It’s a well-known fact that payroll management can pose a challenge for small businesses. In fact, according to a Deloitte survey, as many as 45% of small businesses cite avoiding mistakes as a reason they opt to outsource payroll.
Understanding Payroll Outsourcing
Payroll outsourcing involves employing an external provider to handle your company’s payroll administration. Rather than relying on an in-house payroll or HR professional, team manager, or business owner to manage payroll, a third-party company takes charge of the coordination. Businesses opt to outsource payroll to save time and money and to prevent payroll mistakes that could have serious consequences.
Benefits of Outsourcing Payroll
Outsource Payroll also provides access to convenient and secure cloud-based solutions. QuickBooks payroll services offer a fast and efficient option. You can utilize the application or desktop version to manage everything from direct deposits to tax retentions. But when should you consider outsourcing payroll? Let’s delve into it.
When Should You Consider Outsourcing Payroll?
Outsourcing any aspect of your business can feel daunting. After all, it’s your business—you want to be in control of everything. However, for many small businesses, worrying about details like payroll can hinder you from commanding that leadership position.
There are a few signs it might be time to consider outsourcing your payroll solution. If your current system leads to frequent mistakes, this could become a liability. This can lead to significant costs, wasted time, and lost productivity. You may also struggle to comply with IRS or labor laws, and employees may experience frustration due to significant delays in receiving their paychecks.
Moreover, some companies are subject to tax penalties due to mishandled payroll processes. These can be costly on their own, and they end up costing even more when you factor in lost time spent dealing with an audit or penalty.
Understanding Payroll Outsourcing Services
Payroll outsourcing services streamline your payroll processing system. Often they automate many aspects of payroll. This includes calculating tax retentions and deductions, depositing employee checks for each timesheet, organizing payroll reports, and generating payroll registers.
A quality payroll outsourcing service will provide you with a comprehensive set of features for running payroll efficiently. Simple outsourcing options allow you to manage payroll data from a phone or desktop application, while higher-value options allow you to connect directly with professional support. They may also include HR outsourcing features.
Rather than having an in-house team deposit check, calculate tax retentions, and prepare quarterly tax filings, outsourced payroll handles everything behind the scenes. Professional payroll services significantly reduce the chances of errors in your payroll processing.
Why Should You Outsource Payroll?
Only 17% of UAE businesses outsource payroll—it’s common to not know when to make the switch. Not sure if your small business is ready? Let’s review a few of the benefits you can expect.
Cost savings: Hiring someone to handle payroll in-house can be expensive. And if you’re spending your own time working on the payroll instead of focusing on other aspects of your business, you could be losing money. Outsourcing payroll can be a much more cost-effective option.
Time savings: Time spent worrying about payroll tax documentation, payroll processing, and more is time you’re not spending elsewhere. As a leader in your business, it’s important to dedicate your time to the things that matter most. Outsourcing payroll allows for that.
Precision: Payroll errors can lead to a lot of headaches. Employees may get frustrated and leave your company if they are paid incorrectly or late. Outsourcing payroll reduces the chance of errors, especially for companies with a large number of employees.
Tax penalty protection: Errors can also lead to tax penalties. By having a professional payroll service handle tax compliance, you’ll avoid that headache—it’s an investment in peace of mind.
HR services: Some payroll processing platforms also include a range of HR features, such as downtime and insurance management. These can also help reduce costs for your business while streamlining your employee management.
Direct deposit: Employees appreciate being paid on time. Outsourced payroll allows you to set up automatic direct deposit so no one’s ever wondering when their paycheck will come in.
Onboarding new hires: Outsourcing payroll will quickly get newly added team members on the payroll and ready for their first day at work before the next payroll interval.
How to Outsource Payroll
Outsourcing payroll is easier than it sounds. And a little effort now will save you tons of headaches down the road. Here are the steps you can take to ensure the transition is seamless.
Pick your budget
As with everything in the business world, it’s a good idea to have a budget before committing. The great news is that full-service payroll outsourcing doesn’t have to be expensive. You can start for as little as $22.50 per month. Odds are, that’s a fraction of the cost of the time you may spend on the payroll if you’re doing it yourself.
For more advanced services, pricing can be slightly higher each month—but the long-term savings on time, effort, and accuracy quickly make outsourced payroll cost-effective.
Determine what type of service you want to use
Which aspects of your payroll would be most beneficial to outsource? Is there any part of payroll, tax, and employee benefits management that you know you want to keep in-house? Be sure to answer these questions as you look for the right payroll service provider for your organization.
Keep in mind, that some services may only handle basic payroll functions. However, others can also assist with a full range of HR tasks, like benefits management, downtime, and more. Keep these needs in mind as you seek out the right payroll service.
Do your research
This step goes hand in hand with the previous one. It’s impossible to know which payroll processing software is right for your company without doing solid research upfront. Your research should involve asking questions like the ones listed above, and then seeing what each platform offers.
Some platforms, like QuickBooks, allow you to choose from a variety of payroll processing plans. This gives you more flexibility when selecting different levels of service for your organization. You must research each plan’s features and price point. That way, you know you’re only paying for the services you need.
Choose the right payroll service
Once you’ve set a budget, determined what you need, and researched your options, it’s time to choose a payroll service provider. When choosing a provider, you want to find one that is quickly and easily integrated with your current payroll process. It’s also important that employees feel secure and confident in their new payroll system.