It is often advised by business experts that you should outsource tasks that aren’t primary for your business. A business owner may wonder what they might gain from outsourcing payroll since it may seem like a waste of time and effort to look into a viable company offering payroll outsourcing services. And the additional work attached to shift the payroll management over to the payroll provider makes it seem not worth the hassle.
There are certain important advantages attached to outsourcing payroll processing to a competent third party provider. Mainly we have three:
- No division of focus between core business aspects and payroll.
- Payroll function is handled well due to enhanced infrastructure and expertise
- It lowers the chance for errors and costs incurred.
Let us dwell a little deeper into these advantages
- Shift of Focus to Core Business
Now payroll is definitely not the end all be all aspect for a business because it doesn’t directly impact sales. But if you slip up in the management of payrolls, you can incur heavy losses. It is also an activity that takes a lot of time. As a business owner, there is a plethora of rules and regulations that you have to take care of when you’re managing employees, and some of these rules are very intricate.
You have to understand laws related to wages and overtime and hour laws – all of these can be quite complex. And when you’re hiring new recruits, there are various unemployment schemes and worker compensation insurances to worry about. Doing all of this by yourself will not be viable if your organization doesn’t have the properly developed methodology that a payroll provider would have.
- Developed Infrastructure and Skill at Your Disposal
To develop your own infrastructure that is needed in managing payroll is quite an investment, and the majority of small businesses are not ready to go through with such a huge step. Plus the lack of in-house expertise, that the payroll staff would have, is also a hindrance.
For instance, your business is growing and you now have thousands of employees. Relying on manual work to manage their records isn’t going to work and neither is the technology you were using when you had only a hundred employees. In addition to this, the expectations of the employees, from a technological standpoint, of you will also be high. They would want to use services like direct deposit and be able to access their payroll information online. These days we have ‘smart’ technology which allows employees to look up these details via their smartphones, a technologically backward employer will not be able to provide these and would hence be at a significant disadvantage. Outsourcing payroll processing takes care of these issues.
- Lower Chance of Errors and Incurring Costs
Did you know that, due to the discrepancies between the apparent time an employee works and actual precise time record, businesses are paying their employees in excess by roughly 4%?
A service that could precisely check and record the time that an employee works for would reduce the occurrence of this error.
The IRS released reports stating that small businesses pay around $845 yearly due to late or incorrect report filings. This is seen in around 40% of the small businesses. This can be easily avoided by taking advantage of outsourcing.
If you’re unsure about what payroll outsourcing service provider you should go for, there are certain parameters that you should look for before making your choice. We’re listing a few to make it easy for you.
- Track Record
- Technology and Infrastructure
- Regulation Compliance Records
Keeping these in mind, you should choose a payroll provider that is cost-effective for you, that is reliable according to reviews, that has a good track record, has good infrastructure as well as technology to make use of and has a good record of regulation compliance.
A good provider will help you reach heights that you couldn’t by yourself. Hopefully, reading this article helped you out and will allow you to make a better decision on whether or not you require an outsourcing partner. After all, these benefits are surely lucrative!
Your search for a reliable and cost-effective payroll service provider ends at Accounting to Taxes. To book your free consultation with us, email us at firstname.lastname@example.org.