Payroll has long been one of the most commonly outsourced business functions. Doing payroll in-house may be sustainable for larger companies that have a team of in-house accountants to manage complicated payroll tasks but, for small to medium sized businesses like yours, it is often better to outsource. Payroll is one of those things that a company must get right. Employees must be paid accurately and on time, and your company must adhere to regulations to avoid incurring any penalties. Keeping up to date with current payroll laws and procedures is not easy and is yet another one of the many reasons so many companies like yours have been outsourcing payroll for so long.
There are a number of reasons why your company may choose to outsource. Here we dive deeper into the benefits of outsourcing payroll.
1. Save time
Saving time is the primary reason most companies opt to outsource their payroll function. Payroll consumes enough time when things are running smoothly. However, when things go wrong, and inevitably they will, your employees start to clock serious hours. This is time that can be spent on other important aspects of your business. Reports have shown that small business owners spend upwards of six hours a month on payroll; that is seventy-two hours a year or two full work weeks! Imagine how much you could improve customer service, research your markets or improve business operations with that time.
2. Save money
Yes, you must pay for the privilege of outsourcing your company’s payroll but in the long run you will save money. The time and resources it takes to effectively manage a business’ payroll must be assessed correctly. When you outsource payroll you save money through the elimination of payroll software and the reduction in staff time or personnel who manage the payroll. You also eliminate or drastically reduce the cost involved in tracking, filing and processing payroll documents..
3. Avoid penalties
Payroll-related mistakes are some of the most common mistakes made by businesses today. The governing bodies make regular changes to taxes and regulations involving employee pay; failure to keep up with these changes can result in penalties for your business. Outsourcing your payroll means you place your payroll management in the hands of specialists specifically trained in this area. It is their job to remain aware of changes and issues that affect a company payroll processes. By employing these experts you minimize the chance of something going awry. If something does go wrong, your employees will not have to spend valuable time going through the files with a fine tooth comb.
Not many people consider the hard work and many different processes involved in ensuring employees are paid on time. It is up to every organization, big and small, to ensure they have a system in place to properly manage payroll. Because payroll management is a timely and costly process with little strategic value, owners and managers should strongly consider the advantages of outsourcing.