Outsourcing payroll functions to a firm that specializes in payroll may sound like just another expense your business should try to do without—but hiring a payroll firm will actually save you both time and money.
Whether you’re a small-business owner or an HR professional in a larger company, managing payroll can be a real hassle. The rules and regulations surrounding payroll can be complex and often vary from region to region.
Here are four great reasons for outsourcing payroll a dedicated payroll company.
1. Leverage the Experts
Managing and administering payroll is not as straightforward a process as we’d like. In addition to making sure all checks are cut and delivered to the right employees in a timely manner, payroll has to withhold the right amounts for taxes, monitor any withholdings for benefits, and track accumulated vacation time, sick days or advances. All of this must be in compliance with the latest local, state and federal employment laws.
Since payroll firms handle nothing but payroll, they’re experts on this topic. They’re always up to date on the rules and regulations that govern payroll, taxes and benefits, and they can ensure that every employee is paid correctly and on time.
2. Time-Saving Convenience
With all the work that goes into preparing and administrating payroll, this activity alone can consume several hours, even a full day of your week. If you own a small business, you simply don’t have the time to devote to payroll—and hiring a payroll employee would be cost-prohibitive. For HR departments, all that time spent working on payroll would be better served if employees could focus on core responsibilities.
Working with a payroll firm saves your business valuable time, and time is money. Outsourcing this function also reduces the stress of having to deal with payroll—and lowered stress means higher productivity.
3. Reduced Risk
A professional payroll services firm will take on both the responsibility and the accountability for your payroll. This means your company has a reduced risk for employee lawsuits and other costly payroll-related issues, including compliance issues with state and federal employment laws.
For smaller companies, outsourcing your payroll gives you greater separation of duties, reducing the risk of fraud that occurs when just one or two employees handle all of the accounting and payroll activities for the business.
4. Advanced Technology
Payroll firms can offer more advanced payment options to your employees at a lower cost. Through economy of scale, payroll service providers have access to technologies such as direct deposit and secure electronic paystubs—programs that can be cost-prohibitive for individual companies to offer. These convenience benefits also help to increase employee satisfaction.
Finally, a payroll firm can provide additional services for your business, such as bookkeeping, accounting and tax form preparation. Establishing a professional relationship with a payroll service provider makes it easier for your company to outsource more functions as your business needs grow and change.