For many businesses, outsourcing payroll services offers an attractive and valuable alternative to in-house processing. Managing a business and managing payroll can be a full-blown financially-induced migraine. Outsourcing your human resources can provide a less expensive, simpler means of paying your employees, and performing a host of other duties for your business. Here are some reasons for small businesses to consider outsourcing payroll.
Compliance with Regulations
Outsourcing the payroll function typically shifts responsibility for legal compliance onto the payroll preparation service. Employees as well as federal, state, and local tax collection agencies need to be paid in full, on time, and in the proper manner. Late payments will cause monetary penalties from the Internal Revenue Service, and grossly affect the bottom line. The Internal Revenue Service reports that one out of every three employers have been charged for a payroll mistake. The ever-changing nature of tax regulations makes it difficult to stay up-to-date. Sometimes even a small change may have a big impact on your business. A well-designed payroll infrastructure can ensure you comply with regulations. Payroll services ensure that the business complies with the complex regulations.
Recruit and Retain Employees
An outsourced payroll service can also make the business more attractive to potential employees. These services can provide added perks such as online check stubs, time tracking and apps where employees can view pay information. Employees can be sure their wages, taxes, and bonuses are calculated correctly. Companies that have a proper payroll infrastructure in place attract the attention of potential employees. Many services now offer tie-ins with 401(k) and Section 125 mutual fund plans, allowing employees to designate automatic deductions from their paychecks.
Saves time
Payroll is a large undertaking every pay period. The administrative process of calculating payroll and tax obligations for each employee, printing and delivering checks, and providing management reports. In addition, direct deposit of checks, issue W-2 forms at the end of the year. Business owners know time is the most assets for business. The time and resources spent in payroll management is time away from working to grow your business. Outsourcing can freeing up your internal resources to focus on supporting and sustaining long-term growth.
Smaller businesses with a stable, salaried staff and minimal changes in tax obligations may be fine processing payroll internally. But many businesses that have changes each payroll period would benefit from outsourcing payroll services. If your payroll changes with each pay period, and have employees working varying amounts of hours each week or have a significant turnover rate, a payroll service can be a time-saving and cost-effective alternative to internal processing.