Should You Outsource Payroll at Your Business?

Whether you process payroll monthly, bi-monthly, or weekly, payroll is the fuel that keeps the fire of your company burning. As much as your employees may love their careers, it’s the regular paychecks that ultimately keep them coming back to work every day. Hopefully you aren’t one of the many business owners who have had to deal with the backlash from failing to process payroll on time or processing payroll incorrectly.

Payroll is something that you absolutely must get right, every time. If you haven’t considered outsourcing payroll at your business to ensure its timeliness and accuracy, it may be time to reconsider.

There are many benefits to outsourcing your payroll, some of which we’ll cover in this post:

• How outsourcing your payroll can reduce risks
• Ways that outsourcing your payroll can save you money
• How an expert and neutral payroll service provider can benefit your business

How Much Payroll Risk Are You Comfortable With?

If you were to make a list of every payroll law in the United States, your list would be hundreds of pages long with tens of thousands of laws and regulations. By the time you had written every law down, you’d already have to start editing your list because there would likely be a new federal, state, or local regulation to consider.

Ask yourself, do you have a staff member dedicated to staying up to date with the ever-changing, complex payroll regulations? If not, you are accepting a certain amount of risk. Failing to properly comply with payroll regulations can lead to lawsuits and civil penalties – neither of which you’ll want to be involved with as your company tries to stay afloat in the wake of the COVID-19 Pandemic.

Outsourcing your payroll to an experienced provider is an easy way to reduce the risk of payroll lawsuits and fines. As a business leader, you have to constantly juggle sales, marketing, finances, office culture, and dozens of other tasks to help your business succeed. Alternatively, an outsourced payroll provider will have a team of experts dedicated to one task – managing payroll.

Relying on the expert payroll processors at an outsourced provider is an excellent way to ensure that your payroll processes are compliant with all relevant regulations. Don’t take on the unnecessary risks associated with trying to include payroll with everything else you are juggling. Leave it to an expert and you’ll be able to spend less time worrying about the risks of making a costly payroll mistake.

Adding up the Costs of Managing Your Own Payroll

Outsourcing payroll obviously comes with fees that must be paid to the provider, which is why many companies choose to manage their own payroll internally. However, have you ever paused and thought about all the unexpected costs that come along with managing your own payroll? We’ve already discussed the risks of potentially facing costly lawsuits and fines, but what about the smaller, day-to-day costs?

First of all, employees will inevitably have questions about their paystub. What do all the taxes mean? How can they change the number of allowances on their check? When will their W2 tax form arrive? How can they split their direct deposit between two banks? The spent answering these type of questions adds up quickly, and by managing your own payroll, you will have to be the one to answer them. We all know that time equals money, especially in the business world. This is a cost that many employers don’t consider. Outsourcing payroll means that your provider will be in charge of answering employee questions and ensuring compliance.

Employee data security is an increasingly expensive issue for many companies. As hackers become more sophisticated, employers must consider how much money they are willing to invest in the integrity and security of their HRIS systems. Another cost saving result of outsourcing your payroll is that you can pass on some of the costs of payroll data security to the provider. If and when you do have a consultation with a potential payroll provider, be sure to inquire about their data security. The outsourced provider will cover the high costs associated with keeping your employees’ sensitive financial information secure.

Let Yourself Focus on What You Do Best

The last benefit of outsourcing your payroll is something that we take pride in at Advantage – helping business owners focus on growing their business.

Let’s be honest, the key to growing your business is not found in payroll outsourcing. More likely, the key to doubling the size of your business is found in effective branding, developing products that sell, excellent customer service, recruiting amazing employees, and a variety of other important business functions.

Outsourcing your payroll and other HR functions to a payroll provider and benefits broker allows you to focus on the core business functions that matter much more in the long run than payroll. Any time you can reliably let someone else handle monotonous tasks like payroll, it opens up new opportunities for you to grow your business in exciting ways.

Key Takeaways

Outsourcing payroll will require you to pay fees to a provider, but the benefits we’ve described in this post far outweigh those costs. Remember:

• There are many risks associated with payroll. The federal, state, and local regulations impacting payroll are complex, and you may or may not have someone on your staff who is capable of understanding all of them. Working with an outsourced payroll provider ensures that you have access to a team of dedicated payroll experts that can help you reduce risks.
• There are many costs associated with managing payroll yourself. Some of these are obvious, but others are less intuitive. Outsourcing your payroll allows you to pass many of those costs on to the provider.
• Most importantly, outsourcing your payroll allows you to focus more of your time on the aspects of managing your business that fuel growth.

Advantage has effective, trust-worthy payroll solutions for growing businesses. Learn more today.