Negosentro.com | How Outsourcing Payroll Can Benefit Your Business | Without question, payroll is an essential part of your business. Much like sales, customer service, or marketing, it is critical to the business and top of mind to almost every employee. Simply put, payroll is how you reward and retain employees. It is how you compensate your teams for the work they’ve done. If your payroll is prone to errors consistently, even if they are small annoyances, you’ll eventually wind up with dissatisfied and unmotivated employees. Here, we are going to talk about payroll software and the benefits associated with using it.
Mistakes, the bane of any payroll cycle
Calculation errors aren’t the only issue though. Meeting all the tax code guidelines and payroll regulations can cost you dearly if a mistake is made. The IRS handed out 6.8 million penalties in 2013. That’s $4.5 billion in fines to large and small businesses alike. More-so the small ones though as up to 40% of small business do not even use an accountant at all.
Though some businesses opt to handle payroll internally, there are many benefits to having your business outsource payroll to a knowledgeable and vetted payroll vendor.
Time savings through outsourced payroll
Time is the biggest challenge in meeting payroll obligations. When you choose to do payroll internally, it occupies a great amount of time and attention to detail. As the staff grows, the demand on your time grows significantly.
You are caught in the loop of each pay period becoming a system of checks and balances to ensure not one error passes in the amount of data variations from employee to employee.
Overhead reduction in costs
Your time has a dollar value, as a business owner, investor or partner. That dollar value is linked to revenue and the time you are able to save each day goes toward that value. The time you spend on payroll pulls away from the revenue side.
Calculating employee hours, deductions, paid time off, sick leaves, taxes, printing, signing and distribution of the paychecks or stubs alone are enough to take your focus away from making revenue. Additionally, processing direct deposits or electronic payments, and generating payroll reports to be sent to local, state and federal tax bodies are also time consuming.
If you or staff member are doing the payroll, you may want to hold those costs against the costs to outsource and you may be pleasantly surprised to see actual savings when those tasks are taken off the plate.
Keeping payroll in-house runs the risk of identity theft. Employee records can be viewed, records can be tampered with for personal gain and of course the risk of embezzlement are just a few concerns.
Add to this, you will need to ensure your payroll software must be kept patched and secure. The database of your payroll software as well will need to be kept in a secure storage lockup, not to mention the backups to software that must be regularly maintained and tested.
Most, if not all outsourced payroll vendors will include high-level encryption and secure storage at no extra charge.
You may not be an expert in regulatory compliance, but it is expected of you to be legally held responsible to meet all tax regulations. One mistake can leave you open to regular audits and costly penalties. It is not an easy process to try to stay ahead of the game when it come to changing rules, regulations, and tax laws.
Variety of services also available
Outside of standard payroll and tax calculations, many outsourced agencies offer value-added services such as contract generation, labor law compliance, workers comp payments and general bookkeeping services to name a few.
Outsourced payroll providers are professionals who specialize in regulations and government compliance, tax changes and human resources issues. Headaches, time and money will be saved to enlist an outsourced agency to care for your payroll, leaving you and your team re-focused on bringing a return to the business rather than a constant expense.