A lot of people ask me why they should outsource payroll when they can just do it in-house? Its seems like offloading the responsibility of payroll to someone within the organization will save money. But, when examining these key factors, outsourcing can prove to cut not only cost, but have a positive effect on multiple aspects of the business.
- Reduction of cost
Who doesn’t want to cut costs? When it comes to the larger corporations, it may benefit to have their own payroll department, having the funds to maintain the proper software and employees. But when it comes to small to mid-sized business, those extra funds aren’t normally available to properly monitor the payroll process. This is where outsourcing the payroll can help reduce costs. Think about how many hours an employee spends on the payroll process. Keying in census data, calculating payroll, printing, signing, and distributing paychecks, training of, support, and maintenance of the necessary computer programs, keeping up with changes in tax rates and laws, preparing and remitting payroll taxes and returns to government agencies, w-2’s, garnishments, new hire reporting, generating reports for in-house and accountant use, are just some of the tasks that need to be done on almost a daily basis. Now, if you were to calculate just how much you were spending on said employee, as compared to a payroll service provider, the results might surprise you.
- Time Savings
As we just noted above, there are many responsibilities for the employee dealing with the payroll process. These responsibilities eat up a number of hours per week, and chances are, this employee’s title is not relegated to payroll processor. Meaning, payroll is a secondary responsibility, so this takes time away from their primary objectives. Now, on the other hand, a payroll providers sole task is just that, payroll. Payroll, time and attendance, and HR are what companies like Charlotte Payroll do from open to close. These are our primary objectives. Outsourcing only frees up precious time that most small to mid-sized business owners are constantly short on.
As a small business owner, we are responsible for keeping our companies compliant with all government regulations, which can be a tricky process. Considering the rate at which these rules and regulations are constantly changing. One false move can lead to hefty fines and penalties, as well as an audit. Not only do are these mistakes costly in a monetary sense, but as an owner, now your time must be diverted to handle these issues. Professional payroll providers make it their job to stay current with all matters relating to compliance.
The payroll process itself offers a number opportunities for a security breach. The employee who has the responsibility of processing payroll will have access to large sums of money, either in the owners operating account, tax account, or any other bank accounts associated with the payroll process. Not to mention the security of the servers being used when processing in-house. A quality payroll provider will invest in secure systems that will store and protect your data. Plus, most providers will be insured against issues that could arise, including theft. If your in-house employee decides to clean out your operating account and flee the country, your business could be left in ruins. But with the protection offered against such instances from a reputable service provider, you can rest easy at night knowing your money is safe.
Over the last 30 years the pace of technological change has increased so quickly that one decade’s must-have gadget becomes the next decade’s laughing stock. This is no different when it comes to the world of payroll processing. And the cost of staying up to date can break the bank for again, that small to mid-sized business. Having the latest software not only increases functionality, but also helps maintain proper tax rates and tables. As we have seen here at Charlotte Payroll, antiquated software can often produce lackluster results when dealing with the ever-changing world of taxes. Filing with the wrong unemployment rates can lead to those fines we discussed earlier. Here at Charlotte Payroll, the software we use pulls in tax information based geospatial technology, and is constantly updating itself to maintain proper tax rates for all 50 states.
In conclusion, to all the small to mid-sized business owners out there doing your own payroll, the next time you receive a call from a payroll vendor, take the time to really understand what they have to offer. At the end of the day, they could save you a significant amount of money and help ramp up productivity.