There’s more to managing small business payroll than writing checks and handing them out to employees on time. Businesses need to keep accurate records, calculate and pay payroll taxes, and communicate effectively with employees. Many small and medium business owners are finding that they can simplify the process by using an outsourced payroll provider to manage the entire process cost-effectively and efficiently.
Outsourcing your payroll can provide your small business with a number of important benefits:
Using an outsourced payroll solution is typically more efficient for a small business than processing payroll internally. Leaving payroll to experts frees up hours that can can be devoted to focusing on your core your business. Whether it is your time, staff time, or a combination, chances are the hours could be better spent winning more business, improving customer service, fine-tuning business operations or launching a new product line. Among the areas where outsourcing will save time are:
- Processing payroll
- Cutting and distributing paychecks
- Calculating and paying withholding and employment taxes
- Handling employee payroll inquiries
Many companies underestimate the cost of processing payroll internally by failing to account for all hours spent and resources allocated to pay employees and maintain payroll paperwork. A thorough cost assessment usually proves that a company saves money by outsourcing the processing, tracking and filing of payroll documents.
To assess your own internal payroll costs, consider:
- How much the time spent is actually worth: consider the cost of your time and the time of anyone who processes or “touches” payroll. Often, many people in a small or mid-sized company are involved in the various parts of payroll processing.
- What savings would outsourcing provide: since an outside provider can handle all the responsibilities involved in managing payroll and answering employee questions, your business can eliminate or reallocate an internal payroll resource.
Calculating taxes and filing payroll-related tax paperwork can be more than just a hassle. If it’s done incorrectly, a company may face penalties and even interest on money owed since the mistake was made. Outsourcing payroll does away with the risk of many of these costs and hassles.