You Will Thank Us - 10 Tips About Payroll Outsourcing You Need To Know
The Importance of Outsourcing Payroll: The Right Solution For Your Business
Despite how time-consuming and tedious, a payroll service plays a vital role in any organization. As your business develops and grows, there are only more payroll taxes to consider. It could be time to seek out payroll outsourcing from a trusted payroll service provider.
Outsourcing payroll is essentially an extension of your organization. And with that comes plenty of pros with a side of some cons to consider. It is necessary to understand the pros and cons that come with outsourcing payroll to ensure you are confident in your decision.
There are many factors to consider, from the time it takes to implement payroll software to what that profitable return on investment looks like in the long run.
Why consider outsourcing payroll?
It is not always financially feasible to hire an entire payroll team. Also, many companies do not want the added hassle of doing payroll manually themselves. It is incredibly time-consuming and has countless different payroll tax calculations to consider.
When you have a team of payroll specialists that can work with your accounting team, there are a number of reasons to consider outsourcing. The time and hassle of managing your payroll can be better spent elsewhere. The payroll outsourcing services are legally responsible for a payroll mistake, filing payroll taxes, remitting payroll taxes to the local and state government agencies, in addition to remitting federal payroll taxes.
It is more likely that your business will have success because you are not trying to handle payroll for your small business on your own. It’s like hiring your assistant, but you can focus on your other projects instead. There are plenty of other areas you can spend your time on without that constant pressure on your time.
Pros of Outsourcing Payroll
Time is of the essence. By outsourcing payroll, you are gaining back valuable time in your day instead of having in house payroll processing. Outsourcing your payroll empowers productivity, allowing you to focus on more critical initiatives in your business.
(2) Promising return on investment
Manual payroll processing can take days, if not more. By outsourcing, you are not only saving time but also money in the long run. Those days turn into hours, ultimately reducing expenses and encouraging a return on investment.
(3) Guaranteed compliance with regulations
Partnering with a payroll provider will guarantee your business stays compliant with payroll responsibilities. Outsourcing payroll helps mitigate any risks by staying up-to-date on important changes in tax regulations. Although, it is always helpful to check with your chosen provider if they offer a compliance guarantee. Guaranteed compliance means a payroll provider will take responsibility for any potential tax penalties resulting from any errors made.
A payroll outsourcing provider's responsibility under the Service Level Agreement (SLA) includes reporting employment taxes accurately along with calculating payroll. The outsourced payroll providers are measured against other performance metrics, such as meeting payroll processing timeframes and preventing payroll errors.
Cons of Outsourcing Payroll
The time spent to implement.
Business owners have different business needs, and payroll outsourcing services provide various payroll solutions and payroll software that can be customized to your business's requirement. The more customization, the more time it can take to implement a new system and payroll process. Fortunately, many payroll providers' payroll operations have methodologies and best practices in place to ensure the transition and implementation of the business processes for the payroll solution are efficient from start to finish.
Cost of implementation.
While you are saving time and money, there is still a fee associated with outsourcing payroll. It is essential to consider all company objectives and ensure the payroll system is efficient. Efficient payroll systems save time and money by ensuring that paychecks go out on time in the correct amounts each pay period. When determining your return on investment, this is just one factor to consider. Additionally, manually performing payroll tasks yourself could be more costly than outsourcing payroll with a qualified full service payroll firm.
You’re still responsible in the end.
If in the dark event, third-party payroll companies fail to meet their end of the bargain, your business still has to pay the price. Protect your organization by setting clear expectations from the very beginning of the working partnership.
Benefits of outsourcing payroll
When it comes to outsourcing payroll services, there are several benefits you will experience as a business owner, from enhanced productivity to data security. No matter the number of employees, partnering with a payroll company is a cost worth investing in.
Overall, a qualified and professional payroll provider will help lift the burden off your shoulders so you can focus on the core activities of your business.
(4) Increase in productivity
Considering how time-consuming and daunting payroll processing tasks are, the decision to outsource may come more easily. Keeping track of benefit deductions, payroll taxes, and federal and state regulations is a lot.
Instead of worrying about finding time to process payroll yourself, a payroll provider is more than ready to do the heavy lifting. Outsourcing payroll frees up valuable time while making room for productivity in your workday.
It is also a win-win for employees to have access to employee self service during each payroll frequency to ensure the payroll information is accurate, resulting in time savings processing payroll.
(5) Reduces the cost
Having an in-house team to process payroll can burn a hole in your pocket. More giant corporations could have the resources to take the work’s brunt, but mid-sized to small businesses tend to be affected much more. This is where outsourced payroll can come in handy.
An in-house team means it is still your responsibility to manage payroll processing, and, on top of that, you have benefits administration and human resources to think about. The tasks add up. If you are a small business, new hire reporting can also add more pressure. Outsourcing payroll eliminates that stress and is cost-efficient in the grand scheme of things.
(6) Low Risk
Let’s be honest; payroll mistakes are painful. Not to mention, disrupting the pay period and benefits administration can upset your employees, which can affect your overall business. Failure to accurately report payroll will lead to formidable penalties that could have been avoided. Many outsourced payroll companies will take ownership of any potential errors due to incorrect calculations or late payments.
(7) Strengthened Data Security
If you choose to outsource payroll services, your business benefits greatly from enhanced security. Payroll processing is already complex and is a risky business operation. Some risks include, but are not limited to are identity and data theft, embezzlement, and other potential payroll hazards.
Most payroll processing uses innovative technology that will spot various types of payroll fraud. It is best to partner with a payroll provider who takes data protection and compliance seriously.