Why Does My Company Need Outsourced Payroll Services?
If you’ve been handling payroll in-house, you may be looking at ways to optimize your processes and free up your team for other priorities. One of the ways many businesses can ease their burden is by outsourcing payroll services. Is this the right approach for your company? Let’s find out.
To understand if outsourcing your payroll is the best approach for you, here we’ll discuss some of the top reasons you may choose to outsource:
- Expert tax support
- Resource savings
- Compliance assistance
- More value for your money
- Greater security
- Employee satisfaction
After reading this article, you’ll be able to decide if outsourcing would be a good fit for your company.
What are payroll services?
Corporate payroll services are offered by a third-party provider who will handle as much or as little of the administrative and compliance tasks associated with payroll as you’d like. For example, you may just want a vendor to process payroll and take care of tax filings. Or you may want to offload more responsibility and outsource other functions as well.
6 Reasons You May Need Payroll Services
Whether you’re a large business needing assistance with its payroll function or you’re looking for payroll services for small businesses to be managed in their entirety, outsourcing can be a good solution for a number of reasons. Corporate payroll services can support your business in a variety of way:
1. Gain Expert Tax Support
Did you know you can face potential fines for improperly calculating tax obligations and submitting less than what’s required or not making the deposits on time? For example, you’ll pay a 10% penalty for deposits made 16 or more days late. It’s estimated that, each year, 40% of small businesses are levied with tax penalties due to missed payroll deadlines.
In addition, you need to file required quarterly tax reports that show your tax liability and what you’ve paid and annual FUTA reporting to the IRS as well as possible state reports — more tasks that need to be completed correctly and on time. In fact, the IRS can impose a late filing penalty on unpaid FUTA tax that ranges from 2-15% depending on when you submit.
When you outsource to a payroll provider, they’ll use online software that automates tax calculations, withholdings, and filings for greater accuracy and timeliness. And they’ll be responsible for any penalties you incur because of their mistakes. They’ll also deal with payroll tax-related issues that arise because when you grant power of attorney to your payroll provider, they are authorized to communicate with the appropriate tax agency on your behalf.
2. Save On Necessary Resources
If you’ve been running payroll yourself, you know it can take a lot of time to complete all the tasks required. According to a QuickBooks study, business owners spend four hours and 52 minutes calculating, filing, and paying payroll taxes each pay period.
Since this can detract from other business priorities, you could hire someone to handle payroll in-house. But that approach can also be a resource drain. Not only will you have to manage this individual, but the median salary for an in-house payroll coordinator is $44,020––plus you’ll likely have software, implementation, and maintenance fees.
When you partner with an outsourced payroll provider for payroll services, they’ll take care of all the daily, weekly, and monthly tasks involved with paying your employees and keeping up with taxes, freeing you up. With Complete Payroll Solutions, for example, a small company will spend less than 15 minutes each pay period on payroll. That means you and your staff can concentrate on more revenue-generating functions to position your company for growth.
3. Access Compliance Assistance When You Need It
When you run payroll yourself, ensuring compliance with various federal and state wage and hour laws can be a daunting task. And if you’re like many companies, you likely don’t have the expertise in house to understand exactly what’s required and when – especially because the rules change frequently.
For example, when you manage payroll, you need to follow requirements regarding:
Each of these aspects of payroll carries the risk of penalties for non-compliance. For example, in Massachusetts, if you don’t pay hourly workers weekly or biweekly, you could face treble damages. If you outsource to a payroll provider, however, they’ll guide you on legal requirements and ensure you get payroll right. In addition, since they’re experts in compliance matters, you won’t have to spend the time and effort to stay on top of all the regulations yourself.
4. Futureproof Your Payroll Operations
You may have just a few employees now and seemingly pretty basic payroll needs. And you may be able to confidently handle them yourself. But if you plan to grow, your needs can get more complicated. For example, you may hire employees in different states, which can have different laws governing pay matters. Or you may decide to offer health insurance or a retirement plan, which come with their own rules and regulations you’ll need to follow.
When you choose to outsource, you’ll find that vendors typically offer as much or as little support as you need in all areas of workforce management. That means that as you grow, you can choose to get comprehensive and integrated payroll, HR, benefits, and compliance support all in one place, and with bundled pricing for even greater value.
As you evaluate vendors’ abilities to meet your future needs, always ask about their other offerings and how they will scale with you to meet your objectives as your business evolves.
5. Enhance Security for your Business
If you hand off payroll responsibilities to someone else in your organization, you may be worried about exposing sensitive employee information, which could potentially lead to a leak of salary data. In addition, your payroll staff could be the victim of phishing attacks, putting your information at risk.
Outsourcing can mitigate these dangers. And while sharing payroll data externally may also be concerning, you can ease your mind by partnering with a secure vendor who has protections in place to prevent the leak of sensitive information.
At Complete Payroll Solutions, for instance, all employees undergo data privacy and internet security training. We also restrict your information to only authorized personnel, and all our facilities are fully secure. In addition, we employ firewalls, DNS filtering, and anti-phishing, spam, and virus prevention technology, among others, and undergo yearly audits on our security.
6. Increase Employee Satisfaction
By doing payroll yourself, you risk getting pay wrong as a result of common problems that occur like incorrect calculations. And these mistakes can frustrate employees and negatively impact morale – and retention. In fact, just two payroll errors can cause 49% of employees to start job hunting. And that’s not all. The mistakes could prompt employee complaints that may lead to an audit, putting you at risk of fees and penalties.
With outsourced payroll services, automated processes mean you’ll consistently pay employees accurately and on time. In addition, many payroll vendors provide your team anytime access to a self-service portal where they can look up pay data, download their paystubs and W-2s, and change their personal information – actions that can empower and engage them, and increase loyalty.
How to Decide if Your Company Needs Corporate Payroll Services
As you can see, there are several reasons you may want to make the switch to outsourced payroll. Whether it’s payroll services for small businesses or larger organizations, generally, outsourcing is a good option for companies who are worried about the complexities and compliance involved in doing payroll themselves and want to rely on the expertise of a provider to get it right.
If this sounds like you, visit our dedicated payroll page to learn about the payroll options Complete Payroll Solutions offers.