Many business owners make the mistake of assuming their payroll is better handled in house. They want control of their data, informational protection and financial savings. Occasionally in house payroll processing is the right fit, but the vast majority of businesses will quickly find the decision to manage their own payroll to be all consuming and costly in more ways than they imagined. Outsourcing your payroll is a much better solution for many businesses.
Payroll requires a depth of knowledge few business owners have time to acquire. There are the ever-changing intricacies of tax and wage laws. Federal, state or local agency reporting requirements that must be followed increases the number of items which a business owner must handle. The slightest error will trigger penalties and interest that compound and quickly burn through any cost savings that you may realize by bringing the payroll in house.
What to consider when analyzing your payroll processing method.
- Up to date knowledge and the required continuing education – Training staff to handle payroll and the associated duties is costly. The risk in training a staff member to handle your payroll processing leaves an information gap if they ever depart your organization. Payroll providers are professionals that handle things for you so you can focus on your business.
- Time commitment – Processing payroll internally requires both hours and resources that can better serve you in other functions within your business. Time is valuable; use it effectively.
- Guarantee that comes with an outside payroll service – A competent payroll company provides a guarantee that things will be handled correctly. The guarantee means that you don’t pay costly penalties from the IRS and the numerous other state and local agencies involved with your payroll.
Is it right for you?
Each business is different and will need to consider their specific needs to determine if outsourcing will benefit their organization. In-house payroll processing can fit for two types of organizations, large companies with thousands of employees or a company with predictable straightforward payroll with no variations. For companies who fit these categories, outsourcing may still be the best option. When making the outsourcing decision you’ll need to consider items like,
Return on investment
The right payroll service will tailor their service offering to fit your specific needs. No two businesses are the same and no one size fits all payroll solution is adequate. The basic functions include,
Stay tuned next week for part 2 that will explore things to consider when choosing a provider. For any questions or comments or to inquire about more details please contact Tristan Ruhland.