Whether you have one employee or hundreds on the payroll, you must follow a set of formal procedures when paying employees and dealing with payroll taxes. You can handle these tasks yourself or outsource them to a reliable payroll service company. This helps the business focus on core operations while leaving this complicated procedure to the professionals.
What is Payroll Outsourcing?
When you contract with a third party to provide payroll services, this is known as outsourcing. Outsourcing the payroll process is one of the most common types of business process outsourcing. Once businesses realize how much work is required when handling their payroll in-house, having an outsourced solution doesn’t seem so far-fetched. Individuals dealing with payroll have many areas to monitor, including managing taxes and withholding (especially if they are in different locations and states), current laws and regulations, and the processing itself.There are many benefits of outsourcing payroll that can help your business run more efficiently and effectively.
Reasons to Outsource Payroll
Payroll processing takes a lot of time and effort to ensure things are done right. It really doesn’t matter how many people you have on your team, many small businesses lack the expertise and capacity to do this. When working with expert service, you have more control over your business infrastructure. Outsourcing the payroll function helps focus on other areas of the business that need attention. You won’t have to worry about additional overhead or training an employee on how things should be done.
Minimizes Payroll Errors
Using a payroll provider helps reduce the risk and errors resulting from manual calculations and data entry by automating tasks. This alleviates many of the labor-intensive aspects of payroll. When dealing with numbers, having these tasks done with quality and accuracy counts. There are many things that can throw your numbers off if you aren’t familiar with the intricacies of payroll, like taxes, adding new employees, correctly calculating payroll amounts, and other things that seem small but can have major consequences. Reports are automatically processed and transmitted to your organization, so you have an up-to-date account of all employees, their wages, taxes, when your taxes were filed, and other information.
When you’re handling payroll tasks in-house, companies have a lot of risks to consider. Employees who have sensitive company data could embezzle funds or steal identities. This could cost the company millions of dollars and threatens the longevity of the business. Outsourcing alleviates the likelihood of it happening because you won’t have to print, sign, and manually distribute checks. This is time-consuming and can lack the right risk management mitigation processes. The outsourcing firm keeps your data confidential and has backups on state-of-the-art systems to ensure your information is compliant and accessible.
Using a payroll outsourcing company means your office won’t have to think or worry about regulatory matters that consistently change. The payroll outsourcing company automatically makes the adjustments to your files. Your federal, state, and local taxes will be filed without worry. You won’t need a team or dedicated person to follow the new laws and you won’t have to worry about whether your taxes are being filed correctly or on time. Many businesses don’t understand how intricate the government’s rules and regulations are. If you aren’t paying attention, you can quickly miss a slight change in their requirements. Businesses that don’t have the manpower to dedicate people to watching the regulations often get in trouble because they don’t know or have the resources to comply.
Having a single sign-on improves data accuracy, making it easier to access information when payroll is integrated with time and attendance, benefits, and other HR applications. Integrating all your benefits into the payroll system can be confusing when you’re working with different healthcare plans, contribution amounts, deductions to different bank accounts, dealing with employment status and salaries. There are also many components to consider before and after the benefits enrollment period, when multiple changes may take place. Outsourcing ensures these areas are taken care of while you reap the benefits of better technology that seamlessly integrates while alleviating the costs of outfitting your entire operation.
Facilitates Employee Self-Service
Full-service payroll typically allows employees to view their pay information, log their hours, and manage their withholdings – all from a mobile device. You won’t have to worry about employees wondering how much they are being paid, how many taxes are being withheld, or where they can access their information from last year. Employees can also easily change their withholding amounts without having to go through human resources. This comes in handy when employees need to verify their financial documents. They can access their information privately and discreetly. Outsourcing can also help with completing paperwork, submitting requests for time off, and more.
By outsourcing payroll, your business does not need to hire a person who specializes in this area. Using an outsourcing company helps spend less money and time by reducing the expenditures you will incur, helps streamline processes and operations, and focus on maximizing profits. The time you save by hiring an outsourcing company also helps you save money because you won’t have to worry about additional salaries, possible overtime, or other employee-related costs.
A payroll outsourcing company has expertise in this area and understands complex situations. This can help put your mind at ease so you can focus on using your employees where there are most needed and scale with confidence. Payroll processing firms do more than just pay taxes and payroll, they handle 401(k) information, update W-9 forms and deductions, employee withholdings (voluntary or involuntary), quarterly and year-end taxes, monitor tax credits, and more. While it may seem like things will be easier and cheaper by having all these functions in-house, there’s nothing like having an expert handling your payroll.
If any of these benefits can assist in increasing profitability and efficiency in your business, it may be time to consider outsourcing your payroll. There are tons of options available to make your life easier and enhance this part of your organizational infrastructure. Once you’ve outlined your needs, you’ll be able to hand off this task and enjoy the results.