5 Reasons To Use a Payroll Service
If you want something done right, do it yourself. Everybody has heard that one. But it’s also true that in some cases when things such as time and money savings are at hand, hiring someone outside of your business to do the work is worth its weight in gold.
Such is the case for hiring a payroll service to handle that function for you. It’s for this reason that more and more business owners and managers have professional payroll services to take care of this important administrative function. Payroll preparation services not only have the expertise and resources to complete payroll functions, on time, accurately, and at a lower cost but you will also benefit by outsourcing payroll.
Businesses of any size will recognize the value of outsourcing the payroll to an external payroll service. Most experts agree that payroll is normally the first service of a business that is outsourced–usually at the insistence of their accountants. What follows below is a list of the five most common reasons to outsource the accounting function of a business:
5 Reasons to Use a Payroll Service
1. Reduced Cost. Payroll is an important function of a business that, especially for a small business, is most cost-effective being outsourced to a specialized service. It is important that business owners and managers consider all of the costs associated with payroll functions to get an accurate picture of what it costs them to perform this function internally. And don’t forget related costs such as printing and distributing checks, creating tax documents, and bookkeeping. When everything is added together, it can be obvious that the cost of a payroll service is not only less, but it can also be assumed that these services are more up to date in tax regulations, the use of tax software, and utilizing the best practices to minimize the tax effects.
Another factor that should be considered alongside reduced costs are the savings in terms of time as well. How many times has the person who is responsible for signing checks in time for having them distributed been out of the office when that time came around? Having a payroll service can assure that checks are pre-signed and in a sealed envelope.
2. Productivity. Move the payroll function to an off site location frees internal staff to focus on higher-value work that can result in business development. This is especially valuable in a small-business environment where a limited number of employees might be available for a relatively large number of tasks that need to be performed. This keeps employees working on what they do best: projects that focus on the business and related tasks. Also, when a payroll service is responsible for the completion of the payroll tasks, it can normally be completely faster and enjoying the benefits of expertise, volume, and the most appropriate software.
3. Accountability. The payroll function comes with a thicket of IRS and state tax authority rules and regulations. Transferring these functions to a qualified payroll service shifts the responsibility for the accurate completion of these tasks to the outside firm. It has been estimated that more than forty percent of small businesses pay penalties to the government each year for erroneous errors in the completion of payrolls and related taxes. When a payroll services performs these functions, fees and penalties are born by the service, not the small business. Also, if these payments are made late or accompanied by inaccurate paperwork, the resulting penalties are also the responsibility of the payroll firm.
It is also important that this reporting function works both ways, to the benefit of the client as well as his employees, both of which deserve to have accurate and timely reports of their employee functions. This includes not only pay and related payroll reports, but the tracking of vacation time, distribution of bonuses, reimbursements, deductions, and other benefits.
Security is also an important function of an independent payroll firm. Since confidential information is such an important part of any payroll matters, it is critical that only authorized personnel be allowed to have access to this information. Whether this information is handled internally or externally, it can be a very risky proposition, for threats of loss as well as possible embezzlement or other tampering.
4. Legal Compliance. Payroll services have the expertise and the resources to complete a business’s payroll to the standards of the legal authorities. Payroll services make it their business to ensure that their employees know what the laws are in regards to taxes and other charges, and they know best how to comply. This is no small job, since the laws regarding taxes not only change often, but they also change from state to state. Payroll services ensure that payroll tax deposits are made accurately and on time. All of this is especially important when a company’s workforce is dispersed over a large area where laws might change according to where the employees live and work from.
5. Better Service. Payroll services also have the advantage of being competitive with other firms for business. As a result of being competitive, any given service behooves itself to make sure that payrolls are done correctly and on time or face the possibility that they will lose a given account in favor of another. An independent payroll firm also might have an advantageous relationship with a given processing firm when it comes to the completion and filing of reports, passing the benefits of this relationship along to their client.
The completion of a payroll is a burdensome responsibility for any firm, especially in the case of small businesses. To minimize this burden, it only works to the advantage of the firm to allow an independent payroll service to perform this function.
Any and all of the matters related to payroll can be a tremendous headache for employers, and not just over their ability to make payroll, but with all of the little factors that affect it as well. Independent payroll services can offer numerous benefits over the preparation of payrolls done internally. Payroll services don’t cost, they pay.