The first benefit that comes to mind when you think of outsourcing payroll is likely how much more you could get done if it wasn’t sitting on your to-do list. Processing payroll is time consuming, and it comes with a learning curve.
When you decide to outsource your payroll, you can focus on business development instead of sorting through timesheets, reconciling hours, and calculating wages. You have to track and verify hours all while ensuring you’re in compliance with local, state, and federal laws and regulations for each employee. This can take up a significant amount of time and bandwidth, especially as you expand your business.
Many managers and employees in small businesses have to split their attention between different roles. They often don’t have a dedicated HR or payroll department to handle the process. If you currently assign payroll tasks to one of your employees, you’ve likely realized it eats up most of their working hours leaving little time for other meaningful tasks.
Not just any employee can handle your payroll; they need to be properly trained on how to properly process payroll, including tax rates, facilitating tax returns, and ensuring minimum wage rates are followed. Outsourcing your payroll allows you to benefit from expert payroll knowledge and ensures full confidentiality for your employees.
Managing payroll responsibilities is more than ticking boxes and finally putting your 10-key skills to use to input numbers. If you’re committed to using an existing employee to manage payroll, you have to invest in the initial courses to get them up to speed and then ongoing training to ensure they stay up to date with ever-changing regulations. Without continued education, you open your company up for potential mistakes, which can be costly to correct.
Third, payroll companies provide the benefit of expert knowledge and experience in not only the current best payroll practices and regulations but also any upcoming tax changes you may need to budget for.
Payroll documents contain sensitive information about your company and employees. This information could be used for identity theft or even taking money directly from the company or an employee’s bank account if it should fall into the wrong hands.
In-house payroll comes with many unforeseen risks for small businesses such as the security of your server and protecting employee and company data. On the other hand, when you outsource to a professional payroll company, you benefit from their specialized software, which provides extra security, alerts you to potential fraud, and protects your precious data.
Taxes are a concern for any business. It’s also a fundamental part of payroll responsibilities. You may have some employees who qualify for certain tax deductions, while others are awarded benefits such as childcare allowances.
Outsourcing your payroll can be a game-changer for your small business. If you wish you had more time for meaningful business growth tasks, struggle to understand or stay on top of payroll, or wish your payroll was more secure, it’s time to outsource to a professional provider.
There are a few things to consider when choosing a payroll provider. With thousands of payroll processing companies out there, it’s important to consider which benefits of outsourcing are a priority. You may prefer a provider who specializes in your industry or perhaps a local company who can take the time to get to know your business.