Why Outsource Payroll Processing Services?
Payroll, in this context, refers to the total amount of wages a company pays its employees and other workers such as freelancers and contractors. It’s an important aspect of running a business and is how you compensate your employees for the work they’ve done.
Payroll processing is the task of managing the payment of employees and other workers by a company. Payroll processing steps usually include collecting employee time information for a certain time period, managing benefits and deductions, and distributing employee pay for the selected time period.
Nearly all companies use a payroll software system to organize and process payments of salary and benefits to employees. Some businesses choose to do this in-house, while others outsource the task to third-party payroll processing service.
Does Outsourcing Payroll Cost More?
Outsourcing your business’ payroll doesn’t necessarily cost more than handling the task yourself. Payroll Specialties Inc, a Klamath Falls, Oregon payroll service, notes that handling your payroll yourself certainly saves you short-term costs, but the risk involved in making an error while logging employee time and payment certainly carries monetary value.
The risk involved in handling your payroll personally just isn’t worth it, as overpaying or underpaying staff could have consequences for the image and integrity of your business. A recent survey conducted by the Financial Executives Research Foundation shows that 39% of US companies (which amounts to over 10 million businesses) outsource their payroll processing. It’s the cost-effective and financially secure option.
Benefits of Outsourcing Payroll Processing Services
Although most small businesses may decide to handle payroll themselves, there are plenty of benefits if a company decides to outsource its payroll to an experienced and reputable payroll vendor.
Companies that take care of employee finances know that it requires a lot of time and attention to detail, and the time consumed increases as the staff grows. Each pay period is a series of checks and balances to make sure there are no errors while handling a significant amount of data that varies from employee to employee.
That’s time taken away from the core tasks that help you manage and grow your business. For something that doesn’t promote your brand, it sure takes up a lot of time and can put your business in jeopardy if handled incorrectly. When you outsource your payroll, you alleviate yourself and your accountants of all the stress and focus on vital aspects of your business.
Data Is Accurate and Secure
If the company has done its homework on researching a good payroll service, then there should be assurance that the payroll is being done perfectly. The payroll software used at top notch services are directed towards this very function. All salaries and taxes are handled efficiently in a way that would be very difficult to do on your own.
There is a sense of security that comes with outsourcing your payroll. It reduces the risk of embezzlement by employees and everyone gets paid for the work they do. You’ll have to spend significant sums of money on servers and security systems to achieve anything near the amount of data security at standard payroll services.
Cost-Effective in the Long Term
If a company decides to handle payroll in-house, it should prepare for the cost of recruitment and training of staff, which just adds to your list of concerns. Outsourcing to a good and competent payroll processing services provider will help save the costs and the maintenance issues that come with maintaining a dedicated internal payroll processing management system.
Running a business also means your time has a dollar value. Spending hours calculating employee benefits and how long they spent on medical leave will cost your business long-term. Time saved is money saved, it’s that simple.
Payroll processing companies will provide reports that address the most common reporting requirements. The company’s IT staff may find this task time-consuming or above their expertise. Payroll processing companies can quickly deliver specific and ad-hoc reports for your company’s custom analysis.
Outsourcing your payroll also ensures you are on the right side of federal laws. Most small business owners are not experts in government tax laws, but are still held legally responsible for any case of inaccuracy in regard to employment taxes. Employing a payroll service eliminates this risk.
Choosing the Right Payroll Service
Choosing a qualified payroll service is a pretty straightforward task provided you don’t overcomplicate matters. There are hundreds of qualified services to handle your company’s finances; however, here are the major qualifications you should look out for;
- Track record of successfully serving businesses like yours
- General reputation
For more information on choosing the right payroll service, check out Inc’s recommendations.
Outsourcing your payroll to experts is a vital step in running a business smoothly, especially for large companies. It ensures integrity and clarity in the system and saves you the trouble of keeping up with every change that occurs in the company. Choose the right payroll service today and ensure the financial security of your business.