Business owners often decide to process payroll internally because they consider it more cost effective or they are protective of the data and want to maintain control. This decision is right for some organizations, but most ultimately discover that managing payroll is more costly and time consuming than expected.
Price of Knowledge
Payroll management not only means paying employees, but also means paying federal, state, and local tax agencies, as well as other third parties, in full, on time, and in the appropriate manner. Without proper knowledge, payroll mistakes are easily made and can be costly to your organization’s bottom line.
Leveraging outside payroll expertise can help you:
- Free up time. Processing payroll internally can require many hours and resources allocated to pay employees and maintain proper paperwork. Time is money.
- Keep knowledge. Utilizing an outside provider minimizes internal staff training and avoids payroll knowledge leaving your organization.
- Get peace of mind. Working with payroll and tax professionals can ease your mind, keep you compliant, and help avoid IRS penalties.
Is Outsourcing Right for You?
Every business owner should determine if outsourcing payroll is right for his/her organization. Processing payroll “in-house” can work well for businesses that have minimal changes each pay period and payroll is otherwise straight-forward.
Your organization may find that outsourcing could save time and be more cost-effective if you can answer “Yes” to any of the following:
- Do employees work varying amounts of hours each pay period?
- Is a significant turnover rate normal for your organization or industry?
- Do you have complex overtime calculations?
- Do you have to file payroll taxes in multiple states?
- Not sure of the answer to the question above?
- Do you or your staff have trouble keeping up with payroll and tax regulations?
- Is your payroll data at risk in case of a disaster?
What You Get
Generally, professional payroll providers deliver a common set of basic services. An outsourced solution can offer these features and more:
- Payroll Processing: Calculating payroll and taxes, processing payments, and providing reports per pay period (weekly, bi-weekly, semi-monthly, monthly, or annually). Online processing is most common; however, some providers will accept phoned, emailed, or faxed data for processing. Several employee payment options are usually available including paper check, direct deposit, or pay card.
- Funds Transfer: Employee direct deposits, taxes, and deductions (retirement, benefits, garnishments, etc.) are drafted and remitted to the proper accounts or agencies.
- Integrated Systems: Payroll systems are often connected with other systems that help better manage your workforce. Timekeeping systems, for example, can transfer employees’ hours for the pay period automatically into payroll. Similar “integrations” can be set up with HR and Benefits systems as well.
- Year-End Tax Forms: Forms W-2, 1099, etc. are processed, printed, or made available electronically for employees.
How to Choose a Provider
When comparing providers, your selection may be based on features, price, or customer service. Be sure to consider the following and ask the right questions before making your buying decision:
- Features: What does the basic service include? Has the provider addressed each of your needs?
- Price: How does each provider’s price compare? Does the service fit in your budget? How long are “quoted” rates in effect and what rate increase can you expect? Have you reviewed all of the fees that may be incurred (like multiple state filings, etc.)?
- Security: Where is your data stored? How is it protected? Could it be recovered in case of a disaster? Are processes regularly audited?
- Customer Service: How has the sales process been? Have you reviewed references of each provider in consideration? Have you asked peers and colleagues which provider they’d recommend?
Conclusion
Business owners often find that outsourcing payroll can free up time, reduce costs, and eliminate unnecessary headaches. Finding the right solution and provider for you can help you get back to handling business and doing what you love.
Download this information in a free eBook or email us at sales@mpay.com for a demonstration of how an outsourced payroll solution can benefit your organization.
Photo Credit: 401(K) 2012