Hiring employees can help your business grow, but it does make your job more complicated. Take payroll for example. It’s a headache that recurs before every payday, one that may be relieved by outsourcing payroll.
Processing payroll internally takes time and resources. And it’s easy to make mistakes. Statistics from the Internal Revenue Service show that approximately 40% of small businesses incur penalties for failure to comply with payroll requirements. The total amount of fines paid by businesses represents billions of dollars. That’s money that could be better spent.
Outsourcing payroll can keep you on the right side of compliance, and it is really not that expensive considering the time and worry that it can save you.
How Outsourcing Payroll Works
In general, payroll companies take care of payroll administration for their clients. If you’ve been doing it yourself, you know that is a much bigger job than just issuing checks.
A payroll company will handle all of the details to get your employees paid including check processing, direct deposit, W-2 and 1099 processing. They may also help you manage employee benefits and other HR functions. Where a business may find the most value in outsourcing payroll is a payroll company’s tax administration services.
Tax administration is an important part of the payroll process that many small business owners find difficult to manage on their own.
There are monthly, quarterly and annual deadlines for payment and reporting. Keeping track of those while you are trying to run a business can be overwhelming. Add to that, regulations that change on a frequent basis and it makes a great case for outsourcing payroll.
Payroll Service Pricing
Pricing varies depending on the size of your business and the services that you need. It’s common for services to charge a flat monthly fee plus a per employee fee. Entrepreneur.com reports that basic payroll service pricing ranges from $.80 to $2.00 per check plus a base fee. Many companies will provide a free quote customized to your business’ needs.
So, is outsourcing payroll a good solution for your business?
If your focus is needed in other areas of your business, outsourcing payroll seems like an inexpensive option when you look at the potential expenses related to penalties and interest for not being in compliance.
Very few people go into business for the fun of payroll administration. By outsourcing payroll to a trusted provider, you can get back the precious resource of time, allowing you to put your energy into the areas of your business that need your attention. It also grants you peace of mind that your payroll administration is being done right.