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
- 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
- The cost of payroll processing is reduced as a department and a person manning it is not required
- 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
- 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
- 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
- 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.