If you are struggling to keep up with payroll or are intimidated by managing payroll yourself, then you should consider outsourcing it. There are plenty of companies that will be more than happy to take that responsibility off your hands. If you choose to outsource your payroll, a third party will handle tax, and accounting, provide legal support and ensure that your employees are paid on time every month, so you don’t have to. Deciding to outsource payroll can benefit companies of all sizes. Outsourcing payroll is not always the best solution for everybody. However, it does have a few drawbacks. Let’s look at some of the pros and cons of outsourcing your payroll function.
Pro – It Saves Time
Managing payroll in-house takes a lot of time, and this isn’t something that is bringing direct profits to your company. So, you’re essentially losing money during the time you manage it. You could instead hire a team that would handle the whole thing for you, allowing you to concentrate on your organization’s core functions. By allowing you to focus on the business rather than payroll admin, you will be able to help your business grow a lot quicker and more efficiently than if you were trying to manage payroll as well. In addition, outsourcing your payroll frees up time so you can focus on letting your business progress.
Con – Communication And Access Issues
One thing you have to know, however, is that you may have difficulty accessing crucial information when you need it when you work with a managed payroll provider. And if there are errors, because payroll companies can make mistakes from time to time, correcting these mistakes could take you more time and put you in extra trouble with employees or regulatory agencies.
This is why we suggest that you look for payroll services near me, like G&A Partners, which has offices all over the country. Being closer to your outsourced payroll provider will make communication that much easier.
Pro – Fewer Chances Of Mistakes
With that being said, you should know that good payroll companies rarely make mistakes, and if they do, they should be corrected pretty fast. They will also accept some of the liability that comes with those errors. Managing payroll requires a great deal of attention to detail, which is a task many business owners don’t have the time to dedicate to with the level of accuracy it deserves – which means costly mistakes could occur. If you outsource your payroll function, you will have a team of experts with the knowledge and care to carry out the task, limiting the risk of human error.
Under or overpaying employer taxes can also put you in regulatory hot water and incur additional costs. There are very few chances that a team with years of experience working with people in your industry will make that sort of mistake. It has been estimated that the average small business in this country has to pay over $80,000 to deal with compliance issues in their first year. This is something you won’t have to worry about if you work with a reputable provider.
Con – Time To Implement
Switching from in-house payroll to an outsourced solution can take some time, however. You will have to establish new reporting systems and protocols across departments. You’ll also need to learn how to use these systems and how to transfer payroll information to your provider safely and efficiently. This means that you’ll need to sit down with your team and see how long it will take for you to make that transition.
Pro-One Less Thing To Remember
There is a lot to think about when you run a business which can make it feel chaotic and difficult to know what business function to focus on. So, outsourcing your payroll function gives you one less thing to worry about and remember. In addition, as the entire process is outsourced at a location away from your business, you can streamline your business functions as payroll will be out of sight and out of mind.
Con – Confidentiality
Confidentiality is essential when it comes to payroll. Whether you employ someone to do your payroll in-house or outsource, it is an issue. You need to ensure that your employees’ bank details and pay rates stay private as a leak of this information could cause problems for your business, such as fraudulent activity. You might be reluctant to hand over the payroll function to a third party for these reasons. However, if you choose a trusted service that uses technology such as encryption to protect your company’s data, you should be in safe hands.
Pro – It Saves Money
Outsourcing your payroll can save you money. The exact amount you could save will depend on the size of your business. The cost of outsourcing payroll to a third party is often cheaper than paying full-time in-house staff to manage payroll. You will no longer have to spend time and money training staff by outsourcing to the experts. You also won’t have to spend on the recruitment process, saving you money.
Con – Less Control
As a business owner, it can be daunting to hand over payroll control if you’ve been managing it yourself. If you’ve been used to looking after all business functions, you will need to learn to trust someone else to handle this for you. If you’re unsure about letting go of payroll, you need to make sure you carry out the appropriate research first to make sure that you are comfortable with handing the payroll over. Only with this reassurance will you be able to fully let go of the task yourself and truly make the most of the extra help.
Now that you know a bit more about the pros and cons of outsourcing your payroll, you can start speaking with a few suppliers and see what kind of packages they have to offer. Interview a few different ones, and don’t forget to check their reputation and what previous clients had to say about them before you hire anyone.