Outsourcing payroll is a common practice in the modern business world. After all, there is no denying the time and money you can save by bringing in a third party software to assist with the intricacies of payroll. While processing payroll in-house is definitely a viable solution, whether it’s through manual bookkeeping or a variety of payroll apps, even small business owners are starting to see the benefits of outsourcing. The higher up-front costs almost always pay for themselves (more on this later). But is it right for everyone? That’s a question we get asked frequently here at Dominion. If you’re considering outsourcing your payroll to a third party SaaS (software as a service), read on to see if it’s right for your business.
1. Save Time and Money
In the words of Benjamin Franklin (and many others since): Time is money. Whether you have 300 employees or 3, processing payroll in-house can take up a huge chunk of time. The attention to detail it requires to avoid any payroll errors can make it quite a grueling task. Processors are required to double check their work, key in large amounts of data, and stay on top of any new FLSA (Fair Labor Standards Act) laws or regulations put in place. Consider the time it takes each pay period to calculate payroll, print, sign and distribute paychecks or stubs, generate important reports for your accounting team, and prepare and remit payroll taxes and returns. By outsourcing, you can cut the time it takes to process each week and give your payroll processor the chance to focus on more important tasks.
2. Enhance your Data Security
Payroll processing is a complex and potentially risky business operation because it involves some of the most sensitive information your business has to deal with. Most payroll services have technology that can spot and alert clients to various types of payroll fraud. Additionally, online payroll solutions offer a “safe haven” for your confidential payroll data. Not only do you get secure data backup, just by the nature of the industry, but often times the provider will have multiple server locations. This will further secure your data and give you state-of-the-art storage and protection.
3. Stay in Compliance
As a business owner, it’s unreasonable to expect you to be an expert on every aspect of HR and tax regulations. However, you’re still responsible for any discrepancies that the government finds, and thereby expected to pay the associated fines. Even with a specialized team on-hand, this isn’t an easy job, and you’ll eventually find yourself faced with audits and penalties. The IRS states that more than 1.8 million tax returns were audited in 2016 for businesses with income between $200,000 and $1 million. Luckily, professional payroll providers are forced to stay current with rules, regulations, and changes in tax rates and other vital HR regulations. By outsourcing your payroll, you will always be aware of regulatory updates so that you can make more informed decisions about your business.
4. Have their Expertise at your Fingertips
In addition to the benefits listed out above (and so much more), one of the best things about outsourcing your payroll is that you have the complete expertise of every single payroll and HR professional employed by your chosen company. These individuals specialize in the complexities of payroll taxes, as well as compliance with government regulations. It's what they're trained to do and part of the guaranteed service they provide. When you outsource, that wealth of information is a simple phone call, chat, or email away.
As you can see, there are a number of compelling reasons for millions of businesses to outsource their payroll. If you feel like your business could benefit from outsourcing their payroll processes, the next question you have to ask yourself is how to choose the right payroll provider?
Hint: Step one is watching a demo. 😉