Third party payroll is defined as the outsourcing payroll responsibilities of an employer such as a part of their payroll, tax-related duties to third-party payroll service providers. These service providers assure that the requirements are met so that business operations are carried out in an efficient way. An employer enters into a contract or agreement with a third party so that they agree to fulfill some of the duties of their employees. In general, payroll is defined as a total amount of expenditure spent by the employee towards their employees and also maintains a list of company’s employees. Third-party payroll is good..