record is a third-party partner that handles payrolling responsibilities for temporary staff and, as part of that process, takes on burdensome costs like taxes, unemployment insurances, workers’ compensation expenses, and employer benefits, while protecting the company from sensitive co-employment risks. 

In a recent Acara poll on LinkedIn, 43 percent of respondents said they are currently utilizing an employer of record. 

Payrolling can be a great option for organizations that need of contingent workers but whose internal HR teams also need to focus on other important business priorities. 

Here are five compelling reasons to consider payrolling/employer of record services: 

  1. Cost-Effectiveness

Everything in business has a cost—and those costs can add up quickly when bringing on full-time employees. Benefits and taxes such as Social Security, Medicare, state unemployment, healthcare, insurance, and 401(k) plans can tack on an additional 18 to 20 percent to a base salary. When you outsource payrolling, your organization won’t be required to cover these expenses; they’ll be covered by the employer of record instead. 

Related: Case Study: A Master Vendor Solution: Streamlining Recruitment Operations for a Global Transportation and Defense Company 

  1. Payrolling = Speed

Companies don’t always have the luxury of time when bringing on contingent staff, and the administrative lag of employee onboarding can slow the process by days or even weeks. By engaging with a payrolling provider, your organization can take these onboarding tasks off your plate so your new resource can hit the ground running. 

  1. Day-to-Day Efficiency

As companies look for ways to make their organizations leaner and more operationally efficient, many hiring managers and HR leaders have been forced to take on additional tasks in their day-to-day roles. Once staff members become overburdened, assignments can become neglected and slip through the cracks. Using their valuable time to onboard and offboard employees is not always the best use of these critical resources. Partnering with a strategic payrolling partner can eliminate these hassles and allow your HR department to tackle more pressing business concerns. 

  1. Insulation from Co-employment Risks

In today’s day and age, organizational compliance has proven critical to overall workplace success. When utilizing a payrolling provider, all payrolled personnel will be known as employees of your employer of record. This can be pivotal in insulating your organization from potential co-employment risks. An employer of record can help to solidify employment relationships and eliminate confusion surrounding the resource’s actual employer. 

  1. Trial Period

Payrolling services enable you to test out your resource on a short-term contract. This will help you examine the quality of their work and determine the value that they provide to your organization. Some payrolling providers like Acara will even offer a free conversion after 520 hours worked, allowing you to bring the payrolled resource on as a direct employee at no cost. 

Related: Infographic: Employer of Record Workflow 


Payrolling services can greatly benefit your organization’s bottom line. From greater cost savings and increased operational efficiencies to protection from co-employment risks, there’s never been a better time to pursue payrolling for your contingent workers. 

Interested in engaging with Acara as your organization’s payrolling provider? Get in touch with us today.