Anyone who has experience processing payroll knows that it isn’t always the easiest or most enjoyable part of running a business. Depending on the size of the company and the complexity of its structure, running payroll can take anywhere from a few minutes, to several hours, to an entire day or more. With most companies running on bi-weekly and/or weekly pay schedules, payroll can become a big administrative burden.
It’s no wonder that many businesses choose to outsource their payroll function to free up their valuable time, especially in smaller companies that may not have a payroll team, and where the payroll processing is the responsibility of the owner or manager. Outsourcing allows the business to save time and focus on taking care of its customers and clients, while relying on a third-party to help with the payroll and related tasks, such as tax reporting, payment distribution, and periodic filings with local, state, and federal government agencies.
While it may seem like an easy decision for some, payroll outsourcing is not always a one-size-fits-all solution. There are several things that should be considered when trying to determine whether outsourcing this function is the right move for the business.
Does the provider understand your business?
For companies operating in specific industries that might involve special pay structures, commissions, bargaining unit agreements, piecework, etc. will benefit from having an outsourced partner that is experienced or fluent in the specific rules and regulations that apply to the business. In some cases, companies may find that working with an outsourced provider is almost as much work as keeping the process in house, due to the complexity of the payroll. An outsourced partner who understands the intricacies of the payroll can save the business a lot of time from having to explain scenarios and audit for accuracy.
Does the provider have a good track record?
It is ultimately the responsibility of the business to make sure employees are paid correctly, and to see that taxes are remitted and filed. Inaccurate or missed payments and reporting can lead to high penalties and interest owed to different state and federal agencies. With so much at stake, it’s important to find an outsourced payroll partner that can be trusted to properly handle all aspects of the payroll covered by the service agreement. Reviews or referrals can be helpful in finding a provider with a good reputation.
How much does it cost?
Cost may perhaps be one of the most important factors to consider. When assessing the cost of an outsourced option, businesses should think about the time saved from not doing the administrative work in-house. Those hours can be spent on more revenue-generating activity and focusing on the core business.
What about my current team?
A common misconception is that outsourcing equal layoffs. However, this is not the case. It is possible for a business that has an in-house payroll processor to keep that person employed while still using an outsourced provider. The in-house team or individual can act as a liaison to clear up any issues or discrepancies with the provider, while being able to focus on strategic initiatives and other high-value activity by allowing the third party to take care of the administrative tasks. Working with an outsourced partner usually means the entire process doesn’t fall on one person, which takes away the worry and stress if someone is out sick or on vacation.
Is payroll outsourcing right for your company?
Outsourcing may not be the solution for everyone, but by asking the right questions and choosing the right provider, businesses can benefit greatly from working with an outsourced payroll provider. At Valor Payroll Solutions, we have the tools and experts that can ease your payroll burden and free up your time so you can take your business to the next level. Contact us today and see how we can help!