by Debbie Allen
Running a business of any size requires many skills. Not only is it necessary to learn about things like marketing strategies and how to build and manage an online reputation, but there are more basic concerns related to the daily operations of running a business. This includes small business payroll processes.
Because so much depends on the accuracy and timeliness of payroll, many small business owners opt to outsource the entire or at least part of the payroll processes. The reasons are obvious. Payroll can be more than just a frustrating and time-consuming process; the truth is, payroll calculations can be complex, and inaccurate results can lead to real consequences. This can include everything from unhappy employees to stiff penalties from the IRS.
Some businesses have in-house systems and software to help in payroll processes. If the wrong information is entered into these systems, the outcome is inaccurate withholdings.
Payroll withholding deductions include wage garnishments, state and local income tax, Medicare tax, and Social Security tax. Disability insurance and unemployment insurance withholdings may also be applicable.
Manual payroll systems, those that require completing payroll calculations by hand, are the most likely to result in errors. Manual systems are only advisable for businesses that are extremely small. Using a payroll service provider is a much better choice. It is a way to help ensure there will be fewer payroll errors.
The Benefits of Outsourcing
Outsourcing payroll can provide some tremendous benefits. One of the biggest benefits of outsourcing payroll is the time gained. Payroll is a time-consuming process that causes a lot of stress and frustration. When the process is outsourced, that time can be used in other ways that are productive and beneficial to the business. For instance, it may be used to develop new marketing strategies or to work on increasing sales.
Most businesses find that outsourcing is actually cheaper than paying in-house staff to tend to payroll duties. Also, leveraging the knowledge of experts can help create a sense of ease and peace of mind for the business owner. Besides knowing the paychecks will be accurate and on time, the risk of penalties for late or incorrect tax filings is eliminated.
Payroll services usually include the option of direct deposit. This is easier for employees, and because it is a greener option, it is a cost-saver for the business. According to the payroll service company and the specific payroll plan, various types of reports are available to businesses.
Disadvantages of Outsourcing
Using the services of a payroll company can have downsides. In some cases, it can be difficult to access data related to employee data and payroll. And although it is rare that these services make mistakes in payroll calculations, when errors do occur, corrections may not happen immediately. This, of course, can be frustrating for all concerned, especially for an infuriated employee.
Should You Outsource Payroll?
With so many advantages to offer, it seems clear that nearly any small business can benefit from the services of a payroll company. However, like any other business decision, before jumping on board, careful consideration should be given.
Compare the various options available, and be sure to compare package plans as well as individual services. Also take the time to do some research into the service provider’s reputation.
The bottom line is, using the services of a payroll processing company can result in extra time and savings for your business. But the biggest benefit may be the peace of mind you will enjoy. It’s definitely a worthwhile investment.
Debbie Allen is a blogger, professional content writer, and Internet marketer. In addition to writing about issues related to small business management and online marketing strategies, Debbie likes to write about matters that pertain to reputation management and self-development.