It’s common for small business owners to handle many responsibilities including payroll processing. Handling payroll on your own could cause potential problems for your business.
Too often, small business owners don’t have the experience, time, or knowledge to manage complex tax and payroll filings. As a result, important deadlines are missed which end up costing business owners both time and money to resolve.
Accurate and Timely Payroll Processing Is Critical
Payroll processing is a highly regulated business function that encompasses everything from personal information on employees to federal and state government requirements. The consequences of improperly filed payroll can be damaging to your business.
The IRS estimates that approximately 40% of small- to medium-sized businesses improperly file their payroll yearly and pay penalties averaging $845 each year. Keeping up with complicated IRS payroll regulations is not something most business owners have the time or expertise to handle on their own.
Managing payroll can be a costly and time-consuming endeavor for small business owners. When payroll is handled in-house, you need appropriate software, extra hours to dedicate to the process each week, and a thorough understanding of changing tax laws and employer obligations.
Calculating payroll taxes and ensuring correct deductions, integrating third-party 401K and benefit plans, and ensuring compliance with federal and state regulations are just a few aspects of accurate payroll processing.
Small business owners benefit from outsourcing some back-office tasks in order to free up time to focus on generating income. Outsourcing payroll can give your business more flexibility than hiring an in-house bookkeeper. Rather than putting your funds toward hiring support staff, you’ll have more money to spend on the core functions of your business. You’ll also have the expertise of an entire team of professionals rather than a single person handling your payroll needs.
Why You Should Consider Outsourcing Your Payroll
Surveys of small business owners consistently cite payroll and other administrative tasks as a top challenge. As a business owner, your time is better spent on employee management and company growth. When you outsource your payroll, it frees up a significant amount of time, allowing you to focus on generating more sales and higher profits.
Hiring an additional employee to handle payroll is a significant investment. You’ll need to consider the time and expense of recruiting, hiring, and training a qualified bookkeeper.
After factoring in salary, employee benefits, payroll software, equipment, ongoing training, and other costs related to payroll processing, you’ll likely find that you’ll save money by outsourcing your payroll. And you won’t have to worry about replacing an internal bookkeeper if they decide to move on or they don’t work out.
- Data Security
Processing payroll in-house carries a high-security risk. Payroll information can fall into the wrong hands and create numerous problems for small business owners. Even with employees you trust, fraud, identity theft, or tampering of company data is all possible.
When you outsource payroll, sensitive and confidential payroll information is calculated off-site. There’s little chance of a breach of confidentiality.
- Accuracy and Timeliness
Payroll errors are stressful and upsetting for both employees and employers. An experienced provider is far less likely to make errors since they have the knowledge and experience to ensure that payroll is accurate every time.
If you have just one person working in-house on payroll and they get sick or take a vacation, your payroll can easily fall behind which is frustrating for both employees and employers. When you outsource your payroll, you don’t have to worry about missed tax filings or late paychecks.
- Checks and Balances
No one likes to think about theft or fraud, but having just one internal employee handling cash, payments, and payroll processes increases the potential for fraud or theft. Fraud happens to almost two-thirds of small businesses, so it’s far more common than most people realize.
Even with a good payroll software system, you still need to have someone with a thorough understanding of payroll who can uncover potential errors – intentional or otherwise. Payroll software can’t overcome human error. In other words, the software is only as accurate and reliable as the person entering the data.
- Expert Financial Advice
When you outsource with the right payroll service provider, you have access to expert financial advice throughout the year. These services go well beyond just simply processing paychecks.
The right accounting service will offer services for tax filings and management, as well as other types of financial services small business owners need. Taking advantage of this expertise can help you manage your company more effectively and increase your profits.
- Peace of Mind
Unless you enjoy calculating payroll and dealing with federal and state payroll regulations, you likely find dealing with payroll stressful and with good reason. The IRS reports that one in three employers are fined for payroll errors each year, with total penalties reaching billions of dollars.
When you are busy running a small business, worrying about tax penalties and regulations is not the way you want to spend your time.
Get the Professional Payroll Help You Need
Payroll is an essential business function and can be a time-consuming and complex task, especially for small business owners. Getting your payroll right is a critical aspect of running a successful business. Outsourced payroll services offer all of the expertise you need, without the cost of having another employee in your office.
Outsourcing is often the best of both worlds for small business owners – you save money and have reliable, accurate payroll processing at the same time. In addition, partnering with the right company can help ensure both your personal and business finances are running smoothly.
Orcutt & Company is a full-service financial solutions provider. Our comprehensive service plans are designed with the small business owner in mind.
We can handle your bookkeeping, payroll, and corporate and personal taxes in one office, with one point of contact. Our integrated approach is designed to ensure that we understand your personal goals and how they integrate with your business finances.
When you’re ready to hand off your payroll processing, give us a call. We’ll discuss your needs and develop a plan that’s right for you.