Payroll companies provide various services beyond cutting paychecks and ensuring compliance with tax laws. They help small businesses save money by allowing them to automate processes and free up human resources to focus on high-level tasks.
Payroll and tax regulations are constantly changing. Professional payroll companies monitor these changes closely and can offer guidance to help businesses stay compliant and avoid penalties.
Reduced Risk
When you hire a payroll company, you transfer responsibility for processing sensitive financial information to a third party. While this does not eliminate all risks, it lessens the impact if an error occurs.
Whether missing an employee’s tax withholding, miscalculating a 401(k) contribution, or making a simple typo on a paycheck, even minor errors can have significant consequences. Employees will be upset and disengaged if they don’t receive their pay on time, and your business may face fines or other penalties.
A professional payroll provider stays up-to-date on changing laws and regulations, calculates taxes and deductions correctly, files and pays the appropriate fees, and maintains records. Moreover, they offer customizable reports and analytics that provide insights into labor costs, overtime, compensation, etc.
When you rely on a payroll company, your internal team can focus on high-level tasks and projects that drive the business forward. This reduces the risk of burnout and turnover, which can lead to diminished productivity, which is a problem considering that an estimated 25% of companies spend most of their time running payroll (Deloitte Survey, 2018). Moreover, outsourcing does not eliminate your overall responsibility; in-house staff must still make policy decisions and direct other aspects of the company’s financial operations. A payroll company provides security and expertise to help you avoid costly mistakes.
Increased Efficiency
Companies often outsource payroll to save time and resources. Managing the intricacies of payroll requires significant effort and time that could be spent growing revenue or connecting with customers. Payroll service providers streamline tasks like calculating payroll each pay period, signing and distributing checks, preparing taxes and returns for federal, state, and local agencies, implementing systems that help employees report hours and access payroll reports, and providing training & support.
A full-service payroll company is also a trusted partner regarding compliance and labor laws. They know the latest changes and are experts in processing and filing payroll taxes. This helps ensure you make accurate deductions/withholdings without overpaying your employees or violating labor regulations.
Additionally, many payroll companies offer services that take care of HR functions, such as ensuring that new hires have the proper paperwork to work in the US, confirming the accuracy of employment eligibility documents, and addressing other common concerns like verifying background histories and conducting criminal checks. This allows your finance and HR teams to focus on other essential tasks. The result is a more efficient and effective workplace that ensures your team is paid correctly and on time.
Reduced Costs
Payroll services don’t just make employee payments; they also help businesses manage their payroll costs by ensuring that all taxes are paid and that paystub online accurately reflect employee information. Leading payroll service providers also have compliance teams that monitor regulatory agencies for changes that impact paycheck calculations, deductions/withholdings, reportings, deposits, and filings.
These teams can quickly change software calculations and workflows to comply with new regulations. For example, suppose a city ordinance changes how local taxes are calculated or sick leave accruals are reported. In that case, these teams will immediately update their system so that all clients comply.
Some providers offer other cost-saving services like time and attendance tracking, applicant management, onboarding, benefits enrollment, etc. These services can free up internal HR staff to focus on high-level strategies that drive business growth and improve company performance.
When selecting a payroll service provider, ensure it offers all necessary features at an affordable price. Many companies charge a fee per employee or payroll period and additional fees for direct deposit or end-of-year processing. Additionally, consider the time it will take to input data into the system manually and the number of errors that may occur.
More Time to Focus on Your Business
Payroll can be a time-consuming and confusing process for businesses. Whether you are calculating overtime, filing taxes, paying employees in multiple states, or ensuring that your company meets all state and federal labor laws, payroll companies can help. This enables your business and HR team to prioritize their core responsibilities.
The best payroll service providers have a variety of services that can be customized for your unique needs. For example, some may offer various payment options (direct deposit and paper checks), tax filing services, garnishment payments, workers’ compensation administration, and detailed payroll reports. Some even include benefits administration and integrations with your existing accounting software.
Regardless of the size of your business, you can find a payroll provider that fits your needs. Look for one offering flexible pricing – some operate monthly with no long-term contracts, while others require a yearly commitment.
Managing your company’s payroll can take time and effort, especially for small and medium businesses. However, outsourcing this responsibility can help you save money and focus on the most critical aspect of your business – your people. Consider the benefits of working with payroll companies to make the most out of your investment in your workforce. By entrusting payroll tasks to experts, you can ensure accurate and timely employee paychecks.
