Payroll management is essential for the easy handling of employee salaries, wages, taxes and other deductions. Some businesses handle it in-house while others trust outsourced payroll providers, which have become popular because of their simplicity and effectiveness. Outsourcing payroll doesn’t take away your responsibility, but it gives you more time and energy to invest in core areas of your business.
If you’re skeptical about outsourcing your payroll, here are a few reasons why you should.
Why Outsourcing Your Payroll System Is a Good Idea
In-house payroll processing is time consuming and can lead to costly mistakes if you fail to comply with ever-changing tax regulations. Fortunately, outsourcing your payroll is a simple, helpful solution.
1) It Saves You Time
Whether you have one employee or hundreds, processing payroll demands time and attention to detail. From calculating leaves and benefits to updating entitlements, there are many aspects to take care of when you manage payroll in-house. If you outsource your payroll, valuable time spent on it can be used for business priorities such as serving customers, increasing revenue and creating partnerships. This saved time can also be used to improve work-life balance.
2) It Saves You Money
Apart from time, you save money. Managing payroll internally is expensive because you need to hire a workforce, provide infrastructure, invest in payroll software and pay costly penalties in case of an error. Also, you can see the difference when you compare the cost of the time your employees spend on payroll-related activities to what you spend on a payroll service. It’s likely that you’ll save more.
3) It’s Less Complicated
Payroll taxes involve multiple layers of taxation. That’s why they should be managed accurately and efficiently. Small businesses, including startups, need a professional to take care of payroll. The best way to reduce the complication of tax is to outsource your payroll. It saves you the trouble of filling out elaborate forms and calculating and collecting taxes.
4) It’s Accurate
Payroll errors can be costly and stress out both employees and employers. Depositing and reporting employment taxes incorrectly, late tax payments and misclassifying employees can lead to audits and penalties. By outsourcing your payroll you can expect more accurate results because these providers have sophisticated systems in place and a team of qualified professionals with finely-tuned error-checking procedures.
5) They Have Access to Expertise
Professional payroll companies employ individuals who know payroll processing inside and out. They specialize in tax obligations, compliance with government regulations, verifying accurate data, finding errors and fixing them before they pose bigger problems.
Some of their areas of expertise include:
- Calculating and submitting quarterly and annual payroll taxes.
- Depositing funds directly or issuing checks to employees.
- Filing relevant government reports.
- Recordkeeping and verifying the reliability of pay data.
- Tracking employee benefits, eligibility dates and processing the enrollment of benefits.
6) It’s Secure
Payroll processing is potentially risky. Constant monitoring is necessary to avoid identity theft, embezzlement or payroll fraud. With a payroll service provider, you can rest assured knowing your data is safe. In addition to employing multiple server locations and data encryption, they store and protect data on state-of-the-art systems and use robust technology to spot (and alert clients to) payroll irregularities.
7) It Gives You Peace of Mind
Apart from the economic advantages of outsourcing your payroll, the peace of mind it provides is priceless. They are dedicated to your business, so you don’t have to worry about paying employees on time, calculating taxes or distributing payslips. Do you have a single employee doing your payroll? What happens if they go on vacation? You can take a few days off and let the payroll processor handle the process for you.
8) It’s Budget-Friendly
Many business owners think hiring a payroll service is expensive. The truth is that it’s an affordable option with flexible payment plans and a flat monthly hourly rate so that you can leverage the services to the extent you need.
A reputable payroll service provider will also ensure there are no last-minute surprises or hidden costs. That way you can stick to your budget without compromising the quality and accuracy of your services.
9) It Streamlines the Process
Payroll can be overwhelming when handled internally. But when outsourced, it becomes streamlined.
The payroll service provider prepares a checklist of all tasks so nothing is missed. To make your payroll process that much easier, they use the latest software. This eliminates paperwork, lets you stay up to date with current tax regulations, understand risks and keep complete records. It also improves the accuracy of the process which in turn increases employee satisfaction.
10) Turnaround Time Is Quick
Outsourcing your business’s payroll speeds the process. Fewer errors, effective solutions, the right knowledge and dedicated staff all contribute to processing payrolls quickly. Having a robust team of payroll specialists speeds processing of information and makes employee management easier, thus providing quick turnaround time.
How to Choose a Reliable Payroll Service Provider
Have you decided to outsource this process? Here are some tips for choosing a payroll service provider.
- They must have an established track record so the team can ensure data security and handle complex issues.
- Find a service that is within your budget by determining what payment plan suits you (e.g. a flat hourly rate or month to month).
- Make sure which points are included in the services offered. Some providers offer direct deposit, worker’s compensation administration and other benefits beyond payroll processing; others don’t.
- Read their website and Google reviews to figure out what clients have to say about their services.
- Ask about their security measures to keep your business’ payroll data secured.
Choosing an outsourced payroll provider can benefit your organization in several ways. It not only increases your business’ profitability and efficiency but helps you leverage their expertise without hiring a dedicated staff. With these key business functions outsourced, you can use your time and resources to grow your organization. Simply put, consider taking the burden of payroll off your shoulders for the betterment of your business. But make sure you choose a reliable payroll service provider to give your organization a competitive edge.