Outsourcing payroll can help small businesses become more efficient and focus on their core competencies. Many times, when small business owners hear about payroll outsourcing, they feel it should only be meant for the big companies but this is certainly not so because almost all businesses can benefit from outsourcing their payroll. Here are five good reasons why companies outsource their payroll to a third party.
- It Allows Employees to Focus on the Main Purpose of Their Job: Outsourcing payroll allows employees to focus on the main purpose of their job and not be distracted by payroll and queries from their employees, perhaps asking questions about how their payroll has been processed and that’s one of the advantages of taking it outside and letting an outsourcing company process it for you.
- Reduction in Errors: By using efficient data collation and automated processing techniques, usually not available in-house. You reduce manual intervention and risk of payroll errors to reduce your dependence on in-house expertise. A payroll provider has not one expert but a whole team of payroll experts. So, unlike in-house payroll, you are never affected by absenteeism caused by illness or annual leave.
- Payroll Accuracy: Payroll service providers have the technical expertise to accurately and consistently provide payroll in a timely manner. It’s also their job to stay on top of the ever-changing tax laws at the federal, state and local level, so you don’t have to. The time you’re not spending on payroll is more time you can spend focusing on growing your business. That’s a win-win for both you and your customers; there are also giant penalties for mistakes. Did you know the IRS penalizes roughly one out of every three business owners for payroll errors? Doing payroll yourself might mean accidentally classifying employees and contractors incorrectly or making deadly payroll mistakes that could put your business at risk. Don’t take that chance.
- Cost of Administration: Another reason why companies outsource their payroll is costs of administration. Take a moment to consider this; how much time do you spend learning about taxes and changes to the tax laws or how much time do you think you should be spending? How much money do you spend on things like signing checks and putting them in envelopes or making changes to employee records? Once you compare how much it costs you to do these things on your own, you will be pleasantly surprised to see how much you can save.
- Tax Administration: One of the most important benefits of hiring a payroll service is that you get tax administration services with the bundle. So you won’t need to do tax related work yourself, as you’ll have qualified legal professionals who will file on time and accurately avoiding penalties.
It’s our believe that outsourcing payroll to a third party has a lot of benefits and when you do outsource your company’s payroll, make sure they have a very detailed plan as to how they intend to go about it.