Few business owners cite payroll as their favorite business task. In fact, it generally tops the list of least favorites. At what point does it make sense to leave it to the experts?
Here are three big advantages of outsourcing payroll:
- Access to expertise and knowledge. Employers have to deal with almost 10,000 federal, state and local taxing jurisdictions across the United States. In addition, employers today rely on technology to operate more efficiently. As a business grows, employers have more employee records to keep and also need more reporting. The lack of technology becomes a hindrance to scaling for growth of the business. When you’re doing payroll in-house, you’re more likely to make mistakes that not only upset employees, but the government as well. Payroll service providers may be less likely to make big mistakes, and when they do, it’s easier to approach them about it than if the same mistake were made by one of your own employees.
- Minimize costs and risks. Outsourcing payroll can also assist with cutting costs and limiting risks. On average, businesses are overpaying employees by about 4 percent because of differences between the employee’s time and an accurate time record. Larger businesses often have the means to employee an entire accounting/payroll department, but businesses with fewer than 20 employees often find that outsourcing payroll saves them money. A quick way to determine if outsourcing payroll would save your business money is to figure out how many hours your employees are devoting to payroll-related activities, calculate how much you’re spending and compare the amount to the plans offered by several payroll-services providers. Also, be sure to factor in the money your business spends on tasks like printing and distributing checks, creating tax documents, and the like. You’ll probably be surprised by amount of time and money spent on these tasks.
- More focus on your core business. Doing payroll yourself can take a lot of time and focus from the money-making aspects of your business. Payroll may not directly increase sales, but done incorrectly, it can put your business in a world of hurt. To be in accordance with the laws and legal requirements of payroll takes a considerable amount of time and detail. Outsourcing payroll will help you save time and allow you to spend more money on the profitable parts of your business.
FAQs:
1. When should I consider outsourcing payroll for my business?
- It’s advisable when payroll tasks become burdensome or prone to errors.
- As business grows, managing payroll in-house may hinder scalability.
- Expertise of payroll service providers reduces mistakes and ensures compliance.
2. How does outsourcing payroll help minimize costs and risks?
- Reduces overpayment errors, averting financial losses.
- Especially beneficial for small businesses with limited resources.
- Comparing costs of in-house payroll tasks against outsourcing can reveal significant savings.
3. What are the benefits of focusing more on my core business by outsourcing payroll?
- Saves time and resources for revenue-generating activities.
- Ensures legal compliance and minimizes risks of payroll mistakes.
- Allows business owners to prioritize growth and profitability.
4. What advantages does outsourcing payroll offer in terms of expertise and technology?
- Access to specialized knowledge on complex tax regulations.
- Integration of efficient technology for payroll management.
- Service providers offer reliable support and troubleshooting for payroll issues.
5. How can I evaluate if outsourcing payroll is cost-effective for my business?
- Assess time and resources spent on payroll-related activities.
- Compare costs of outsourcing against in-house payroll management.
- Factor in expenses like check printing, tax document creation, and distribution for accurate comparison.
