Every business owner is faced with the option of doing payroll in-house or outsourcing to a payroll service provider. While each has its advantages and drawbacks, outsourcing payroll seems to be a common choice for both large and small businesses. If you are trying to decide if payroll outsourcing is right for you, consider the following benefits.
1. Fewer Compliance Issues
Payroll tax regulations can be complicated and confusing. It may be difficult to stay up with all the tax rules and changes when trying to run a business, yet you are legally responsible for inaccurate payroll reporting, which can result in penalties from the government. Outsourcing payroll services can help you prevent compliance issues. Companies dedicated to running payroll stay up-to-date on all tax rules and therefore are much less likely to make a costly error. In addition, outsourced payroll services will often handle filings, taxes and payments, and take responsibility for the cost of mistakes.
2. Lower Costs
In addition to reducing the probability of costly penalties, hiring a company to manage your payroll can save you money in other ways. Payroll outsourcing usually costs less than managing payroll internally. Particularly for small to medium businesses, the price to pay for training and the labor hours spent processing payroll in-house generally add up to more than the price of outsourcing.
3. Saved Time
Not having someone process payroll internally can not only save you money, but also time. When one of your employees has to work on payroll every couple of weeks or once a month, she is spending less time actually doing her job. Because payroll takes a lot of time and attention to detail to prevent errors, outsourcing to a professional company can increase efficiency.
4. No Days Off
When you rely on an employee to manage your payroll, you may have to deal with illness, vacations or resignations. If your employee gets sick or requests PTO when payroll is due, it may not get done on time, which can lead to penalties. Hiring a payroll company means no asking for days off. This ensures consistent and reliable payroll processing every pay period.
5. Better Security
By processing payroll in-house, you may be putting yourself at a greater security risk. Even though you may trust your employees, there is always a chance personal information could accidentally get shared or be seen in the office. This could lead to potential identity theft, messing with company records, manipulating payments or embezzling money in extreme cases.
6. More Reliable Backup
While payroll software is available to help companies run payroll internally, if the software goes down, all of your data may be lost. When you outsource payroll to a service provider, they generally have backup systems in place and several server locations to protect your information – without additional cost to you.
7. Peace of Mind
One of the greatest benefits of outsourcing payroll is the peace of mind that comes with it. When you don’t have to worry about whether your payroll is getting done correctly and on time, you can concentrate on growing your business. Since payroll providers usually take responsibility for errors, you can feel confident mistakes will even be taken care of. If the payroll service company cannot fix the issue, it is quick and easy to hire a new one, as opposed to having to take weeks to hire and train new members of your staff.
8. Alternative Payment Methods
Many payroll companies offer different options for how you pay your employees. A lot of times, doing payroll in-house means sending paper checks to your employees each pay period. By outsourcing payroll, you often have the ability to do direct deposit or even offer pay cards to those employees without bank accounts. Having these options means it is easier to stop payments and reissue if necessary.
9. Quicker Processing
Payroll service providers employ experts in payroll rules and requirements. Because payroll is all they do and they have advanced technical resources as support, they can complete complex payrolls quickly and accurately. This includes adding new employees to the system and removing former employees as soon as they leave the company.
10. Access for Employees
Outsourced payroll often comes with an employee access system that allows your workers to see their personal payroll information. This creates a quicker and more efficient way to get information to employees and makes it easier for them to update their information. Since this feature often comes with outsourced payroll services, employers don’t have to worry about maintaining it.
While every payroll company is slightly different, the benefits of outsourcing payroll often outweigh the negatives. If any of these factors are leading to inefficiencies or limiting profitability in your company, it might be time to consider payroll outsourcing.