Archive for the ‘Outsourcing Payroll’ Category
When you own a small business, you have to make decisions every day about which tasks you should handle yourself, which may be delegated to employees and which should be outsourced. For many small companies, outsourcing payroll is a cost- and time-effective approach to reducing your costs and boosting your profits.
When you handle payroll internally, you must pay one or more employees to devote their time to this task. Not only must someone add up employee hours, but he or she must figure out shift differentials, check and re-check basic computations and, depending on the payroll software used, may have to manually enter special circumstances, such as bonuses and deductions, for each employee. You must also spend money on printing checks, keeping tax documents up-to-date, and other bookkeeping tasks. If you were to add up all of the hours and materials spent on payroll-related tasks, you might be surprised at how much money you are spending.
Outsourcing payroll also offers the benefit of allowing your employees to concentrate on other matters. For example, instead of dedicating a certain number of hours per week toward figuring out which employees worked during which shifts, and how much each shift pays per position, the employee in change of this task may be able to complete other projects, such as analysing sales trends or improving customer service procedures. If one person is spending a lot of time on payroll tasks each week, his or her position could be cut to part-time, or eliminated entirely, reducing your costs by a portion of one person’s salary.
By outsourcing payroll services, you also increase the accuracy and reliability of your payroll system. In the extremely rare event that an error is made by the service provider, you as the employer will not be responsible. If you handle payroll in-house and the person in charge is sick or on vacation, this creates a backlog of work for you and other employees, which may contribute to delays and wasted time.
Since you are paying for your employees’ time, time wastage equals lost money. An internally handled payroll service may depend on one person. If that person quits, you must then spend time training a new employee in your payroll system. This will not happen with an outsourced payroll company. If one person is out for any reason, the company still works on as planned, so your paychecks will be both accurate and on time.
One major benefit to hiring an outside company to handle payroll is that you will not incur penalties for not following the often-complicated tax rules and laws. A payroll company is specially trained to know the applicable laws inside and out, and will take responsibility for any discrepancies. As tax laws change, the company will remain up to date on the new guidelines and requirements, and will implement them while handling your company’s paychecks. Since not following the rules to the letter may result in heavy fines and wasted time, this alone can reduce your cost and boost your overall profits.
An outsourced payroll company makes sense for many small businesses. From eliminating the worry of handling shift differentials in each person’s paycheck, to reducing your workload, to freeing up employees to work on more profitable projects, using a payroll service can reduce your overall costs and boost your profits.