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What Is a Service Bureau?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 October 2014
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A service bureau is any type of company that offers business services to their clients, in exchange for some type of compensation. The term has often been used to describe any business that offers technical support services to companies of every size, as well as a kind of financial institution. In many cases, the support offered by service bureaus allows companies to outsource essential functions to the bureaus, thus decreasing the operating cost of the customer.

One common example of a service bureau is the local bank. Bank customers utilize the services offered through banks in order to manage their finances more effectively. In exchange for services like loans, investment accounts, and even checking account services, the institution charges fees based on the schedule provided to the customer.

Another common type of service bureau is computer and network systems support. Many smaller businesses prefer to outsource the care and maintenance of their internal network and the related equipment to a business that offers a wide range of technology-based services. In exchange for taking care of the system as well as any components such as desktop computers, and managing software installations, the bureau often charges a standard monthly fee. An additional schedule of fees may apply if the customer requires help with projects that are not covered in the terms of the monthly agreement.

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Increasingly, businesses outsource tasks such as payroll processing and distribution to some type of service bureau. With this application, the bureau maintains information on each employee, including specifics regarding withholding and direct deposits. The data is used to prepare payrolls based on the schedule provided by the client. Most payroll services also forward funds withheld for taxes to the appropriate tax agencies, and manage the process of depositing net pay into each employee’s designated bank account. As with many other service bureau types, the payroll service charges a flat fee, usually for each payroll processed, a figure that is usually much lower than employing personnel to handle payroll tasks in house.

Along with the cost savings that can be realized by utilizing a service bureau, smaller companies also have the advantage of being able to project the image of being a much larger operation. This can be helpful when attempting to secure clients, as the model allows the business to easily provide the same level of support to its clients as a much larger company could manage. When coupled with the lower operational costs, using a service bureau for a number of day to day needs is a choice that makes sense for many different types of companies.

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