WHY YOUR BUSINESS NEEDS A PAYROLL SERVICE

Many business consultants will advise small business owners to outsource any functions or duties that they don’t charge their customers for. Payroll services are one of these non-core functions that small businesses should consider outsourcing. From avoiding costly mistakes to having regular access to finance professionals, outsourcing your payroll service will allow you to focus on what’s important—your business.


AVOID COSTLY MISTAKES

There are several risks associated with processing payroll in-house, and it is very easy to make a simple, yet costly mistake. Some common errors associated with processing your own payroll include:

  • Simple data entry errors can result in you overpaying or underpaying your employees. These errors will cost you time and money to research what happened and re-issue payments.
  • Determining the exact amount of money to withhold from your employees’ checks can be complicated. Employers need to calculate federal and state deductions and ensure that their calculations are correct. Penalties are assessed for miscalculations on deductions.
  • Employers also must ensure that all payroll taxes are calculated properly and paid on-time. Employers can face stiff penalties for late or incorrect payments.

When small business owners outsource their payroll to professional payroll services, they can effectively eliminate these kinds of costly errors. Payroll service providers have strict quality control standards, stay abreast of all federal, state, and local requirements, and can help business owners pay their payroll taxes on time.

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Recommended: To help you select a payroll service for your business, we’ve reviewed the best payroll services for small businesses.

GAIN ACCESS TO FINANCE PROFESSIONALS

When small business owners choose to work with a dedicated payroll service, they have access to more than just payroll experts; they will often have access to a number of finance-related professionals:

  • Payroll Professionals: First and foremost, when businesses outsource their payroll services, they will have access to payroll professionals. They are experts in their field and can ensure that payroll is processed timely and accurately.
  • Accountants: Payroll services also employ accounting experts. Accountants can provide financial advice that pertains to payroll and other aspects of running a business.
  • Tax Experts: Small business owners can have access to tax professionals who can help them make sure all their tax information is correct and that they are withholding the correct amounts on their employees’ paychecks. Tax professionals are accustomed to dealing with federal, state, and local tax codes and can help small businesses avoid tax-related penalties.
  • Human Resources Professionals: Many payroll service providers will also offer human resources services as well. Although not typically classified as finance professionals, HR experts can help small businesses onboard new employees and ensure that all the finance-related paperwork is filled out, submitted, and stored accurately and safely.
  • Benefits Administrators: When small business owners outsource their payroll services, they can often choose to leverage benefits administration services as well. Benefits administration experts can help small businesses remain compliant with the ACA and determine how to best administer benefits to their employees.

Having access to payroll, accounting, tax, HR, and benefits experts can be invaluable to small business owners. All good payroll services will have these types of professionals on-hand and can bundle their services along with their standard payroll packages.

FOCUS MORE ON YOUR BUSINESS

In the long run, payroll services can help entrepreneurs save time and money, allowing them to focus more on their business. There are several ways that small business owners can leverage payroll services so they can focus more on their business:

  • Employers can effectively eliminate the need to hire and train employees to perform payroll-related duties.
  • Business owners will not need to take the time to keep abreast of state, local, and federal laws pertaining to processing payroll.
  • Researching and understanding ever-changing requirements for unemployment, workers compensation insurance, and new-hire reporting can take a lot of an employer’s time. Outsourcing payroll duties to a professional can relieve employers of this time-consuming task.
  • There are a number of unexpected time obligations that employers may face as well. These include dealing with fines, paycheck/bonus mistakes, etc. These issues can easily take up a lot of valuable time that could be spent engaging in other work-related duties.

By outsourcing their payroll services to dedicated professionals, small business owners can free up their (and their employees’) time to focus on what’s really important. There are several time obligations, expected and unexpected, that are associated with processing payroll and professional payroll services are well-equipped to handle all of them.

HOW TO DECIDE ON A PAYROLL SERVICE

When determining which payroll service is most appropriate for your business, there are a number of factors to consider. We’ve provided some information on the top three factors you should consider when researching payroll services, but we encourage you to read our comprehensive guide to choosing the best payroll service for your business.

REPUTATION

One of the most important things to consider while researching payroll services is their reputation. Small business owners should check out review sites, blogs, and other reliable sources to assess each company’s reputation. Customer reviews can be invaluable. They can give you insights about what services customers like and where the company can improve. Some key questions you may consider include:

  • Can you trust this company? You will be providing your employees’ sensitive information to a payroll service. Make sure you select a company that has a good reputation and solid cybersecurity protocols.
  • Will this company be around in 5, 10, 15 years? To the best of your ability, you need to determine if the service provider is financially stable and that you won’t have to find another provider in a year or two.
  • Does this provider understand your business? There are many payroll service providers out there. You need to choose one that will suit your industry and your size.

Every company has good and bad aspects, but we suggest that you locate a provider that has a solid reputation. It will help you feel more confident in their ability to handle any issues that might arise.

COST

Cost is obviously a key factor when considering which payroll service to use. All businesses hope to find a service that meets their needs and is affordable. Some key questions you should ask when researching payroll services include:

  • Are contracts required? Some payroll services require long-term contracts, and some operate on a month-to-month basis.
  • What is the payment structure? Some payroll services require you to pay a year in advance, some accept monthly payments, and some require payment every pay period. Make sure you examine the costs associated with each service and decide which service provider meets your budgetary needs.
  • Are there any hidden costs? It is important to find out if a payroll service provider will charge for running quarterly and end-of-year reports. These hidden fees can add up over time.
  • Are there any opportunities to bundle services and save money? Many payroll service providers also offer benefits administration and human resources services. You may consider adding some of these services onto your payroll package if it saves you money in the long run.

These are just a few questions you should think about when performing research on various payroll services. If you’ve made the decision to outsource your payroll, it’s worth the time to research to make sure you pick the right company for your needs.

AVAILABLE SERVICES

Other than finding a reputable company that is within your company’s budget, small business owners should also consider what services are essential and which companies offer them. Some key services that you may consider important include:

  • Payment Options: Do you want the payroll service to offer direct deposit, prepaid debit cards, paper checks, or all three?
  • Paid Time Off: Does the service provider offer PTO services, and is that something you need/want?
  • Payroll Reports: Which reports are included in your package and which reports cost extra?
  • Additional Services: Will your company need HR or benefits administration support in the future? If so, you may want to choose a payroll company that already offers these services.

These are just a few of the questions you should think about when examining the services offered by different payroll companies. It is best to think about where your company is currently and where you’d like it to be in 5 to 10 years. Choose a payroll service provider that can grow with you.

 

For more information on how to choose a payroll service for your business, check out our guide.

WRAPPING UP

Whether you have 2 employees or 200, outsourcing your payroll to a reputable payroll service will save you time and give you access to a number of financial professionals that can help your business grow. When you choose a prominent payroll service like Gusto, you are investing in your company’s future.

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Recommended: To help you select a payroll service for your business, we’ve reviewed the best payroll services for small businesses.