Outsourcing Payroll is a Wise Business Strategy— Here’s Why

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Outsourcing Payroll is a Wise Business Strategy Here Why by The Payroll Company 505-944-0105

In this article there will be a discussion about the reasons why small and mid-sized businesses choose to outsource payroll as a way to run their business. Quick recap: outsourcing payroll can be a more cost-effective choice and save your business time and money that can be put towards your efforts to grow as a company. Outsourcing payroll is a wise business strategy, and it’s more efficient. Making this decision may be a wise decision that will favor your business in several ways. When considering payroll outsourcing, look for reputable and committed to providing solutions for all your needs.

Payroll Outsourcing Providers

Payroll and HR outsourcing can be tricky things to handle. A professional employer organization (PEO), on the other hand, will take a portion or all the functions related to workers’ federal employment tax, withholdings, reporting, and payments. When looking for an outsourcing provider, choosing a PEO that also handles payroll, accounting services, and bookkeeping often makes sense. Besides, the PEO overlaps with the HR-related matters and responsibilities, and it allows your business to focus and manage the other vital affairs needed to make the company run. 

In-House vs. Payroll Outsourcing

Cost-effective: As mentioned earlier, payroll outsourcing provides many advantages. Signing up with a service is more cost-effective and gives you peace of mind that everything will be handled efficiently.

Compliance: Since payroll regulations are ever-changing, outsourcing can eliminate any potential fines resulting from human error. Moreover, new laws often target small business owners or sole proprietors, so you don’t want to take any risks. You shouldn’t have to worry about fines or compliance issues with a payroll outsourcing provider.

Security: Your business’ payroll has many processes involved, and Data or security breaches can occur when freelance writers don’t have updated software systems. Payroll outsourcing companies will provide your business with the latest technology systems to protect data and other information. They come up with the latest technologies and ensure the security of your data and information.

When Should Your Business Consider Outsourcing Payroll?

When should you consider outsourcing payroll services? When you struggle to submit payroll documents or stay compliant with regulations, it could mean it’s time to outsource. Here are a few ways to consider outsourcing payroll services:

  • Cost – The first thing you should know before deciding is to calculate the cost difference between the two scenarios and decide accordingly based on cost-effectiveness.
  • Technology – make comparisons among the software and other assets with service providers. Most of the companies have efficient and more reliable resources in such terms.
  • Reputation – A reputable workplace like all the companies that rely on us needs to have a clean compliance record, satisfied employees, and good security in place. It is highly important to do business with a service provider that will assist you in keeping your stellar reputation

If you are struggling to complete all your payroll-related tasks or your business is growing and you want some help handling payroll tasks. It might be time to consider the option of a payroll outsourcing provider. That being stated, complete the Free Quote form on The Payroll Company’s website to find out your options.

Why Outsourcing Payroll Processing is a Smart Move for Your Business

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Businesses are required to complete and meet obligations to employees. Payroll problems are difficult for today’s high-tech business world. A business’s payroll division oversees multiple components of employee compensation. It manages payroll processing, direct deposits to employee’s bank account, FICA, FICO, State Income tax payments to government entities including the State and the Federal Government, reporting requirements, time and attendance tracking, company payroll management reports, worker’s compensation, 401k’s plus other types of retirement account reporting, unemployment claims, vacation time-off and more. This is a giant set of tasks to manage for a small business while running the business itself. Putting time into these tasks means a business owner is not focusing on building and managing current business.

What is the Appropriate Amount of Time to Spend on Payroll?

The practical way to answer this inquiry is a business owner needs to calculate the amount of time spent working on payroll each week, every two weeks or month and multiply it out for 52 weeks, 26 weeks or 12 months. After the totals for each segment of time are calculated, a business owner needs to look at the true cost of working on payroll by comparing it to the amount of business not generated related to working on payroll instead of managing and building the business. To make the comparison and analysis useful and valid each payroll task needs to be included in the assessment including managing tax reporting, employee benefits, retirement funds to new name just a few. Several studies over the years indicated in real numbers that business owners spend 3 full weeks a year dealing with federal tax problems. Add all the hours spent dealing with all the other payroll problems and tasks and it becomes readily obvious managing payroll is costly from both a time and business growth perspective. There’s not a fixed number or an empirical study out there that provides when a business owner should hire a payroll processing company, instead of doing it themselves. However, it’s easy to assess if an owner is spending 10 – 20 % of their time working on payroll and all its accompanying issues it’s likely a smart move to hire a company to process payroll to save time and money and then put those savings into managing and building business.

Look at the questions below to determine if it’s time to hire an outside payroll processing company:

  • Is the time spent on payroll exceeding your comfort level?
  • Is your business growing, adding more employees and now is
    payroll becoming a much bigger task than before?
  • Are payroll mishaps become more costly due to tax penalties assessed
    for filing errors charged by the IRS?
  • Is payroll taking up so much time that the critical time needed
    to manage and grow your business is compromised.

From a logical assessment perspective, if the responses to this set of questions happen to be yes, it’s makes good sense to outsource payroll processing. The monthly cost of payroll processing fees, while not nominal, is affordable for most businesses. The benefits of outsourcing payroll processing are time-savings, cost savings generated from reduction in penalties and fines and the improved ability to focus time on and energy towards building and growing your business.

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