As your business grows so do many of the support functions needed to keep things going smoothly. But it's not always easy to keep up and sometimes outsourcing is the smart move.
According to a recent survey by Actionable Research, nearly 75 percent of CPAs who serve small businesses felt that their clients "do not have the necessary expertise to handle the demands of payroll processing." In addition, 68 percent suggested their clients' time would be better spent working on the number of other strategic demands of their businesses.
Many businesses will choose to manage their payroll functions internally through manual bookkeeping, in-house bookkeeping or payroll software. Yet, a growing number of small business owners are opting for the expertise of professional payroll providers.
By outsourcing payroll, they are able to focus more on processes and strategies to guide the future of their business.
Payroll Compliance: A Constantly Increasing Challenge
Companies of all sizes are dealing with an increasingly complex regulatory environment and the ability to comply with changing regulations, particularly those related to the Affordable Care Act (ACA).
According to recent survey, 33% of businesses incurred unintended expenses related to non-compliance with government regulations. Of companies that were fined or penalized, each received an average of 6.4 fines or penalties. Especially hard hit were companies that process payroll in-house which received nearly three times as many fines or penalties as those that outsource.
Smart Reasons for Considering Outsourcing
Most entrepreneurs start up their businesses and then do most of the work themselves, taking on the responsibility for marketing, sales, HR, technology, and other functions of the business.
Many smaller and medium-sized businesses will continue to process their payrolls in-house, especially when they have invested in payroll personnel and training. While this is a typical approach, many companies eventually find that it can begin to have a negative impact on their overall performance and bottom line.
The decision to outsource is a strategic one while keeping payroll in-house is a tactical choice. In the short run, doing it yourself may be easier and faster and you may ask yourself, ‘Why consider outsourcing?’
With that question in mind, here are seven smart reasons for outsourcing your payroll functions:
1. Reducing Operating Costs
Small business owners need to think like larger enterprises and leverage outsourcing. Hiring new or additional personnel and providing them with needed training can be expensive. And if your payroll department does not effectively comply with governmental laws, rules and regulations, it could make mistakes that result in fines and penalties.
A payroll service, on the other hand, has a staff of professionals who are trained in all aspects of the law, which ensures total compliance.
2. Maintain Business Focus
By outsourcing payroll functions, business owners and managers can focus on growing the company. To save money, many businesses hire staff to assume numerous responsibilities, including handling the payroll. Most of these businesses plan to hire additional staff to perform these tasks when the company expands.
However, managing payroll functions and maintaining accurate accounting records internally diverts talent and resources that would be better focused on duties that can help your company grow. Your staff can concentrate on your core mission while the outsourcing company handles accounting and payroll, which is their top priority.
3. Professional Resources
When you process a payroll internally, your company must have sufficient personnel to perform this crucial function at all times. Hiring a professional company, on the other hand, ensures that your payroll is processed on time regardless of your internal personnel issues.
A professional payroll provider employs individuals who know payroll processing inside and out. These individuals specialize in the complexities of payroll taxes, as well as compliance with government regulations. It's what they're trained to do and part of the guaranteed service they provide.
4. Payroll Compliance
The rules and regulations that govern employee payroll are constantly changing. Mistakes can lead to audits and penalties which no small business wants or needs. As noted by ProfessionalEmployer.net, "The IRS estimates that over 40 percent of small businesses in the United States pay penalties of over $800 per year ... the result of late or incorrect filing and payments.”
Small business owners struggle to stay on top of these changes. Professional payroll providers, on the other hand, must stay current with rules, regulations and changes in tax rates.
5. Security and Data Safety
Payroll processing is a complex and potentially risky business operation. Even with trusted employees, there is always a risk of identity theft, embezzlement of funds, or tampering with company records for personal gain. There's also an ever-present risk when using in-house payroll software: How safe and secure is payroll data on the company's server or network?
You can have a high degree of security for your confidential payroll data with a payroll provider. In addition to redundant backup and multiple server locations, a quality payroll provider can offer state-of-the-art systems for storing and protecting data, simply because it's part of the service provided to clients.
6. Employee Payroll Options
Small companies often issue paper checks on each payday, which can be expensive and time consuming. Using a payroll service, however, provides your business with a variety of pay options for your employees. While some may still prefer to receive a paper check, you can provide direct deposit or even debit cards for others. You can select the options that work best for your company
7. Time Savings
Regardless of the number of people employed by your business, your payroll process still requires a great deal of time and attention to detail. In fact, according to one study, and average business may spend as much as six weeks out of a year doing just payroll. Outsourcing this function immediately frees up precious time.
Time saved is money saved. When evaluated on a per-payroll-period or a monthly basis, a time/cost analysis can quickly reveal the value of outsourcing to a full-service provider.
The Smart Move Is Outsourcing
Your company can experience the benefits of outsourcing its payroll functions to an outside service. The most important reason is that payroll is their area of expertise. These companies have experienced staff to ensure compliance with current rules and regulations and may be able to provide your employees with several pay options.
Savings in time and money, greater data security and the comfort of knowing experts are handling your payroll functions are compelling reasons to explore the benefits of outsourcing today.
Finding a Reliable Payroll Management Service
As a business owner or payroll manager you have a number of options for your payroll functions. Software that can be installed in-house, or cloud-based programs offer a good alternative. But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex can still be the best decision.
Reliability, full-service options, and reputation are the hallmarks of a quality payroll management service provider. If you are currently looking to invest in outsourcing you get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.