Having a solid payroll solution is the driving force behind every company that keeps the corporate ship afloat. The big question CEOs, CFOs and Controllers ask themselves is this: should I outsource payroll services, or build an internal team? Many business leaders are under the misconception that building an internal payroll solution will save them time, money, and create a more efficient solution due to the fact “everything is in house”. However, these are common misconceptions that cause many corporations big losses. Here are four reasons why companies would be better off outsourcing payroll services to a trusted and established provider.
- When Companies Outsource their Payroll Services, they Save Money
When working with a payroll company, businesses can significantly reduce costs they would otherwise rack up. While mega corporations like Coca Cola or Microsoft can afford to have their own payroll department, most mid-size and larger businesses are better off outsourcing for payroll needs.
Having an internal payroll team for mid-size businesses with fewer than 50 employees is a major money burner. Just do the math: determine how many labor hours are being devoted to payroll tasks by calculating each time period, signing, printing, and distributing paychecks or pay stubs, including electronic transfers and direct deposits, Also, factor in staying on top of charges, reimbursements, and taxes. Then you have to train individuals on the payroll software, and if there is a glitch, you will need to create a ticket to have IT or a tech expert come and troubleshoot the issue (these things are costly). Computer maintenance for payroll services software is also very expensive, and often requires additional updates every time your company needs to do a new tech integration with other platforms and updates to intranet platforms, which brings a cost.
- Save Time by Outsourcing Payroll Services
In continuing from the first point, time is money. And all corporations strive to slash costs by being more efficient when it comes to time management. Staying up to date with tax laws and rates, the ever evolving world of W-2s, garnishments, new hire reporting, and creating and distributing reports for in-house needs (like accounting) takes a plethora of time and also takes an employee away from other critical tasks that can be done more economically and efficiently. As for the technology used in payroll services, managing the software, making updates to it plugins, and performing maintenance takes a great degree of time. In fact, if someone misses the mark, entire systems can go down for days at a time wasting a great degree of time and money.
- Payroll Companies help You Avoid Mistakes, Lawsuits and IRS Penalties
According to the IRS, small and mid-size businesses pay an average of roughly $850 per year for incorrect or late payments and filings. Penalties for omissions, late payroll tax filings and errors can cost companies a great degree of money and raise red flags in front of the IRS that can remain for years. Companies that offer professional payroll services must stay current with all laws regarding payroll and tax filings, as well as employee and employer rights. In some cases, employees that have been terminated or laid off have successfully sued their former employer for huge sums of money due to errors made in final paychecks and benefits. When companies outsource payroll services, they remove the risk of creating situations where a lawsuit could emerge, or the IRS could lower their hammer.
Protect your business from having a bad reputation, and ensure you are profitable and efficient by outsourcing your payroll services to an experienced company that has all the right tools, strategies and years of experience to make your business run smoothly while delighting employees and making things easier for your HR department. Call a company that offers payroll solutions to multi-sized businesses today, and learn how you can take 2021 to the next level when it comes to efficiency and business growth.