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.
(8) Considerations for outsourcing payroll
Any company that wishes to implement a payroll system should know that it is a major undertaking, not to mention extremely time-consuming. Outsourcing payroll services can make a big difference in the ease of scheduling and the functionality of the system. This is especially crucial to a startup business that is constantly growing and expanding.
Another important factor to consider when looking for a reliable payroll provider is business costs. Know how much your company will spend on the services you are looking for.
A cloud-based payroll system will make your life easier and your employees more productive. Payroll outsourcing is a specialized and time-consuming process, but it can be extremely beneficial for many businesses.
(9) Outsource payroll for contingent workers
Outsourcing payroll for contingent workers is a must in today’s workforce. In fact, one in three Americans are contingent workers and it is projected to reach 55 million workers by 2025. This statistic is only increasing by the minute. Contingent workers are those who work for an employer in one season and then move on to another job without the same employment security of full-time employment.
Despite their growth, most small business owners and mid-to-large-sized organizations do not have the resources to manage this contingent workforce, so they partner with managed service providers to manage their outsourcing needs.
The key to outsourcing payroll for contingent workers is finding a service provider that offers high-quality service at a competitive rate.
(10) Outsource payroll for small businesses
You might not be thinking of outsourcing payroll for your small business but, as your business grows, the time, money, and resources you invest in payroll can add up. Once you have a firm handle on your business’ growth, you can take the necessary steps to bring payroll in-house. But doing so can cause a lot of headaches. Â You are best to hire a payroll service provider to help you with your payroll needs.
One of the most challenging parts of payroll is record keeping. As you grow, your business demands more detailed information from you. Depending on your circumstances, you may find it beneficial to find a payroll outsourcing company that can help with accounting. Whether you need help with tax withholding, receipt filing, or human resources duties, the process can be quite complex.
As a small business owner, it is nearly impossible to keep up with the payroll regulations for any size company, especially as your business gets bigger. As a business owner, you do not have the skills for payroll processing, so selecting a payroll processing company that is a quality payroll provider is a must if your area of expertise is not payroll processing.
While it is incredibly important to protect your small business or any size business against legal issues, you should also consider the options that could help you succeed. The benefits of outsourcing payroll services offer a reliable payroll service to help you with everything that comes with an established business.
When looking for a payroll service provider, you must ensure you take time to understand their value to your business and determine what is ideal for your business. A payroll service is a unique asset to your business.
Payroll outsourcing services from Accendi Group make it easy for you to complete payroll efficiently, accurately, and in full compliance with the law without having to become an HR expert. We simplify business operations.
This article was written by, Antoinette Jones, Sr Consultant.