Every successful business is the result of a sound strategy and an eye on the bottom line. One component of an effective business strategy is outsourcing key business functions to save money.
If your business has been around more than a few years, it’s quite likely that you’ve already looked into outsourcing certain tasks. Bookkeeping and tax filing are probably the most common. These are critical functions that require accuracy and a degree of compliance that is easier to simply delegate to a third party than to keep in-house.
Other time consuming and non-operational tasks that are often outsourced include building maintenance and cleaning. Some businesses will outsource their IT services, as well. And, finally, there is the growing trend to use employment services both virtual and brick-and-mortar for finding new employees.
Getting the Most “Bang” for Your Buck
What all these outsourced functions have in common is that they can often be done more cost-effectively by a third-party than by full-time employees.
In addition, numbers of businesses – both small and large – also consider the efficacy of outsourcing their payroll management to an outside company. The fact is that outsourcing payroll is a common practice that many companies eventually adopt to reduce their overall costs and free up a variety of resources.
While it may true that start-ups and very small businesses may find the cost of outsourcing a fiscal challenge, even in those cases it can still be a better investment than doing it themselves. The very real opportunity cost of having the owner take time to manage payroll every month on a recurring basis can be substantial.
However, even though the benefits it can provide are substantial, outsourcing payroll management and the payroll process can be a major undertaking. In addition, learning where and how to make it happen and which firm to choose can be a challenge.
Consequently, some businesses decide against outsourcing their payroll management and opt to continue to managing their payroll in-house. While this may appear to be a more fiscally conservative approach than outsourcing, the problem for many organizations is that they are growing and, in many cases, expanding outside their home state. The long-term result is that continuing to keep their financial and payroll management under control becomes overwhelming.
Good Reasons for Outsourcing
Considering only the potential costs of outsourcing is short-sighted and not at all strategic. It’s important to assess the strategic benefits of handing payroll management to a third-party firm since it is primarily a strategic decision. And seeing it as such is critical.
Because, too often, business owners or financial officers tend to consider a decision to outsource as an added expense as opposed to a business investment. Even owners who have outgrown the state of feeling that they have to “do everything themselves” can still view outsourcing as an unnecessary expenditure.
However, smart outsourcing of key functions such as payroll management is actually a strategic investment in the growth and future of a business.
This is not to say that it won’t be a major task to integrate payroll management outsourcing into the current business plan of an organization. But the end result will be a cost-effective payroll management system that runs predictable, compliant and accurate.
Another Reason for a Payroll Management Company
Payroll management consists of far more than simply cutting paychecks. For most every business, payroll involves a vast array of tasks such as calculating benefits like paid time off and sick leave to be factored into the calculation of wages, managing health care coverage benefits, bonuses, pay differentials, differences for employee payroll from other states, and so on. These all typically require labor-intensive work, even when using payroll software.
Part of the pressure on a payroll staff is maintaining accuracy, compliance and timeliness. Constant payroll errors or even failing to pay employees properly can damage workforce morale and trust, and make it difficult to properly record the transactions. As a consequence, the finances of your business are tied up while staffers work to correct the errors.
Typical payroll management functions also include the calculation, withholding and remittance of payroll taxes. These include, but are not limited to, social security, unemployment, federal income and state income taxes. And the rules are constantly changing and being added to.
Thus, probably the most strategic benefit of outsourcing all these tasks is simply that they are no longer being done by your own HR or payroll staff. In addition, the time and resources gained by outsourcing more than pays for the investment made by the company.
Strategic Benefits of a Payroll Management Company
- Ensures that all employees are paid on time. Managed payroll keeps current and relevant information accessible for calculating and issuing paychecks.
- Automated payroll functions save time by eliminating the need for managers to regularly gather the information needed to calculate payroll.
- A managed payroll service ensures that records needed during audits or when an employee files a complaint related to their pay are complete and easy to find when needed.
- Eliminates miscalculating employee benefits which can lead to payroll errors. While these can be corrected in subsequent paychecks, employees should be properly paid each pay period.
- Failure to properly withhold correct taxes from employees' paychecks can cause serious problems for a company including IRS and state tax penalties. Managed payroll ensures taxes are accurately calculated and withheld.
Knowing the distinct benefits, you gain with managed payroll services will help you in developing your strategy to outsource your payroll process.
Managed Payroll as a Tactic in Your Business Strategy
Payroll management is just one component of a strategic business management plan, but it is an essential one. The proper calculation of payroll and taxes, and the timely issuance of paychecks, has a significant effect on other aspects of the business.
Employees who are confident that they’ll always be paid the proper amount each payday will be far more motivated to be productive than those who constantly fear their paycheck will have errors.. And, in addition, you will have the peace of mind of knowing that your payroll processes are being handled competently, accurately, and on time.
Payroll management also ensures that your financial records are not only accurate, but secure. In addition, you the reassurance that the accountability and liability for compliance belongs to your service provider.
Your Best Payroll Outsourcing Option
Business owners and payroll managers have a number of options for payroll functions. Software can be installed in-house, or cloud-based programs can be subscribed to.
But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex is still be the best option. 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 your payroll management, get your free Payroll Outsourcing Guide to help you make an informed decision, or call Accuchex Payroll Management Services at 877-422-2824.