Let’s shoot straight: managing payroll is an annoying obligation; an especially time consuming and detail-oriented task that can quickly consume even the sharpest business owner. Add to that the stiff penalties for a tax filing omission or a mistake on an employee paycheck and now we’re talking a full-blown pain in the rear.
Outsourcing payroll is an excellent alternative to in-house payroll processing for today’s small businesses. This practice allows business owners to streamline operations, freeing them from the liability and annoyance of payroll duties, and allowing them to focus their efforts on the tasks that impact the bottom line. While there are many reasons business owners choose to outsource payroll, here we’ve identified the top advantages:
- Time Saved – We can all agree that processing payroll is a time-consuming process. Outsourcing payroll is a cost effective way to free up staff time to pursue more important revenue-generating activities. Even if your organization employs only a small number of people, payroll demands the same about of time and attention to detail. Keeping track of benefit accruals, garnishments, new hires and terminations, as well as federal and state regulation changes can be daunting tasks. Each year significant amounts of time are spent preparing W2s and 1099s, and ensuring that they are sent out on time. Outsourcing payroll allows employers to concentrate on their core business and frees up the business owner, human resources, or accounting personnel to work more on strategic tasks.
- Money Saved & Costs Reduced – Time is money! The direct costs of processing payroll can be greatly reduced by working with a payroll provider. When comparing the cost of hiring a third party to handle your payroll needs to your in-house payroll expenses, really think about the amount of time your organization is forced to spend on payroll-related activities such as the time spent calculating payroll each pay period, generating and checking reports, and preparing for tax time. Tally all the expenses: the cost of printing checks, computer software, training, and support. Outsourcing your payroll functions will most likely save you money because your payroll provider will handle all of these things for you.
- Enhanced Security – Payroll is a complicated, high-liability process. Processing your payroll in-house introduces a whole gang of dangers: the risk of identity theft, embezzlement, the exposure of sensitive company records for personal gain. Online payroll solutions are completely focused on security and compliance, it’s what they were created for. Third party payroll solutions will also offer redundant backup and multiple server locations. In short, a quality payroll provider with state-of-the-art systems for storing and protecting data will protect your organization from security breaches (and greedy staff members).
- Direct Deposit – In addition to issuing and shipping checks directly to your business, most payroll companies also offer the convenience and security of direct deposit services. Many employees prefer direct deposit. Not only does this put money in their hands faster, it is a much more secure, and greener alternative than paper checks. However, providing direct deposit is difficult without the help of a payroll service provider.
- Compliance – Government rules and regulations are always changing and small business owners shouldn’t be expected to stay on top of these changes… but if you processing payroll in-house, you are. Mistakes can lead to audits and penalties, situations no small business wants or needs. According to the IRS, 40 percent of small businesses pay an average penalty of $845 per year for late or incorrect filings and payments. Most national payroll services provide a tax guarantee, ensuring that customers will incur no penalties because the providers take responsibility for penalties when they do occur. Further, professional payroll providers must stay current with rules, regulations and changes in tax rates. A reputable payroll provider has a staff dedicated to keeping up to date on all of the changes that could affect your payroll, ensuring that you stay in compliance.
- Professional Expertise – To reiterate: regulations associated with payroll change constantly. Between withholding rates and government forms, most business owners just simply don’t have time to keep up. Professional payroll providers know payroll processing inside and out, and specialize in the complexities of payroll taxes in compliance with government regulations. It’s what they’re trained to do and part of the guaranteed service they provide.