As a business owner, you likely took on many of the administrative tasks yourself during your startup period. However, as your company grows, you may look for ways to delegate some of these duties, especially those you don’t have experience in or education and licensing for, such as human resources, IT, and accounting, particularly payroll. Therefore, these are reasons you should consider outsourcing your payroll.
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Reduce Payroll Errors
Payroll outsourcing can reduce accounting errors. Government regulations can trip up any business owner, especially since they change so often. You have to accurately calculate your worker’s hours, wages, and payroll or employment taxes. If you miscalculate, you are legally responsible for the mistakes and may encounter fines and other penalties.
In addition, your employees won’t be happy if you miscalculate their hours or wages, but if you make a mistake with their payroll taxes, it could cause a reduced check at the end of the year, during the holidays, or take money out of their pockets throughout the year. This can severely damage morale and increase turnover.
Payroll takes time. Whether you pay your employees weekly, biweekly or monthly, you have to spend time before each pay period calculating hours, wages, and taxes. You need to generate in-house reports, print and sign checks and submit information to your state and the federal government.
When you outsource your payroll, you give it to companies that specialize in these processes. They also have software that can automate many of the redundant tasks. These companies can also integrate this information into your system, so your HR and other departments have access to it and can manage benefits, attendance and other factors. Your employees also have greater access to their payroll information.
Gain Experienced Professionals
Payroll companies hire individuals with the right education, experience, and qualifications to manage your account. These individuals understand retirement account regulations and deductions, withholding requirements, employee benefits administration, and employee withholdings. They can track your staff benefits, send state and federal employment reports, update W-9 and other forms, and handle FICA, Medicare, and Social Security deductions.
Keep Data Secure
Payroll companies not only invest in experienced staff, but they also invest in software and hardware that protect your data. These organizations also backup your data to several locations so it is always accessible and safe. These security measures help prevent embezzlement, identity theft, and changes to your company’s accounting and payroll records.
Provide In-House Reports
As a business owner, you need to know what money goes out every month. You also need to manage your employees’ benefits. You may use this information for future hiring and management. For example, you see which employees need to take vacations to prevent the loss of these days, so you can plan for other workers or temporary staff to cover for them.
You can also observe your overtime pay, which can tell you if you need to hire additional staff. Your annual or quarterly reports should also have updated payroll and benefits information on them for your stockholders or investors, and you need to report this information to any financier you hope to get a loan. Payroll outsourcing companies provide these reports to you after every cycle.
These are just a few reasons you may choose to outsource your payroll.