When we say full-service payroll, we usually mean outsourced companies that manage payroll for small businesses. They are most commonly responsible for payroll processing, direct depositing, tax filing, and payment processes.
We usually compare a full-service payroll with an in-house payroll. In-house payroll refers to an internal department handling the payroll and tax processing. Hiring full-time employees that will do payroll and tax in-house is often impossible to afford for small businesses, which is why they frequently reach out toward payroll and tax software.