As a small business owner, you may be thinking about hiring an outsourced payroll service. This approach can be a great way to save time and money, but whether it’s the best option for your company really depends on a variety of factors.
When it comes to the benefits of a local Professional Employer Organization (PEO) vs. a national PEO or “big box” payroll provider, there are several things to consider before making your decision.
Benefits of a Local PEO or Payroll Provider
When you are starting out as a business owner, there are a host of things you generally need to put in place, such as payroll, insurance, accounting, etc. Given the effort required and the potential lack of skill and experience you may have, it’s tempting to set your payroll up with a large national provider that has a familiar brand name and promises the ease of not having to manage payroll.
Over time, however, your business will grow and evolve and your needs will change – likely becoming more complex. You may hire additional employees, bring on employee benefits and possibly a 401K, which means you (or someone on your team) will need to manage the added compliance and administration involved with employing more staff.
This can quickly create frustration, both for you as a business owner or for the employee who now owns all of this extra work. These are additional hours spent on HR, and a large national provider likely won’t offer the personalized support and responsiveness you need.
It begs the question – is handling all this additional administrative HR burden the best use of my time (or my employee’s time)? Do we have the in-house expertise to manage this work efficiently and mitigate any risk to the business?
If the answer is “no,” then it is time to revisit how you handle HR in general. A local HR outsourcing firm (PEO) can become a real change-maker for your business. Let’s take a look at some of the benefits of working with a local payroll/HR outsourcing company (PEO).
Local Industry Knowledge
A local payroll/HR outsourcing company has the benefit of having a team that lives and works in the same geographic area. As such, they will likely understand your business and industry better than someone who works at a larger national firm because they have more experience and interact more closely with local businesses in your market. They also understand some of the nuances that impact your local industry such as compensation trends, challenges in attracting and retaining good employees, regulatory issues, etc. This knowledge and insight offer a big advantage in getting you the specific help and support you need to grow your company and better recruit, develop and retain the best talent for your business.
Potential Cost Savings
Depending on the complexity and scope of your current HR process, a local payroll provider may actually offer better rates and more affordable packages than larger companies, given their lower overhead costs and better use of technology to bring efficiencies and simplification.
This cost and time savings can be especially ideal for businesses with smaller budgets that still need professional help managing their payroll and HR processes.
Better Customer Service
Another benefit of hiring a local payroll company is that communication is much easier and faster. Business owners have a need for speed! They need responsiveness to their pressing HR issues. They don’t want to dial an 800 number and wait on hold for hours, nor do they want to talk to someone that can’t solve their problem. A local provider won’t leave you “on hold” and will get you directly to your personal Payroll Manager or HR Manager assigned to your business who is ready, willing and available to help.
Since they’re located in your area, they can easily come to your office (or you can go to theirs) if there’s a pressing need that may require some face-to-face interaction. Should any problems arise, local HR/Payroll providers can more quickly address the specific issue, saving you time and hassle.
They Customize Their Service To Meet Your Specific Needs
No two businesses are the same. Local Payroll providers can work with you to create a specific solution that works for your company and your employees. Even if you have only one employee, payroll companies can help you set up your payroll so it’s easy to use. A local provider will take the time to understand the unique aspects of your business and can also provide in-person training, which is valuable when you’re getting started.
Your business is unique, which means your payroll reporting needs are different from those of other companies. A local payroll provider can create custom reports that meet the unique requirements you or your accountant may need for financial analysis, budgeting, bookkeeping, etc., including wage allocation for job costing, grants or employees shared across different departments.
Your payroll provider will also reduce your risk by helping you avoid mistakes when calculating employment taxes or other deductions from employees’ paychecks.
Quick Turnaround Time on Changes
When things change in your business — whether it’s a new hire, terminated employee, M&A transaction or simply an updated benefit plan — it’s important for those changes to be reflected in your payroll as quickly as possible so that no one has to wait longer than necessary for their paycheck.
A local payroll company will work with you to ensure changes are implemented as quickly as possible, so you can continue operating smoothly.
Tax Planning with Local Knowledge
If you’re a small business owner and you live in the area where your business is located, you likely know the local laws, regulations, and tax codes that apply to your business.
But if you have branch offices, remote workers, own a franchise or another type of company with operations in multiple locations, it’s unlikely that you’ll understand the specifics and nuances of each state’s tax laws. A local payroll service provider is likely to have more experience with those rules than you do — which will help simplify things for you.
Do Payroll Right with Focus HR
Payroll is a complex and important aspect of your business that needs to be handled by experts. It’s a big responsibility, and you don’t want to make any mistakes. Having a local payroll service can help you get things right the first time.
If you are interested in learning more about how Focus HR can help your company manage your payroll needs with personalized attention, flexibility, and affordable services, then please complete the form below to get started.