08 Feb Should My Business Outsource Its Payroll?
Payroll is often an overlooked priority, and busy business owners don’t always have the time to do it. This leads many to the question — should a business outsource payroll? While some business owners choose to handle payroll in-house through a payroll app or manual bookkeeping, others prefer utilizing a professional payroll service’s expertise.
Outsourcing payroll to a professional payroll service can offer many benefits, including saving you time and money, protecting your business from penalties, enhancing your business’s security and having reports and pay stubs generated for you. Payroll responsibilities are essential, but also complicated and time-consuming, which makes a professional payroll service useful for businesses of all sizes.
One reason to consider outsourcing small business payroll is that a professional payroll service can save you time. If you perform payroll yourself, you lose precious time you could otherwise be dedicating to essential tasks, such as:
- Finding new customers
- Building business revenue
- Developing partnerships
- Serving existing customers
Regardless of how many employees you have, processing payroll demands a significant amount of your attention and time. A company’s payroll responsibilities include:
- Generating in-house reports
- Calculating payroll amounts
- Preparing state and federal taxes and returns
- Printing, signing and issuing pay stubs or paychecks
Each year, you or your staff members likely dedicate significant hours to preparing W-2s and ensuring they’re sent out in a timely manner. Turning your payroll tasks over to an experienced provider frees up your time and allows you to concentrate on your core business. You can choose how often you would like to be contacted about payroll-related tasks. If no problems or discrepancies arise, you may only need your payroll provider to reach out once in a pay period about the successful completion of the payroll process.
Outsourcing payroll can also save you money. When you outsource your business’s payroll, you won’t have to pay a full-time employee. When you consider what it costs to hire an employee, such as wages and benefits, this can add up quickly. If you’re able to outsource this role instead, you can save on the time and money you would’ve otherwise spent recruiting a bookkeeping employee.
You can also greatly reduce your costs for processing payroll by working with an experienced payroll provider. For small or medium-sized businesses in particular, having a payroll process in-house is a money burner. Calculate how much time your employees are dedicating to activities related to payroll, as this can help you determine how much money you’ll save by outsourcing these tasks. Determine how much you spend and compare this amount to plans offered by providers of payroll services.
Outsourcing your payroll means you won’t have to worry about your servicer resigning, calling in sick or wanting to take vacation leave, all of which would cost your business money. Ultimately, it is likely to be more efficient to work with a professional bookkeeper, like Steph’s Books.
Protect Your Business From Penalties
You can protect your business from penalties by having a professional do it right. Many small businesses face a penalty each year for incorrect or late tax filings and payments. Penalties for omissions, errors or late tax filings can be expensive, not to mention payroll mistakes can frustrate or anger employees.
Government regulations are constantly changing, and staying up to date on these frequent changes can be challenging. A professional payroll provider stays current on the regulations and adjustments in tax rates, which means an experienced provider is less likely to make an error than an in-house staff member.
At Steph’s Books, we navigate the boundaries between federal, state and local payroll laws, allowing you to avoid legal errors and IRS penalties. Every year, we read dozens of tax laws, and we can get necessary paperwork from individual employees if necessary. With a payroll outsourcing company on your side, you can take changes in technology and laws in stride while keeping your focus where it matters.
Have Someone Generate Reports and Pay Stubs for You
At the end of every payroll period, each employee’s pay must be recorded carefully for future accounting purposes. Pay includes:
- New hires
- Paid time off
- Deductions withheld
- Payroll tax amounts
- State and federal regulation changes
Depending on your business’s size and structure, fiscal year-end reports may include payroll reporting, particularly if your business is looking for investors or is publicly traded. Even if these reports aren’t required, you may choose to evaluate previous payroll reports when making projections for hiring and staffing.
Your organization’s payroll is also necessary for tax reasons. Your payroll comes into play for your year-end income tax filing, along with annual and quarterly payroll tax reporting. If you keep this information easily accessible and organized for your future reporting or for delivery to an accounting professional, this can cost you extra time every period.
When a trusted provider is generating reports and pay stubs for you, you will not have to worry about whether your employees are being paid on time, especially if you decide to take some time off.
Processing payroll can be a complicated and potentially risky operation for your business. The risks of hacking, embezzlement, identity theft or tampering with records for personal gain are always present in a business, even when you have trusted partners. If you have an employee whose role it is to handle payroll, this could be a risk to confidentiality, such as if this employee shares how much a co-worker earns.
When you outsource your payroll to an experienced provider, this can offer a safe, secure place for your organization’s confidential data. Along with multiple server locations and redundant backup, a quality payroll provider has systems for safely storing and protecting sensitive data.
Contact Steph’s Books for Outsourced Payroll Services
The professionals at Steph’s Books are experts at small to mid-size business payroll with more than two decades of experience. We can help your business organize expenses, keep your accounts in check and handle your business’s prep work for tax season. We focus on financial literacy and remove tasks from your plate so you can concentrate on growing your business.
At Steph’s Books, we can give you insights into your business’s financial health and keep your data up to date. We can also help you save money and time on software, recruiting, legal fees and paying salaries. You can fill out our free quote calculator or get started with Steph’s Books today to enjoy our payroll services for small businesses.