Payroll outsourcing has become increasingly popular among businesses of all sizes. With everything that goes into processing payroll, these processes can be time-consuming and stressful for business owners who are handling it themselves.
When it comes to payroll outsourcing, you may be left with some questions. What does it mean to outsource your payroll? How do you you know if payroll outsourcing is right for your business? What are your options? What are the benefits?
We’ve answered these questions about payroll outsourcing to help you make the right decision for your business.
What is payroll outsourcing?
Simply put, payroll outsourcing is means hiring a third-party company that specializes in payroll processing to handle the payroll for your business.
Payroll processing companies can handle:
- paying your employees each pay period.
- tax reporting.
- regulatory compliance.
- compiling payroll reports.
Using a trusted payroll processing company ensures that:
- all of your employees and contractors are paid effectively and on time.
- payments are accurate and compliant with all local, state, and federal tax laws.
- all of your payroll paperwork is in one place.
By outsourcing your company’s payroll, all of the tasks regarding payroll are handled by your payroll processing company rather than the stress being on your shoulders.
When should I outsource my company’s payroll?
There are a number of factors to consider when deciding whether payroll outsourcing is right for your business. When making this decision, start by asking yourself these questions:
- How many employees does your company have?
- Do you pay any foreign employees or contractors?
- Do you have the means of purchasing and maintaining payroll software to process payroll in-house?
- Do you have the capacity to train employees to process payroll?
- Do your employees’ hours vary widely each week/month?
- How much time do you currently spend running payroll each pay period?
- Does your payroll have frequent errors?
- Have you frequently paid payroll-related tax penalties?
While your answers to these questions may not give you a definite answer, they may help tip the scale in making your decision. If you are spending numerous hours each week running payroll, paying foreign employees or contractors, unable to justify the cost of running payroll in-house, or frequently having issues regarding payroll, outsourcing may be the the right option for you.
What are the benefits of payroll outsourcing?
Before you invest in something new for your business, you want to be sure that the benefits are worth the cost. And investing in payroll outsourcing is no different. Rest assured, there are numerous benefits of outsourcing your company’s payroll.
1. Save money
It’s no secret that time is money. By saving time on payroll tasks, you’re saving yourself money. But even more than that, outsourcing your payroll actually costs less than having an in-house payroll department.
2. Decrease stress and have peace of mind
Having a team of professionals handle your payroll takes the stress off of your shoulders. You don’t have to stress about learning new payroll software and ensuring that you are doing everything correctly. You can have peace of mind knowing that everything is being taken care of effectively and efficiently.
3. Put time back into your schedule
Not having to run payroll yourself means that you’ll have more time to do other important tasks for your business. And like we mentioned before, time is money. You’re able to focus on tasks that make money for your business rather than spending all of your time all things payroll-related.
4. Easy access for employees
With the features most payroll processing companies offer, your employees can easily access their payment info, track their hours, and more. Many even offer mobile apps so that your employees can access these features right from their phone.
5. Protect your employees’ data
Most payroll processing companies use cloud-based servers to store your employees’ information, which protects the information you share with them. Taking advantage of their secure servers ensures that you have maximum security and even helps to prevent embezzlement, identity theft, and other risks.
6. Make fewer mistakes
When running your own payroll, you leave yourself more open to mistakes – especially if the person running your payroll is wearing numerous hats in the office. By working with professionals whose job is to ensure that payments are made correctly and that tax laws are followed, you’re minimizing the number of mistakes that can happen.
7. Outsourcing works regardless of the number of employees
Small, medium, and large business can all benefit from payroll outsourcing. Small businesses are able to spend less time on doing payroll and can spend that time on other necessary and important tasks. While large companies can benefit from avoiding errors that often occur when in the in-house team is swamped with numerous tasks.
How do I choose the right provider and outsource my payroll?
1. Determine your needs and your budget.
Payroll companies offer a variety of services. Depending on the specifics of your business, you may not need every service that they offer. Decide what you’re willing to spend on payroll processing and what specific services you need. Then, start looking at companies that meet your needs and fit your budget.
2. Do your research.
After you determine what you actually need, do your research on different companies. Some payroll processing companies are better suited for large businesses while others are specifically designed for small businesses.
For each company that you’re interested in, be sure to:
- Compare their pricing
- Weigh the pros and cons of each
- Look at peer reviews
- Evaluate their company history
3. Decide on the right provider.
After determining your needs and doing your research, it’s time to decide which company best fits your needs. If you’re having a hard time choosing, reach out to the companies you are interested and talk with them. This can help give you a better feel for what it could be like to work with them.
4. Contact the company and get started.
Once you’ve decided on the payroll processing company who’s right for your business, contact them to start the onboarding process. Make sure you start gathering the the information they will need in order to make the transition as smooth as possible. You’ll most likely need to provide:
- Employee information (Personal information, pay rate, job title, hire date, type of contract, etc.)
- Routing and account numbers
- Recent quarterly payroll reports
- Year-to-date payroll totals
What payroll companies do you recommend?
There are a number of great options for payroll processing companies out there. It’s important to do your research and find the company that best fits your needs.
Here are a few companies we trust: