Payroll is an important function for any business. Depending on the size of the business, payroll may be a task for an in-house payroll team or the business owner or manager to take on. In some cases, a business might employ the services of an accountant or administrative services organization (ASO) to handle payroll and related tasks. Professional employer organizations (PEO) are another option for companies looking to outsource their payroll function. There are pros and cons to each approach, and finding the right payroll solution can be crucial to the success of your business.
In-House Payroll or Outsource?
Many smaller or newly established businesses may opt to keep the payroll function in house, with the burden usually falling on the business owner or an office manager. There are several DIY bookkeeping tools available that offer a payroll module to generate pay checks, calculate taxes, and help with the preparation of periodic tax deposits and filings. However, depending on the nature of the business, payroll may not always be a simple task. Employers will also need to keep in mind that rules and regulations may change based on where the business and its employees are located, and laws are changing all the time.
While a simple payroll with a handful of employees may not seem like much, add in the compliance, tax filing, reporting, and other requirements (especially if the business is growing), and it can quickly turn into its own full-time job. If the business already has an outside accountant or CPA handling their bookkeeping, payroll might be an add-on service that is offered by their accounting firm. This is a logical solution for many companies, since their accounting partners likely already handle some or all of the other financial and tax reporting, filing, and remittance. But, although the accounting team may be very well-versed in tax matters, payroll can have its own intricacies and your accounting firm may not have the expertise to handle some of the more complex payroll situations your company might encounter.
A company may also choose to employ a person or team dedicated to making sure employees are paid correctly and on time. Having a specialized department allows for some deep or specialized knowledge of payroll within the company, and can give the business owner some peace of mind. It can also be helpful to have an in-house team that is aware of any of the company’s day to day activity that might impact payroll. Of course, this is assuming that there are good channels of communication between human resources, benefits, and payroll to make sure everyone is on the same page.
ASOs and PEOs
ASOs and PEOs are other options available to businesses. These are companies that focus on outsourced administrative functions such as payroll and other HR tasks. Businesses may also gain the added perk of falling under the ASO or PEO’s umbrella of coverage, which can allow you to take advantage of generally more favorable group rates and premiums on insurances and other employee benefit programs. Partnering with one of the many service providers out there can also provide valuable industry expertise, as many of these companies have clients of varying sizes across multiple industries and locations. This means they’ll have more insight into best practices, and most have access to specialized tools and software to stay in compliance and keep up to date with the ever-changing rules of payroll.
Finding the Right Payroll Solution for You
Payroll is an essential task for any business, and making the right choice can be critical. Contact Valor Payroll Solutions today and let us show you how we can help!