5 reasons to outsource Payroll
Although many companies use in-house staff to facilitate payroll operations, several companies have discovered that the expertise and convenience, provided through outsourced payroll services, better satisfies the dynamic needs of their business.
Companies that provide payroll services can assist companies in decisive ways that increase efficiency and ensure compliance with everchanging regulations. Managers and business owners who place a high value on their time and are looking to reduce costs as well as risk, will eventually choose to outsource payroll. By making this switch, many of the hassles of payroll (wage calculations, tax withholdings, reporting, etc.) are effortlessly handled for them. There are several benefits to outsourcing payroll, including:
Payroll processing is a time-consuming process. Employees must keep track of deductions, new hires and terminations, paid time off, as well as the frequent changes to federal and state regulations. Every year, critical labor hours are wasted on preparing payroll forms, ensuring their accuracy, and maintaining legal compliance. Outsourcing payroll processes allows businesses to free themselves from these time-consuming operations, to do more specialized work that contributes to the company’s bottom line. Instead of wasted manpower hours, employers simply need to contact the payroll specialist to approve the payroll once each pay period.
Payroll regulations may change at the state or federal level, and these changes can be convoluted and unnecessarily complex. Payroll specialists are consistently informed of these changes and understand in intricate detail how these changes can affect your business. Having a simple discussion with these specialists can make the difference between compliance and non-compliance and can reduce the complexity in the process.
Every company is looking to reduce costs, and outsourcing payroll processes is one area that may often be overlooked. Maintaining a payroll department is not only time-consuming, but it can also be a waste of resources as well. Consider calculating the cost of labor hours and payroll operations (calculating payroll, printing, signing, distributing, training, researching regulations, new hire reporting, generating reports for accounting use) and compare these costs with the plans provided by payroll professionals. Payroll outsourcing services are generally cheaper.
Payroll processing can be a complex and risky business practice. Regardless of the integrity of your employees, there is always the risk of identity theft, embezzlement, and potential hacking of company payroll software. Consider if you have the necessary time to closely supervise and evaluate the company’s payroll operations for time & rate abuses, ethical concerns, or mistakes. Payroll solutions will have technology that ensures the safety of sensitive payroll information, identifies fraudulent activity, and provides data backups in several server locations to prevent data from being lost. These types of security remove the unnecessary burden of in-house payroll operations and provides the peace of mind necessary to focus on what is best for the company.
Main differences between in-house payroll and outsourcing payroll
In-house payroll processing and outsourcing payroll provide different advantages. Companies should consider these advantages thoroughly to determine if outsourcing payroll can help their business increase productivity and lower costs. Although not suitable for every company, thousands of companies have already switched to EOR (employer of record) & PEO (professional employer organization) solutions, creating a global market of nearly $5 billion.
When considering outsourcing payroll operations through a PEO or EOR solutions, managers should first evaluate their essential payroll-related functions. These include calculating wages, managing deductions, calculating and issuing paychecks, handling taxes, and keeping payroll operations compliant with state and federal regulations. By first understanding these costs, companies will have a clearer idea of what outsourcing provides, and a firm understanding of the associated costs.
Managing payroll in-house is possible, though there are several drawbacks to this approach. The first drawback, as mentioned earlier, is the associated costs. A QuickBooks study found that business owners can waste up to 5 hours on payroll operations per period! Over time, this number can add up quickly. In addition to this time requirement, payroll operations will require staff. These employees will not only need to be trustworthy, but also qualified and educated on current payroll regulations.
In general, in-house payroll is suitable for companies who need to maintain more control over the entire payroll process, have employees who can manage this sensitive work, and who don’t want to spend any extra on outsourcing.
Outsourcing is a good option for companies who are worried about the complexities of compliance required for payroll and who prefer to rely on the expertise of experts to meet these needs.
How INS Global can help you
INS Global has already helped a number of companies with their payroll operations. Through providing expert level payroll outsourcing services, INS Global ensures compliance with regulations, detailed customer service, and expert payroll consulting for companies around the world. Get in touch with us today and find out how we can help you!