When & Why to Outsource Your Payroll
The economy is growing (finally!) and your business is booming like you haven’t seen in more than six years. You’ve successfully fought your way from start-up all the way through small status to reach the coveted position of medium-sized business. You have more employees — and profits, don’t forget those — than you know what to do with, and your accounting and human resources departments are feeling significantly overwhelmed.
Payroll was a headache when you had four employees and you were working out of your garage, and now with 50 or more people looking for their paychecks every two weeks, you find your time and resources devoted solely to getting everyone paid on-time and in full.
Close down your Excel sheets and throw out your calculator; there’s a much better way to make sure your payroll is completed efficiently and accurately for every employee, and you’ll barely have to lift a finger. Outsourcing payroll services is quickly becoming the only way mid-sized businesses can stay afloat of their rapidly increasing workforce. Here are five big reasons you should shrug the responsibility of payroll onto a trusted and qualified PEO.
Cut Back on Costs
It’s true, you’ll save if you pay someone else to worry about payroll. Many small and medium businesses falsely believe that doing everything in-house will save tons of money, but research shows that this just isn’t the case. Factor in the time and energy your staff is devoting to payroll every week, and you’ll find that you’re retaining salaried employees just to grapple with everyone else’s payroll. Consider these activities that are completely essential to completing payroll every pay period:
- Calculating total and individual payroll every pay period
- Printing, verifying and signing pay checks or stubs
- Distributing pay checks or stubs to appropriate employees
- Creating and verifying reports for accounting records
- Generating and sending payroll taxes to various government agencies
Staff tasked with payroll services just can’t get anything else done. If you ease their workload by outsourcing payroll, you’ll find increased productivity, which brings in more revenue, and happier workers.
Avoid Facing the IRS
Because payroll is so complicated, many small and mid-sized businesses fail to accurately report the money they spend on salaries and wages. The IRS states that one in three employers makes a payroll-related mistake on their taxes, which results in fines and penalties incurred by various individual companies totaling more than a billion dollars annually.
PEOs, who basically function as outsourced human resources departments, are practiced hands with payroll. They have all the necessary technology to keep track of employees, salaries and benefits, and they’ll have all the necessary payroll tax information organized and accurate without any intervention from you. Fees and penalties are a useless drain on your company’s profit margins, and you’d do much better to avoid the risk of making a mistake on your taxes.
Improve Your Company’s Security
Your employees forfeit a surfeit of information in order to get paid. Not only does payroll require sensitive information like addresses and phone numbers, but most employers require social security numbers and even bank account information to pay their employees. Even with trustworthy employees and top-of-the-line network security software, you could experience an information leak putting your employees (and your company) at risk.
If you want to avoid identity theft, embezzlement and tampering with records, don’t trust your employees; trust a company that makes its name on the safety and accuracy of its services.
Payroll is complicated in and of itself, so for the in-house payroll department, it is virtually unthinkable to add any special bells and whistles to the process. This means your employees must suffer through the old-fashioned activity of receiving their paychecks and visiting the bank to deposit their money. Going to the bank is a chore no matter what the occasion, and antiquated payroll techniques that require it weigh heavily on employee morale.
If you use outsourced payroll services, it’s likely you’ll be eligible to receive more advanced payroll practices, like direct deposit into bank accounts. This speeds the receipt of employees’ payment, making them happier overall.
Get Rid of Pain
We’ve said that payroll is a headache, and it’s not just a metaphor. The stress of payroll is immense, and such intense stress takes its toll on the body. From regular migraines to nausea to insomnia to decreased libido, pains caused by trying to fix your own payroll woes are almost impossible to measure.
Instead of trying to treat the symptoms, treat the disease at its source by getting rid of your in-house payroll system. You’ll find that your nightmares will disappear almost immediately after you have other people worrying about getting everything right. You can rest comfortably and easily while an established and qualified PEO takes care of your troubles for you.