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How Payroll Outsourcing is Beneficial For Small Business

Payroll administration is the biggest headache even for the most meticulous professional. Any omission in tax filing results in a stiff penalty, which disrupts the money flow and planning. Payroll is a non-core function, but critical for planning your success strategy.

Most startups or small companies process the payroll themselves as they believe that in-house processing is cost effective and they can maintain control over the payroll data. This holds true in smaller companies where the staff is on a salary and there are minimal tax obligations, which makes internal payroll processing efficient and easy. A sound payroll procedure and proper knowledge is necessary for a mistake free payroll program. All payments, whether it is federal, state or local taxes or to the employees has to be paid on time to avoid penalties. Even if you have an accounting background, it is beneficial to outsourcing payroll services as the regulations keeps changing and they affect the business directly.

Payroll processing services offered by payroll companies

  • Preparation and distribution of payroll
  • Vacation and PTO accruals
  • Federal, state and local tax filing
  • Direct deposit
  • Employee deductions
  • W-2 preparation and distribution
  • Wage garnishment
  • Tax liens
  • Support orders
  • I-9 employment verification

When to outsource

The biggest question in the mind of a business owner is when it is necessary to outsource the payroll. Processing paychecks internally is not always cost effective. A payroll system requires a computer, an accounting program, a person who is trained in the accounting and taxation procedure plus a regular update on the changing tax laws and meeting deadlines for filing the same.

If your payroll changes with every pay period, if your employees work different number of hours each week, if your employee turnover is very high or you have payroll taxes for many states then outsourcing your payroll process is beneficial, cost effective and helpful.

Benefits of outsourcing payroll for small business

  1. Payroll processing is a time consuming function. When you outsource the payroll function, it frees up the time, which can be utilized for strategic planning and revenue generating activities
  2. The cost of payroll processing is reduced as a department and a person manning it is not required
  3. Payroll service providers ensure all tax and papers are filed on time and that too without any errors. The experts at the payroll service providers are regularly trained in all tax code changes etc, which ensures that there is total compliance and accuracy in maintaining your payroll process
  4. The Payroll process is maintained on computers and on the cloud. This eliminates the time-consuming procedure of manually maintaining the payroll data and it is available to the business owner almost instantly
  5. It is time consuming and maybe be error prone to do a direct deposit in the employee account. The payroll service provider handles this aspect so the business owner need not reconcile the individual employee paychecks monthly
  6. Payroll outsourcing for small business is beneficial as you need not update the computers or payroll software

Find the experienced payroll outsourcing company in your state or if you have business in multiple states, then find the payroll service provider who can handle all your payroll needs. Paying a nominal charge for payroll outsourcing ultimately reflects as a huge profit in your business books.

All You Need to Know About Choosing a Professional Employer Organization

A PEO can be defined as a relationship between you and the dedicated HR Management company to deliver a wide range of HR services on the basis of ‘co-employment’ model. With professional employer organization services, every business can benefit as risks and responsibilities are shared by the provider. When the law or regulation changes, compliance is the responsibility of the vendor, who integrates all employee benefit functions into a single source solutions that converts into real saving and improved efficiency for the business house.

A PEO cost effectively manages all human resources related function by acting as a proxy employer for your business. This leaves enough time for you to focus on your core business and leave the hassles of staff and its management to the professional employer organization. Choosing HR PEO services has proved more beneficial for small businesses across the USA.

Services offered by PEO companies

All PEO companies offer employee benefit administration, employee training, recruiting, workers compensation and administration, payroll and safety management. Nowadays, this arrangement is also called as employee leasing, joint employment or co-employment. The PEO company administers payroll, benefits and train the employees as well and provides accurate information to the business owner as well.

Who uses PEO services?

Using PEO services has proved to be most beneficial for small businesses for whom hiring a full time HR manager and maintaining an HR department is an additional overhead. PEO services have proved advantageous for bigger companies as well to provide employees to supplement the internal HR staff.

PEO is not just a staffing agency, but a company that handles the administrative task of the human resources as well. The tasks include not just recruitment, but benefits packages, health insurance, retirement plans and all the administrative tasks related to employment.

Advantages of using a PEO service

  • As the administrative task are handled by the PEO, the business owner Is free to focus on the core business and improve it
  • With so many laws and regulations, which are ever-changing there are chances of mistakes that turn out to be too costly. A professional PEO company keeps updated with the laws to ensure proper tax reporting and other payroll and insurance compliance to eliminate penalties
  • With a bigger employee base, larger PEO service providers are at a better advantage to negotiate benefits packages and lower insurance costs which ultimately benefit the business owner

Disadvantages of PEO services

  • It is psychologically difficult for the business owner to accept the loss over the control of human resources
  • PEOs may change their health providers regularly, which may be frustrating for the business owner
  • All PEOs provide the same level of service to their employees

Costs

Some PEO companies charge a flat fee while others may charge fees based on the employee or the service offered. When you are shopping for a PEO company, you must compare a number of companies on the basis of pricing plans and services they offer as the cheapest is not always the best in the long run.

Some PEO companies may hide the fees or services they offer and focus only on insurance and benefits that provide you saving. It is advisable to ask for a complete breakdown before you decide to work with that professional employee’s organization. Choose a PEO service to help you save on costs and free you of hr management hassles for your business to become successful.