Accomplish more by saving time. Do you view time as a resource? According to an article by Entrepreneur, you really should. In fact, it could be your most important one. “Far too few business professionals appreciate time as one of the most important resources around, and little is being done in the average workplace to make better use of everyone’s most limited asset.” And when you outsource your payroll, you’ll save time.
Processing payroll is much more than simple math. It involves meticulous detail to benefit deductions, tax withholding, wage garnishments, new hires and terminations and changing government rules. Companies that outsource payroll processing are able to spend time on core, client-facing functions as well as the internal activities that aid in their employees’ professional development.
A way to save money. A commonly known fact is that approximately half of all new businesses fail within the first five years. To not fall into the fail category, many owners and operators may focus most of their efforts on selling their products and services, but saving costs can be just as important.
And processing payroll in-house is costly. Outsourcing it eliminates the need to devote an employee or team of employees to accomplish this part of your operations. The labor costs alone can make a real difference on your bottom line, but there are many other ways it can help you save money. For example, misclassification—labeling employees as independent contractors rather then employees—can be very costly. As reported by Questco, an aeronautics company had to pay nearly $1 million to their employees because of a misclassification error.
Read more: How to outsource your payroll...and get back to doing what you love
Staying compliant by handing off the complexities. According to Arcoro, remaining compliant through outsourcing your payroll is part of the reason why “39 percent of U.S. companies—more than 10 million businesses—claimed they outsource their payroll processing. And 43 percent outsource their payroll tax responsibilities.” So, just like most business owners, while you’re an expert in your field, you’re likely not one when it comes to federal and state tax codes—yet you’re held responsible for every regulation. And errors and oversights come with audits and penalties. Outsourcing puts your payroll in the hands of professionals who stay current with regulation changes while handling the complexities of it.
Use it to enhance security. Even small businesses are entrusted with a significant amount of personal data, such as Social Security numbers and home addresses. And handling payroll on your own can put your business at risk for identity theft.
As reported by SHRM, "For employers, a primary source of exposure can be the theft or release of personnel records," said Kristin Story, an attorney with Lewis Roca Rothgerber Christie in Phoenix. These records can contain personally identifiable information, such as Social Security numbers, birth dates, bank account information, and sometimes health or other biometric information for employees and their relatives.” When you outsource your payroll all of that information is generally stored on “highly-secure servers that use cutting-edge encryption technology, along with regular data backup.”
Help improve reliability. What happens when the individual you depend on for payroll is sick or on vacation—or leaves your organization? Why rely on employees who you can’t count on to remain on staff when you can outsource to a whole company devoted to ensuring this process runs smoothly, and one that isn’t going to leave? And, as reported by CNBC, “one in four workers plan to switch jobs this year."
Related: Strengthen your HR team with an up-to-date time tracking solution