All too often, small business owners invest hours of their time just to keep up with payroll. Sound familiar?
How much time do you spend managing timesheets and cross-referencing federal and state regulations to ensure you’re reporting your taxes properly? Odds are, the answer is, “A lot.”
According to a 2017 survey, payroll consumes more time than any other task for HR professionals. On average, it takes up to 11 hours of paid time. Multiply that over 52 standard work weeks, and it comes to a little more than 14 weeks spent on payroll every year.
By cutting down on that time, you can put your attention to better use elsewhere. Payroll outsourcing services can save time and money—all while helping you avoid tax penalties and costly payroll mistakes.
What are payroll outsourcing services?
Payroll outsourcing services are just what they sound like: you hire a third party business to handle all the payroll functions of your business.
This strategy makes trained payroll employees or staff unnecessary. It even lets you skip buying and maintaining payroll software packages. Plus, depending on the services offered, some payroll firms may cover a lot of the little details that come along with new hires, too.
Does outsourcing your payroll really save money? Almost always, yes. In fact, it can provide a wide variety of benefits.
Here are 7 ways payroll outsourcing can help you:
1. Outsourcing payroll saves time.
Processing payroll takes time and a whole lot of attention to detail. (It’s been known to cause plenty of headaches, too.)
Every pay period, you or your staff have to enter in a seemingly endless stream of data, then double-check—and tripe-check—for any errors. That’s time that could be better spent on more critical, less tedious tasks.
Outsourcing payroll will free up your schedule for what matters most. In most cases, you’ll only have to get in touch with your payroll service once per pay period.
2. Outsourcing payroll saves money.
You’ve heard it before: time is money. It’s just a fact. Now, think of the time you and your staff spend on:
- Calculating payroll
- Preparing and distributing pay stubs or paychecks
- Generating reports
- Filing payroll taxes and returns
Generally, using payroll outsourcing services will cost much less than having to pay employees for these tasks—or having to do them yourself. Like any other worthwhile business expense, it’s an investment that could end up saving you big bucks in the long run.
3. Outsourcing payroll gives you peace of mind.
Payroll processing can be risky business. Even when you think you can trust your employees, there’s always the chance of embezzlement, identity theft, or even someone tampering with your records.
How secure is your payroll data on your company’s server or network? Maybe not as secure as you’d like.
When outsourcing payroll to a professional service provider, however, you get a safe haven for all your payroll information. Not only will they use multiple server locations and redundant backup, they’ll use only state-of-the-art systems for storing and safeguarding your data.
(They’d better, considering what their clients are hiring them for.)
4. Outsourcing payroll helps guarantee you won’t accidentally break the law.
Payroll and tax regulations are nothing if not complex. It’s hard for anyone to keep up, especially when that someone is distracted by other tasks too. But while most small business owners aren’t experts of government tax regulations, they’re still legally responsible. If you report employment taxes inaccurately—intentionally or not—you’re the one that has to face the music.
It’s worth getting right. The last thing you need is an audit from the IRS.
Payroll-related regulations are constantly evolving, and small business owners have little hope of keeping up. Professional payroll providers, on the other hand, must stay up to date with the most current rules and regulations. Some even dedicate entire departments to helping their clients make informed decisions about their business.
5. Outsourcing payroll puts the most reliable systems in your corner.
Manually calculating hours, taxes, and other payroll information makes it easy to miss problems that will end up costing you a heap of dollars. Payroll outsourcing services, on the other hand, use only the best systems available. After all, they have a vested interest in avoiding costly calculation errors.
6. Outsourcing payroll usually comes with a lot of other benefits.
Most payroll services can offer your business extra help, such as:
- Management reports for monitoring labor costs
- Automated timekeeping systems for tracking employees’ work time
- Help with managing benefits and human resources issues
- Help with determining helpful pre-tax deductions
These services often save small business owners serious cash. Sometimes, the savings even exceed the cost of the payroll service itself.
7. Outsourcing payroll to your CPA firm will simplify your financial processes.
You may be wondering why a CPA firm is talking to you about payroll services. Well, we may not be your typical payroll processing service, but we do specialize in providing a one-stop-shop for our business clients. We combine your payroll with monthly bookkeeping and our other accounting- and tax-related services.
Layering on payroll services doesn’t add much to your cost, and by processing your payroll, we gain accounting efficiencies that usually offset most, if not all, of the cost of payroll services. Your net fees will be similar to a typical “commoditized” payroll service, yet you have a single point of contact and a team of highly-skilled CPAs and accountants overseeing your payroll.
Ready to save yourself time and money?
Getting payroll right is essential to running a business, so there’s nothing wrong with calling in the cavalry. Just make sure you find a provider that fits your specific needs and budget and thoroughly vet any and all prospects.
Maybe we can help…
We’d be happy to talk with you about outsourcing your payroll. As Knoxville’s top accounting firm, Culpepper CPA can give you the information you need to make an informed choice—or we can take on your ourselves.
If you’re ready to hand the burden of payroll off to someone else so you can focus on other things, just let us know.