If you are in charge of a large company, you probably have a large, well-funded accounting department. For small to medium businesses, payroll processing can be a complicated and time-consuming task that might be better left to a third-party company. On this page, we are going to outline 7 reasons why you should outsource your payroll processing.
1. Save Money
The number one reason for outsourcing your payroll processing is that it can save you money. A lot of people think that it might be more expensive to hire a third-party company to take care payroll processing when they can just do it themselves or take care of it in-house.
Think about how much you are paying your employees for a moment. Multiply their hourly wage by the amount of time it takes them to do your payroll. Also take into consideration things like medical benefits, sick leave, vacation time etc. and you will see that the cost of having an employee do this type of work for you can add up very quickly. When you take some time to calculate how much it actually costs your company to process payroll, you might be surprised to learn how much you can save by outsourcing.
2. Free up Your Time to Work on More Important Tasks
Above we mentioned that some people think they would be able to save money by simply doing the payroll themselves. You have a business to run and you should be spending your time on revenue-generating activities as opposed to non-revenue generating activities. Whenever possible, you should focus on making money for your company and let somebody else take care of the things that need to get done but don’t generate income.
Outsourcing payroll processing also reduces the workload on your accounting department, giving them the time they need to handle all of the bookkeeping and other tasks that they need to take care of.
3. Protect Your Company from Tax Liabilities
Payroll processing can be a complicated and time-consuming task. If you make mistakes calculating federal, state, and local employment taxes, or if you file the tax paperwork late, you will face penalties that can get very expensive, very quickly. If you outsource your payroll processing to another company, they will usually offer you some type of tax guarantee. A third-party company will get things done on time or they will compensate you for any penalties or interest payments you incur.
4. Avoid Potential Legal Problems
As mentioned above, payroll processing is complicated. There are many local, state, and federal laws that you must comply with. When you outsource your payroll processing to a third-party, the company you choose will have experts that are familiar with all of the rules and regulations that you must adhere to, keeping you out of potential legal trouble.
5. Accurate, High-Quality Work
Because payroll processing companies handle payroll processing all day, every day, they are very good at it. If they were not good at it and made a lot of mistakes, they would quickly lose clients and go out of business. For high-quality, accurate work you are better off outsourcing payroll processing than having someone on your staff handle it. It is in a payroll company’s best interest to do a great job for you because it is very easy for you to select another company if they don’t.
Having a third-party payroll processing company handle the work for you is actually pretty easy. A good payroll processing company will be able to incorporate their services seamlessly into your business. When your employees have payroll questions, they can also get answers from the payroll processor rather than contacting the human resources department at your company.
A payroll processing company has a large team of experienced individuals. You won’t have any problem getting your payroll processing taken care of. That is not necessarily the case if you were to handle the job in-house. What if your payroll person got sick, went on vacation, went on maternity leave, or even quit their job? You would have to scramble to find someone else to fill that position. If you outsource your payroll processing, that is a problem that you never have to deal with.