When you run a business of any size, managing payroll is a basic element. Creating invoices for even a dozen employee, making sure they all get paid on time, and ensuring that records are maintained accurately is a big responsibility. When you have so many other parts of the business to handle and expand, outsourcing some of them can be a smart move. Outsourcing payroll has many perks that are not only advantageous to you but your employees also.
Is Outsourcing Payroll Right for Your Company?
Before you decide to outsource your payroll process to another company, there are several factors to consider, including the size of your company, how many employees you have, and whether the in-house professional handling your payroll currently is up to date on all the latest tax codes. The following are a few questions you should ask yourself when considering outsourcing your payroll:
- How many employees do you have?
Companies with a small work force can usually manage their own payroll process pretty easily, but the same cannot be said for a comparatively larger workforce. If your company has hundreds of employees, a dedicated payroll management service might be necessary to keep the payment process running smoothly. Even if the number of your employees is low, how far the payroll process is internally manageable depends on work pressures and other internal core business functions. Hence, opting to outsource your payroll processing to a seasoned company is a wise choice.
- What type of services do you need?
Not all companies have the same payroll requirements. While some smaller companies need only basic services like issuing cheques and tracking invoices, other companies have more complex deductions like healthcare benefits, Canadian Pension Plan contributions and Employee Pension Plan premiums. To manage all these deductions, your payroll professional must be up to date on all the latest regulations and properly understand how they are implemented. Some small companies neglect to hire a dedicated person trained to handle payroll. This can prove to be a major mistake if problems arise. Hence it is best to outsource this work to a seasoned company that specializes in payroll.
Advantages of Outsourcing Your Payroll Process
Understanding your company’s capabilities and limitations is important to make sure it functions smoothly. Payroll requires time and skill, and even minor mistakes can lead to major penalties. This is where outsourcing comes in. The following are some advantages you can enjoy by outsourcing your payroll process:
- You get more time to focus on your core business
Payroll processing is time consuming and must be done accurately. Handling this work in conjunction with other responsibilities can be a major source of stress and detract from your key responsibilities. If you decide to outsource payroll to a bookkeeping company, your in-house employees will be freer to instead focus on developing your core business.
- It reduces your overall costs
The software and technology needed to accurately maintain payroll records can be costly. By seeking out an outside company, you avoid operational costs related to installing software and systems since the company you are outsourcing to will have the necessary infrastructure. Their fees are usually on an hourly basis or there is a monthly flat rate, depending on which package you choose.
- They have better knowledge of federal and provincial compliance
When you do not have a dedicated payroll processing professional and try to get the work done internally, there is always the chance you have missed out on important legal details. Business owners need to follow federal and provincial payroll and tax regulations to avoid expensive penalties. These laws are constantly being updated, and dedicated payroll processing professionals know all these updates to provide their services accurately and quickly.
- Their services are safe, secured and skilled
Payroll professionals use advanced technology to protect your data. There are numerous laws that they must comply with, and only a seasoned professional can ensure that your company’s payroll processing adheres to all of them smoothly. There are also different legal forms that companies must fill out to be acknowledged as a certain type of business, and a payroll professional can give you the best advice regarding this. A late or incorrect tax filing can also pose a major problem, and this is another issue that can be avoided by outsourcing relevant tasks.
Tips to Choose the Right Outsourcing Company for Payroll Management
The following are a few tips to keep in mind when selecting the payroll company
- Payroll errors can be costly. Before hiring a particular company, check out their online reviews and ask about their error rates.
- Choose a company that uses the best bookkeeping and accounting software.
- Take note of what other financial services they provide. If you can have all your needs met by a single company, all the better.
- Take note of their security and confidentiality policies as you will be sharing a lot of sensitive financial data.
- Look for recommendations and references to estimate their reliability.
- Ask about their complementary services and the technology they use.
- Check their background to find out what their track record is like working with businesses similar to yours.
Payroll processing is delicate work and is key to every business. When you outsource to the right company, you reduce your stress and can focus on other core business tasks. Choosing the right payroll company becomes easier when you are clear about what your business needs.