If you were to ask any of your employees what they think the most important department in your organization is, chances are they will say payroll. Even the happiest, most productive employee is going to be less than thrilled when his or her paycheck is incorrect—or doesn’t arrive at all.
While some small business—and even some larger ones—perform payroll functions in-house, more and more companies are turning to payroll services to handle the essential functions required to make sure employees get paid.
If your company isn’t outsourcing payroll, here are five reasons why you should reconsider that decision, and leave that task to the professionals.
Using an outside payroll company saves time
While large companies may hire employees specifically for the purpose of managing employee pay, in smaller organizations the task often falls to the staff bookkeeper, accounts payable department or even the office manager or business owner. In many cases, these individuals have additional tasks to handle, and have to make sure that employees get paid in addition to handling the company bills and more. Outsourcing employee paychecks removes that burden from employees, and allows them to focus on other things that need to be done. If you aren’t sure, calculate how much time your employee spends managing payroll. Chances are, you will be surprised at how much time it eats up—time that could be better spent on other tasks.
Payroll contractors save money
Again, calculate how much time your own employee or employees spend doing payroll. Are they working overtime to get everything done? If you are paying someone extra cash to do payroll, you might be better off paying an outside vendor. And it’s not just the weekly or bi-weekly payroll that eats up time and cash. Your employee probably also handles tax documents throughout the year, and manages the tax filing process—a time-consuming job for anyone. Factor in the costs of paper, printing, mailing and more, and using a payroll contractor can save you money.
Outsourcing increases reliability and accountability
Many organizations prefer to have payroll done externally for one important reason: security. If you hand off payroll functions to an unscrupulous individual, the chances of your organization being the victim of theft increase exponentially. Most payroll vendors have security procedures and checks in place to prevent loss of assets, and provide extensive training to employees in how to manage payroll to avoid costly errors. Not to mention, when something does go wrong, the payroll company is liable for the mistake, and generally has the resources to pinpoint the problem and rectify it immediately, something that can take days or weeks when handled internally.
Payroll specialists offer greater accuracy
As a business owner, are you up to date on every tax law and regulation that affects your operations? Is your payroll department? In large businesses with dedicated departments, the chances employees will know all of the ins and outs of the laws regarding payroll increase, but in small businesses, it’s hard for everyone to stay on top of that information. Using an outside service virtually guarantees that your company’s payroll will be managed within the scope of current laws; in fact, many services continuously update software to allow for changes and adjustments to ensure compliance. And by using an outside vendor, you avoid all of the payroll knowledge leaving the company if your manager leaves—ensuring a smooth transition during which your employees will always get paid.
Engaging the services of a payroll provider certainly allows for business expense tax write offs, but the tax benefits go beyond deductions. Many businesses unnecessarily pay excess fees for incorrect or late tax filings each year—and using incorrect or outdated tax tables can be disastrous to your bottom line. A payroll company will help ensure that your tax filings are handled correctly and on time, saving you money and headaches.
These are just a few of the reasons that hiring another company to handle your payroll functions is a good idea. If nothing else, handing the task off to qualified professionals reduces your worry and stress, and allows you to focus on running your business and making it as successful as possible.