All About Outsourced Payroll Services
When you’re a leader in a fast growing startup or new business, you probably feel like a jack-of-all-trades. Employee calls out sick? You’re taking care of shifting schedules and duties. Water cooler breaks down? You jump into action. Paying your employees’ salaries? Well, someone’s gotta do it.
But maybe that’s one thing you shouldn’t be handling yourself.
Managing staff salaries through payroll is something that many founders and leaders do on their own during the earlier stages of their company, and for plenty of good reasons. But handling payroll yourself can be tricky business, because not only is it time consuming, but it’s far too easy to mess up.
So, what’s a business or startup owner to do?
The answer: outsourced payroll services.
That’s right — just like you can outsource tax services for your business, you can also use outsourced payroll services to ensure your employees are being paid the proper amount and on time, without error, and without consuming your valuable time.
Still not convinced? Here are 6 reasons why you might want to use outsourced payroll services for your new business or startup.
6 Reasons to Outsource Payroll
1. Saving Time
As a startup leader, time is one of your most valuable assets, and where you put your time can dramatically impact the day-to-day of your employees, and the trajectory of your company. And running payroll can be an incredibly time consuming task for owners and leaders to do on their own. In fact, surveys show that for almost 70% of owners, simply handling payroll duties in-house can cost owners between 1 hour and 10 hours per month, while 11% of owners spend more than 10 hours per month dealing with payroll.
That’s because when you’re handling payroll yourself, you’re not only cutting checks or setting up deposits. You need to set aside time for calculations, reporting, and taxes.
But instead, when you choose to outsource your payroll, you get all of that time back, so you can focus on running your business, instead of making sure your employees are simply being paid properly.
2. Avoiding Errors
As we just mentioned, there is a lot more that goes into payroll than simple monetary distribution. You need to calculate hours and time off, actually distribute payments, generate payroll reports and other monthly financial reports, and prepare your payroll information for tax time. As you can probably imagine (or know firsthand), with all of that information, numbers, and calculations, comes plenty of room for error.
Making errors in your paychecks can be more than just an inconvenience for everyone: it can cost you big time. Authorities often investigate payroll mishandling, even if it is done accidentally. From properly classifying your employees to ensuring the correct amount is paid every time, you definitely want to make sure your payroll is error-proof, every time.
That’s where outsourced payroll services come into play. Because these professional payroll service providers are experts who are 100% focused on your payroll, minimizing room for error.
3. Ease at Tax Time
Tax time can be complicated enough for businesses, without owners having to worry about the nuances and repercussions of payroll-related tax obligations. In general, human error is often a leading cause of accounting mistakes, and it accounts for billions of dollars a year in IRS civil penalties.
Business owners aren’t only responsible for cutting checks every month: they’re also liable for the tax burdens that come with payroll. But when you choose to use outsourced payroll services, these financial experts can ensure you’re following all necessary tax regulations and protocols.
4. Integrating Benefits
If your company offers benefits to your employees, such as health insurance and retirement contributions, you probably know that there are a lot of complexities that come along with the conjunction of payroll and benefits. Employees contribute certain amounts of their paychecks to their benefits, and their contributions can be affected by an employee’s filing status and how much they earn.
Instead of trying to navigate mandatory and voluntary payroll deductions on your own, outsourced payroll services can calculate these figures efficiently and accurately.
5. Maintaining Compliance
Payroll compliance is anything but optional, and there’s a lot of strict regulations and needs that come along with payroll. Classifying your workers correctly, keeping excellent records, and adhering to all local, state, and federal laws are just the tip of the iceberg, and there are many complex and specific compliance needs when it comes to payroll.
When you use outsourced payroll services, you’re choosing to work with professionals who know the ins and outs of your compliance needs.
6. Generating Reports
Your payroll figures are far from your run-of-the-mill numbers, and instead, they’re representative of cashflow through your company. From salaries to deductions and benefits, regular payroll reports are important for running your business, and might even be required by regulators. When you use outsourced payroll services, you know you’ll get the regular reporting you need, when you need it.
Costly Payroll Mistakes to Avoid
If you’re already handling your own payroll, it might seem like it’s simpler or more affordable to keep things the way they are. But it’s important to keep in mind that many of the long term benefits of outsourced payroll services have to do with avoiding errors and costly mistakes. If you are handling your own payroll services for your business, here are some of the most common (and most costly) payroll mistakes to avoid.
- Improper Payments
No employee wants to check their balance and find that their employer paid them less than what they’ve earned. When handling payroll, it’s important to carefully calculate employee payments accurately, accounting for variables such as overtime and time off.
- Tax Compliance
In order to avoid (or navigate) difficulties with the IRS or a tax audit, it’s important to be 100% up-to-speed with your tax compliance. That means taking out the proper deductions and contributions for benefits (both voluntary and mandated). It also means keeping excellent track of your payroll records, in order to file your payroll taxes properly.
- Insecure Data
When you’re running payroll, you’re responsible for the crucial data of your employees. Social security numbers, bank account information, and other key identity documents are in your hands, and you need to make sure you’re taking steps to secure that data and to ensure that it’s handled properly.
- Failing to Generate Reports
Whether your payroll reports are mandated or voluntary, it’s still important to run them regularly, so you have a good handle on your payroll numbers. An excellent record-keeping and reporting system is necessary for ensuring accurate payroll processing.
How Do You Choose a Payroll Provider?
If you’re thinking about choosing to go with an outsourced payroll provider, you might be wondering how exactly to go about selecting one. Here are some things to look for when deciding on outsourced payroll services:
- The Basics
While there are plenty of financial services and platforms for businesses, you should be sure the payroll provider you’re selecting specializes in payroll processing, including elements such as taxes, statutory filings and payroll inquiries.
- Deductions & Benefits
Along with the basics of payroll, your outsourced payroll provider should also set up mandatory and voluntary payroll deductions, such as federal income tax and life insurance.
- Expense Reimbursement
If employees have expense accounts or company credit cards, your outsourced payroll services should be able to service expense reimbursement. According to IRS rules, legitimate expenses can be reimbursed without impacting taxable income.
Your outsourced payroll provider should offer regular reports at specific intervals, and should generate necessary tax reports and documents.
- Error-Free Services
Your outsourced payroll provider should be experts in payroll needs, tax regulations, and reporting requirements, as well as calculating deductions and other benefits, so that your payroll is error-free.
How Does Accounting Tie into Payroll Services?
While payroll services might seem like a standalone need, they actually tie into your suite of payroll services that your business uses. Payroll is inherently tied into HR services in particular, because it’s part of the full scope of HR activities and responsibilities. Aside from HR, your payroll services also go hand-in-hand with your regular bookkeeping, tax, and financial reporting needs, because all of these numbers and figures are the individual pieces of your complete financial picture.
Payroll Services that Get it Right, Every Time.
Payroll is one of those things that you simply don’t want to get wrong, ever. In order to get it right every time, you should work with an outsourced payroll and accounting provider who knows exactly what they’re doing.
Here at hiline, we offer professional outsourced payroll services as part of our HR & Payroll service offering, since these two business needs are intrinsically connected. We’re pretty much payroll-obsessed, which is what you definitely want in an outsourced payroll provider. We’re happy to provide these services to you, along with our main accounting services, such as bookkeeping or tax services.
Interested in outsourcing your payroll? Read about our different service plans, and let us take it from here.
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