Increase Cost-Efficiency With Payroll Outsourcing
For many small and mid-size businesses, processing payroll can be quite the headache. Not only is it labor-intensive and time-consuming, but having to keep up with the latest tax laws and labor regulations can also be rather nerve-wracking!
Thankfully, there are many outsourcing services you can use to handle payroll. Here's what you need to know:
What's Payroll Outsourcing?
When you hire an outsourcing company to process your company's payroll, it will gather employee information, calculate the paycheck amount for each employee, process tax deductions, make deposits to employees' accounts or mail out paychecks, make payments to insurance companies, process payroll taxes, issue W-2 forms, and provide business reporting.
There are different payroll outsourcing options, such as using a bookkeeper, payroll software, or a professional employer organization. These options offer different levels of services and the cost can vary quite significantly. For example:
- Using local bookkeepers can cost around $5,000 per year and you can work with them face-to-face. However, some of them may not be up-to-date on the latest tax laws or labor regulations.
- Hiring full-service payroll providers typically cost around $6,000 per year. These companies specialize in payroll processing and tax laws, so you can be sure that you're adhering to the latest regulations. However, these services can be more expensive, and you'll likely have to work with them remotely.
- Using a payroll software costs around $2,000-$4,000 per year and ensures that you're current on payroll, labor, and tax laws. However, you'll still need to be involved in processing the payroll every pay period.
- Working with a Professional Employer Organization (PEO) gives you access to full-service HR, benefits, and payroll. But it's often quite costly ($12,000-$40,000 per year) and typically not worth the price tag if you only need payroll processing.
Benefits of Payroll Outsourcing
For many small- and mid-size businesses, outsourcing payroll is a cost-effective alternative to in-house processing. Here are some advantages of using a payroll outsourcing service:
- Avoid incurring hefty penalties for tax filing omission or labor law violation
- Save time and reduce overhead by eliminating tedious and repetitive tasks that your staff need to perform in-house
- Enhance security by reducing the risks of a data breach, identity theft, and embezzlement. (Reputable payroll service providers use secure systems to store and protect client data and offer comprehensive backup and recovery plans.)
- Stay compliant with changing government regulations to prevent misrepresentation or failure to accurately report employment taxes
- Leverage the expertise of payroll professionals so you can focus your time and resources on growing your business
- Take advantage of the flexibility and scalability of outsourcing, which is particularly cost-efficient for businesses that experience seasonal or cyclical fluctuations in staffing needs or are expanding rapidly
What You Should Know When Hiring a Professional Payroll Service?
If you decide to outsource payroll, make sure the service provider has the proper professional credentials to securely handle your employee information and ensure that you're staying compliant with tax laws and regulations. Here's what you should consider:
- Understand which party will assume responsibility for the penalty in the event that taxes are filed incorrectly
- Interact with customer service or account management to ensure that you get the level of support you expect
- Inquire if the provider calculates local or city payroll taxes on your behalf
- Ensure that the provider has the proper network security measures in place to protect your data during transit and storage
- Understand the pricing structure — e.g., what's included in the packages, additional fees for adding or dropping employees and updating employee information, whether there's an additional cost for filing taxes in multiple states, and which party will assume the cost if there's a payroll data mistake
- Request references and ask questions regarding the provider's responsiveness, accuracy, and level of customer service, etc.
The Key to Successfully Outsourcing Payroll
Proper communications and Information sharing is the key to working seamlessly with a payroll service provider so you can be certain that it's getting the most up-to-date information to process your payroll and taxes.
Using technologies such as Unified Communications as a Service (UCaaS) and/or Voice over Internet Protocol (VoIP), you can improve communications with video conferencing, messaging, file sharing, and centralized data storage to ensure that nothing falls through the crack.
Your business has enough on its plate. Outsource what makes sense for your business, choose a world-class SaaS technology solution and focus on what's important: your clients. Call 1-866-879-8647 or fill out an online form to request a no-obligation quote from an 8x8 product specialist.