We get asked all the time by prospective clients, “Why should we outsource payroll? [Fill in Name] gets the checks out on time and we’ve never had a problem.”
Just because you haven’t experienced a problem doesn’t mean that a problem can’t exist. For instance, the IRS has said that 40% of small businesses wind up paying an average yearly penalty of $845 due to late or incorrect filings and payments. How sure are you that [Fill in Name] is filing, on-time and accurately, the proper forms with the right information while making the correct payments at the necessary intervals? How sure are you that [Fill in Name] is up to date on the changes to the tax code for this year?
If you hesitated to answer either question, outsourcing your payroll management may be for you. Outsourcing payroll operations is an increasingly popular option for small and mid-sized businesses, and has several important benefits.
- Avoiding IRS Penalties
Tax codes in the United States are incredibly fluid, changing virtually every year. Professional Employer Organizations (PEOs) and payroll companies stay on top of tax code changes like it’s their job because, well, it is. They make sure that filings and payments are made accurately and on-time, making penalties a thing of the past.
- Reduce Costs
Processing payroll every pay period can be expensive. Some research indicates that a small business with 10 employees will spend right around $2,600 per year on just the direct labor costs that come with processing payroll. Outsourcing to a PEO or payroll company cuts those costs dramatically by not only managing your payroll, but also answering any questions your employees have.
- Additional Services
Professional payroll providers can offer services and features that your internal payroll department may not. Direct deposit, for instance, is often difficult for small businesses that don’t use an outside provider. An outside provider also offers considerable expertise when it comes to changing regulations and ordinances.
- Eliminate Headaches
An outside payroll provider can help your business run more smoothly by eliminating the nightmarish headaches involved with doing manual payroll, as well as the technology headaches involved with keeping your payroll and accounting software up to date with the latest versions and newest tax tables. Outside providers keep payroll running smoothly by doing all this for you.
- Save Time
Processing payroll is time-consuming, both for business owners and staff. Your time is better spent running your business, and your team’s time is better spent adding value to the business. Outsourcing payroll lets everyone get back to the business of your business.
Outsourcing payroll just makes sense. In fact, Inc. Magazine recently identified outsourcing payroll as the top priority for small businesses.
Ready to save time and money on your payroll operations? Focus HR is ready to help.