Small business owners have a lot on their plate. That’s why millions of small businesses choose to outsource their payroll management. There are a lot of reasons to do so— it helps these business save time and money, not to mention the sense of security that comes with having professional payroll companies deal with private data.
In fact, many business consultants recommend that busy business owners outsource non-core functions. What does that mean? Well, a non-core function is a part of the business that is not a profit center (meaning you don’t charge customers for it).
For most businesses, this includes back office and administrative activities. Fortunately, there are competent, experienced companies that provide payroll management services, allowing you to focus on what you do best.
Here’s a quick rundown of just a few of the reasons why you should consider outsourcing your payroll management.
No matter how you slice it, calculating payroll each pay period takes time. Regardless of the size of the company or the number of employees, calculating payroll involves a lot of data entry, performing calculations for various taxes, and double-checking entries for costly errors. All of this takes time away from growing your business and serving your customers.
But the bigger time cost is not from the regular processing of payroll— it’s from the potential errors that can lead to an audit. If you receive notice from the IRS about a discrepancy in your records, you can end up spending a lot of time going back through your books and working through a tedious dispute resolution. That’s time you won’t get back.
Saving time means saving money. Just think of the cost involved with calculating payroll each pay period; printing and signing pay checks or pay stubs, generating in-house reports, and preparing taxes and returns for government agencies.
Inaccurate record keeping can lead to additional costs. According to the IRS, 40 percent of small businesses pay an average of $845 per year for late or incorrect filings.
Additionally, discrepancies in payroll records or improper handling of private data can lead to fines and fees— possibly even enormous legal fees. When you choose to go with a professional payroll service, you’ll have access to a team that has the expertise to avoid such costly mistakes.
Is your payroll data safe? Are you sure?
Typically, payroll information about an employee contains name, address, social security number, and bank account information. In addition to this private information, the employee’s hourly wage or salary figures are attached to their record. Should this information be trusted to a handful of people in-house? Do you want coworkers to have access to sensitive data, such as your annual take-home pay?
There are a lot of regulations around this private data, including the method of storage and the accessibility of the information. It’s important to be completely compliant with all state and federal regulations when dealing with payroll data. You don’t want to trust this information with a small financial software company. You want professionals with the experience necessary in keeping this sensitive information protected.
These private data regulations can be complicated, and they’re subject to change on a regular basis. Small business owners can’t be expected to stay on top of constantly changing regulations, but failures in compliance can lead to costly fees and penalties.
It’s best to trust the compliance of these regulations to a professional payroll company that devotes themselves to staying aware of current regulations.
A professional payroll company has individuals who are trained to deal with the complexities of payroll taxes and the changing regulations governing private information storage and processing. These individuals are trained to handle payroll calculations and remittance to government tax authorities. In addition, professional payroll companies stay aware of regulations regarding the storage and processing of private data, keeping you safe from costly mistakes.
In the end, there should be no question about why you should outsource your payroll functions. The biggest question should be how to choose the right company to accurately manage your payroll while keeping your data safe and compliant. Complete Payroll has the experience and knowhow to process your payroll securely and efficiently. Contact us today to get a free payroll quote!
Check out our comprehensive employer's guide to payroll taxes - a structured and simple overview of what employers need to know about the taxes that flow through payroll - on both the employer and employee side.