Outsourcing payroll offers several benefits for businesses of all sizes. If you’ve outsourced other functions, like telemarketing, website design, or printing services, you know how valuable it can be to have an expert working on your behalf. By hiring a professional, you can avoid costly mistakes, save money, and free up time to do what you do best- manage your business.
The following are some of the most commonly benefits of hiring a payroll services company:
Eliminate the need for in-house payroll
In-house bookkeepers are expensive to hire and train. A salaried bookkeeper usually performs invoicing functions, records paid bills, and estimates job costs. Hiring a bookkeeper can run upwards of $40,000 a year in salary costs, plus benefits you hire someone full-time. Part-time bookkeepers are slightly less expensive, but they usually charge hourly. Performing payroll functions will usually be much more expensive at these rates.
Though a bookkeeper can be invaluable in performing other functions, outsourcing payroll is usually much more cost effective than having your bookkeeper calculate tax amounts, file documents, and write checks. Hiring a payroll outsourcing company eliminates the need to train employees in your payroll methods, and ensures that there will be no delay in payments and benefits if an employee is busy, out sick, or otherwise unable to complete work on time. Most business owners find payroll to be a tedious and time consuming effort, and are happy to hire it out to another party, especially one who has the capacity to constantly research tax laws and regulations. A payroll company is a reliable source for services when your business is in busy season, can’t hire a bookkeeper, or requires complicated calculations every pay period.
Expert service
The number one reason most businesses hire a payroll company is the reassurance that comes with hiring a professional. Payroll computations can be complicated to keep track of. For example, employees can amend a W-4 as many times as they like, so tax information can change from month to month. Social security tax is only assessed up to a certain “cap,” which many employees will meet during the middle of the year. Tax laws at the state and federal level change from year to year. Miscalculating tax or savings amounts can result in costly penalties and fees for your business and your employees. A payroll company will be able to make accurate calculations, and most offer to pay any penalties incurred as a result of their own mistakes.
Different payroll companies cater to different industries. Businesses that offer flexible savings accounts, cafeteria plans, or retirement account contributions will find these features very valuable, as the paperwork can take hours to complete during each pay period and can be very confuting. Industries that require specific types of insurance payments or taxes can also benefit from hiring a payroll company.
Saving money and time
Hiring a payroll company will eliminate the need to perform these functions yourself. The more time you as a business owner (or your bookkeeper) spends on payroll, the less time is devoted to other important business functions. A payroll company can perform calculations, make deposits, and generate reports much faster because they have years of experience and knowledgeable staff. Performing your own payroll processing functions will take more time, and is likelier to result in more mistakes than outsourcing. Outsourcing is a great way to save money and time.
You probably didn’t start your business because you were passionate about performing administrative tasks. Most business owners decide to start their own company because they have a real love for a product, service, or industry. By focusing on what you do best and leaving the rest to a professional, you can devote more time to growing and managing your business.