Instead of hiring a dozen employees, small businesses are hiring a few workers and outsourcing the rest of the functions of the company. Services like payroll are being outsourced to professional service companies that can perform the same functions as a payroll clerk. There are some surprising advantages to using the services of a payroll company versus hiring a single employee to handle the task.
Saves Time and Money
There are times in many small businesses where it makes more sense to outsource a task than have to do it yourself. When it comes to payroll, the work could end up taking hours and hours of the owner’s time. If they give it to an employee, that employee will be taken away from other parts of their job.
Pay periods are often weekly or bi-weekly, which means that these tasks will have to be done week after week. This might not leave time for other duties like serving customers. Outsourcing payroll will save many hours per week. Employees turn in their time sheets to the owner and the owner sends it to the payroll company.
Along with time saved, money can be saved too. When you take the task of payroll from the business owner, he or she has time to focus on money making opportunities. Taking the task from an employee frees them up to focus on other tasks too. It’s cheaper to hire a company to perform payroll than have one employee dedicated to it each week.
Increased Business Security
While you might have the best employees in the world, there’s always a risk of embezzlement or tampering when the business owner doesn’t do the books, according to Accounting Freedom, Ltd. Giving an employee access to the bank accounts plus the software involved with bookkeeping and payroll can create a situation the owner might regret.
The software won’t have the security that your payroll service does. They understand the need for securing your data, so they’ll have the latest technology to keep your information safe. They’ll store it on multiple servers and have secure protection in place, so that your information can’t be hacked by exterior forces.
Usually when a business owner takes on employees, he’ll handle the payroll himself. There’s a lot of regulations to understand as well as complex practices involved with employment taxes. You could spend years trying to learn everything you need to accurately perform the duties of a payroll clerk.
When you have a business to run, you don’t have years to learn the payroll software and regulations you’d need to successfully do your own payroll. A payroll service company has qualified individuals who have spent years performing these functions. They’ve been schooled and trained to take care of your payroll needs. They’ll be able to make direct deposits for employees, take care of all deductions and mail out W-2 and 1099 forms at the end of the year.
Compliance with Regulations
With that professional expertise, they also come with up-to-date knowledge of the regulations and laws that apply to your specific business when it comes to taxes. While you might not have the experience and knowledge of a payroll professional, the government doesn’t care about your inexperience. They’ll still hold you accountable for payroll and accounting errors.
The rules and regulations are in constant flux, which can be incredibly confusing for a business owner who doesn’t have an accounting degree. Late and incorrect filings can cause you to have to pay penalties and fees when there are mistakes. In some cases, business owners can be held liable for errors that can result in jail time. It’s vital that you outsource your payroll to a company that understands exactly what the IRS expects.
The expertise and education of a payroll service company can save you time, money and aggravation. You can devote yourself to running your company while employees can devote themselves to servicing your customers. There’s no need to hire a payroll clerk when a company can perform the same tasks for less money. Part of being a business owner is delegating tasks to the right person or organization who can handle it.