What Is Pay Rolling?

Pay rolling is the practice of using a pay rolling or staffing agency so that all aspects of employment can be handled by the agency. This practice is used for contract workers who will not be permanent employees of the client company.

1. 

Contract Workers

2. Pay rolling services and staffing agencies handle taxes, legal matters and compensation for contract workers. This removes the burden of employee management from the client, and often reduces expenses for clients who use this method. Several factors should be taken into consideration when deciding if pay rolling should be used within a company.

Costs vs. Benefits

3. Pay rolling is often used as a way to save money on employee management and administrative costs. Outsourcing payroll processing, tax management and other functions can result in significant savings for an employer. However, it is important to perform a cost-benefit analysis before contracting with a pay rolling service. If it will cost more to use a pay rolling service, but it will free up a manager's time for client work or other projects, then it may be worth the cost. If the service is more costly than performing the work in-house, but there are no other benefits, using internal employees to manage employees may be a better option.

Research

4. Carefully research the reputation and track record of the agencies you are considering. Because these agencies handle all of the administrative aspects of a contract worker's employment, it is important that they have a good reputation for meeting deadlines and providing quality services.

Available Agencies

5. Pay rolling can only be used effectively if an agency is available to perform the service. Seek out local staffing agencies for information on their services. If your local agency does not provide pay rolling, ask for referrals to an agency that specifically provides this service.

Worker Status

6. Before referring a contract worker to a pay rolling or staffing agency for processing, it should be determined if the person is truly a contract worker or an employee. The Internal Revenue Service (IRS) has a very specific list of criteria that apply to contract workers. Contractors are allowed to use their own tools and equipment, control how they are paid and have control over how work is performed. If someone who is classified as a contract worker is enrolled in the company benefit plan, he is told when and how he will be paid and does not have control over how or when work is performed. He may actually be an employee for tax purposes.