You mean I can Outsource Payroll?
The answer is not just a simple YES, but why you should consider outsourcing your payroll? Whether you are a fresh startup hiring your first few teammates or you are a medium to large-sized company, you are going to want these five benefits of outsourcing payroll!
Let us first be on the same page of what Payroll Outsourcing is...
Payroll outsourcing is when a third-party organization or company handles the administrative tasks of employee payment. These organizations have the resources and time to give companies a stable and reliable payment system. This system gives companies the ability to focus on other aspects besides taxes and government regulations. Now with that out of the way, here are five benefits of outsourcing payroll!
The first benefit of outsourcing your payroll to a third-party organization is that it saves time. Keeping track of benefit deductions, paid time off, and new hires or terminations is extremely time-consuming and results in your company not having your attention on actual business growth. A lot of companies that are small and are just starting off find it extremely beneficial to outsource their payroll. This gives them the ability to focus on building the business itself and having that as their only focus. Specifically, the business owner, company accountants, and human resources employees are given more time to work on strategic tasks for the business rather than wasting critical time and resources preparing and inputting critical data every month for their payment period.
2. Reduce Costs
Small and medium-sized businesses cannot afford to have an in-house payroll process. If a company wants to have an in-house payroll process, then they would have to budget a large amount of their income and investments towards this sector of the company in order to ensure that no mistakes will be made. Mistakes with a company’s payroll can result in fines that can easily be avoided by outsourcing your payroll. According to vision-hr.com, companies with less than thirty employees can potentially save money if they outsource payroll operations.
3. Compliance with Government Regulations
Federal and state tax regulations can change quite frequently. This makes it extremely hard for businesses that do not have the resources for an adequate payroll team to keep up with the latest laws. Even though it seems insignificant at first, the financial damage can put a big strain on companies. The IRS states that 40% of small businesses pay an average penalty of $845 dollars per year for late or incorrect filings and payments. These penalties range from errors, omissions, or late payroll tax filings. The exact job of an outsourced payroll provider is to calculate payroll taxes, mage filings, and payments, and more often than not will assume the cost of penalties due to late payments or incorrect calculations. For large-sized companies that have global teams and businesses, this point is of greater significance as they have to be up to date and comply with regulations in more than one market.
4. Access to Technology and Expertise
Companies that specialize in completing another company's payroll have the necessary technology and expertise that smaller businesses lack. They take this job extremely seriously and have the technology to get the job done quickly and efficiently. These companies have state-of-the-art systems that can store and protect data. Since these companies are experienced with this line of work they can offer advice and sometimes deal with addressing employee concerns and human resources.
One of the biggest risks of having inside sources handling financial records is breaking the law. Having an employee handle company funds can result in identity theft, embezzlement, and money tampering. The little things that would normally get reported can get forgotten which causes another great security risk to the company. Some companies try to use manual bookkeeping to avoid these missteps, but manual bookkeeping cannot prevent fraudulent activities. Putting customer and employee information in the wrong hands can cause your entire company to fail.
At Worknetics Global, we are here to help you to scale a distributed workforce and expand your business globally guaranteeing Compliance, HR & Payroll to ensure your employees are always happy and productive. Your business success is our greatest interest!