Small and mid-sized business (SMB) owners often feel caught between a rock and a hard place when it comes to payroll. On the one hand, the task is taking up too much staff time. At the same time, owners of SMBs may worry about the cost of outsourcing payroll and entrusting another party with the task.
Palmetto Payroll understands the dilemmas smaller companies face with payroll. Although it is not always an easy decision to make, our experience shows us that outsourcing payroll saves companies money and time to allow them to focus on revenue-generating activities.
How Small and Mid-Sized Businesses Save Money by Outsourcing Payroll
Keeping payroll in-house makes sense for larger businesses because they can afford to do so. However, smaller companies can actually lose money by devoting staff time to payroll processing. Owners of SMBs often feel surprised when they do the math and realize that outsourcing is the cheaper option. Here is how you can determine that for yourself:
- Calculate how many hours employees dedicate to processing payroll
- Calculate the amount you pay them for these hours
- Compare that figure to payroll service provider plans
Keep in mind that payroll involves more than just calculating wages and distributing checks. You also need to factor in time for calculating and submitting employment taxes, creating reports required by the government and preparing tax documents such as end-of-year W2 forms.
Outsourcing Payroll Reduces Risk
Federal and state laws require businesses to run payroll at set intervals and pay employees correctly and on time. Not only does your business face large fines when this does not happen, but you will soon have unhappy employees looking for a job elsewhere.
The problem with smaller businesses keeping payroll in-house is that tax regulations can change so quickly that they cannot keep up with them. They may assume they are processing payroll correctly according to the most recent information available only to receive a notice from the Internal Revenue Service (IRS) that they are using outdated resources. Outsourcing payroll to specialists makes sense because staying abreast of federal and state regulations is their job. Most payroll processors offer clients an error-free guarantee as well.
Technology and Security Concerns
Smaller companies often do not have the resources to invest in technology to improve processes such as payroll. The benefit of outsourcing payroll to a third party is that your business can take advantage of technology without having to pay for it yourself. Today’s employees expect convenient payroll options such as direct deposit and the ability to look up their pay and benefits information online. Payroll providers offer these services and more.
Payroll specialists know how to detect fraudulent schemes such as phantom workers and manipulation of time reporting. These are skills that most in-house payroll workers at small companies do not have, especially those without specialized education. Knowing each payroll run is secure and your employees receive their checks on time offers you valuable peace of mind as you operate your business.
Request a Quote from Palmetto Payroll Today
Payroll services are just one of the many administrative support solutions we offer at Palmetto Payroll. We invite you to contact us to learn more about our services and to request a quote.
