A recent survey from SCORE, a nonprofit association dedicated to helping small businesses, provided statistics on how much time and money small businesses spend each year for their accounting and tax filing preparation and on their payroll management each month.
Businesses were also asked for their opinions of the most burdensome small business management tasks.
Payroll Management and Payroll Tax Filing Costs Time and Money
It is no surprise that the tasks and functions of managing payroll and taxes involves a great deal of man-hours. What isn't always apparent is how much actual time and money is spent on these processes.
Based on the data gathered, SCORE produced this infographic to illustrate the typical costs in time and money spent for various tasks related to payroll management and tax preparation functions:
Payroll Tax Filing: Who's Got The Time? Or Money?
Some of the key statistics that were brought out in the survey revealed that a majority of small business owners spend more than 41 hours on tax preparation each year. Here is the breakdown based on the survey responses:
- 40% spend 80+ hours/year
- 18% spend 41-80 hours/year
- 15% spend 21-40 hours/year
- 28% Spend <21 hours/year
The annual dollars spent for managing taxes, internal costs, legal fees, and other related expenditures can be significant. Almost half of owner surveyed spent from $5,000 to over $20,000 annually:
- 23% spend $1,000 or less
- 31% spend $1,000 to $5,000
- 18% spend $5,000 to $10,000
- 12% spend $10,000 to $20,000
- 16% spend $20,000 or more
The Costs of Doing Payroll Management In-House
Many small businesses choose to perform payroll duties in-house hoping to keep costs down. However, this is an assumption that is not always borne out by the numbers. For small business owners that do their own payroll processes:
- 26% spend 1-2 hours/month
- 26% spend 3-5 hours/month
- 17% spend 6-10 hours/month
- 11% spend 10+ hours/month
- and 21% spend no time at all
In addition, the survey showed that payroll costs vary greatly among small businesses, ranging from 8% paying less than $50 per month to at least 5% of businesses paying over $5,000 each month.
Reconsidering Your Outsourcing Option
In light of the time and dollar costs revealed in this survey, having the peace of mind of knowing that your payroll and other HR processes are being handled competently, accurately, and on time is a great reason to consider outsourcing.
On top of that, you can be assured that the accountability and liability for compliance rests with your vendor, freeing you from the constant pressure of staying fully informed and compliant with the ever changing - and growing - rules, regulations, and legislation.
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.