For many businesses, processing payrolls can be time consuming and meticulous work. Besides, the professional effort required to contribute to payroll has to be diverted from the core business. In-house payroll processing can slow down business time. Omit a tax filing and you’re faced with a stiff fine. When faced with a choice of processing payrolls in-house or to outsource them, there’re a few considerations to be made.
Some small businesses with minimal tax changes might be better off doing the payrolls themselves. But the amount of time spent for this can be expensive. Outsourcing to professionals can save time and money. The IRS has also noted that one in three companies make mistakes in their filing because of the ever changing nature of tax regulations.
Benefits of Payroll Outsourcing
Focus on Your Business
Outsourcing helps free critical business time to concentrate on more essential activities like promotion and after sales service. Payroll can be so much of a monotonous task eating into productivity that among all activities to be outsourced, business advisors recommend payroll to be the first.
For a business to employ direct payroll personnel or even dedicate existing employees to work on payroll, the costs can go up several thousand for a small business. In the long run, hiring external professionals such as Guardian Accountants to do your payroll can work out to be considerably cheaper.
Government tax agencies, federal, state and local need to be paid properly. There’s no way around that. Any mistakes can cost dearly for already cash strapped small businesses. There are many changes happening regularly and it can be hard for a small company to keep track of each new requirement. To avoid penalties like the ATO, it would be best to hire professionals than to make do with the existing work force. On the other hand, an external payroll company dedicated to payroll services keeps themselves updated at all times, completing works professionally and on time.
Do you have the latest payroll software with all latest updates including recent tax tables installed in your systems? If you don’t, you will have to spend money and upgrade these systems before someone makes errors in financial reporting and cost your company a penalty. Upgrades and changes take place regularly. Can you afford to keep abreast of all latest updates? An outsourced company will always have the latest versions of payroll software with the most recent tax calculators.
Training personnel to handle payroll takes time and effort. If the payroll is handled by a single person, you could risk him jumping ship to another company especially during times when filings are due. All payroll knowledge walks out the door and your business will likely face multiple risks and fines. Payroll details are usually dealt with a certain amount of secrecy which when leaked to competitors could be detrimental to your business. Contracting a professional payroll company to handle the books takes care of this problem.
How to Choose a Payroll Provider?
The payroll providers must have very good customer service and understand deeply the workings of the client. They must be reputed in the market. Always ask for references of current clients and also take a look at their client database and find out how long companies have stuck with them. They must be able to help you in tight situations regarding tax matters and be there in times of emergency. Make sure the payroll company is bonded. This ensures that you will not suffer if case of financial mishandlings.
Questions to Ask Potential Payroll Providers:
- What all services do you provide? Do you handle tax filing for multiple states?
- How quickly can a payroll be re-done, if mistakes are found?
- Do you cover fines on mistakes or delay in filing?
- What are the recurring costs of hiring you?