Businesses of all sizes can benefit from outsourcing payroll functions.  Having an expert in your corner is always a good idea when it comes to complex functions like tax computation and job cost reports.  Hiring a professional is a great way to avoid penalties and fines that can result from filing or payment mistakes.  Here are a few more commonly mentioned advantages of hiring a payroll services company:

No in-house payroll

Hiring a bookkeeper can be expensive, especially if they will be performing payroll services in addition to other duties.  Salaried bookkeepers can invoice clients, record billing information, calculate project budgets, and plan for financial decisions.  Bookkeepers can charge upwards of $40,000 a year in salary costs and benefits.  Though a part-time bookkeeper will cost less, hourly charges will still be much more expensive than a payroll service would be. 

A bookkeeper can be necessary to perform other business functions, but the sheer time involved in processing payroll makes outsourcing much more cost effective for most companies.  Using a payroll outsourcing company also eliminates the need to train an employee in your payroll methods, and provides a reliable source for payroll needs.  A payroll company will process checks on time no matter how busy your business is, if your bookkeeper is out sick, or if you are traveling and unable to sign checks. 

Expert knowledge

One of the main reasons most businesses choose to hire a payroll company is the reassurance that a professional is handling this complicated task.  Payroll computations can be complicated and difficult.  For example, an employee can amend a W-4 at any time, and pay amounts must reflect these changes.  Tax information can change from month to month for some employees.  Social security tax (FICA) has a yearly “cap” based on how much an employee earns during a given year.  Many employees reach this ceiling before the year is over, and don’t need to have the tax withheld for the remainder.  Tax laws change constantly.  Since penalties for miscalculating tax amounts are very expensive, it helps to have a knowledgeable expert preparing your payroll.

Some payroll companies cater to specific industries.  Some businesses are required to offer versions of flexible savings accounts, cafeteria plans, or retirement account contributions.  Payroll companies familiar with these options can guide you through the complicated regulations.  As a business grows, it might also incur additional obligations with respect to insurance and retirement plans.  Payroll companies can file the necessary forms and make sure your business grows smoothly, in compliance with applicable regulations.

Savings

Hiring a payroll company can save your business a significant amount of time and money by eliminating the need to perform payroll functions yourself.  Administrative functions are best performed by the person (or company) that can get the job done the fastest and for the least expense.  With the case of payroll companies, outsourcing is the clear choice.  A staff person at a payroll company can process your payroll in a fraction of the time it would take for you to complete. Performing your own payroll processing not only takes up time, it usually results in more errors.  If you’ve outsourced other jobs, like web design or marketing services, you know the value of hiring a pro.  Payroll is another area where hiring an expert is the most cost effective way to get the job done.

Most entrepreneurs didn’t start a business because they loved performing administrative tasks.  Leave the paperwork to someone who knows how to do it, and free up time to do the work you’re truly passionate about. 

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