Is It Time to Outsource Your Payroll? Take These 5 Pointers Into Account
It’s difficult enough to start a firm and make a profit. When you add the reality that you’ll have employees and payroll to the mix, the workload may become too much to bear. The good news is that payroll outsourcing services are there to assist you.
Payroll is one of the most time-consuming aspects of running a business, and whether you’re contemplating creating an LLC or have recently done so, there are a few things to think about.
To begin, consider what you could accomplish with an extra 11 hours per week. Isn’t it likely to be quite a bit? According to a Paychex survey, payroll activities use 11 hours each week on average. So when you consider that there are 52 weeks in a year and each week consists of a 40-hour workweek, you’ll spend 572 hours on payroll (approximately 14 weeks every year).
Time is both your best friend and your worst enemy when you’re just starting. Spending too much time on administrative tasks can prevent you from focusing on creating and growing your business, which is why tools like our payroll tax calculator come in handy. If you have the funds to hire a company to handle your payroll, it can free up a lot of time to focus on other aspects of your business.
Here are some pointers on how to choose a payroll outsourcing service.
What is the Purpose of a Payroll Outsourcing Service?
A payroll outsourcing provider can help your business with a range of tasks. These may include the following:
- Managing your company’s payroll and accurately accounting for taxes (federal, state, and municipal taxes, for example) and withholdings (such as social security)-
- Getting checks to your employees on time or setting up direct deposit for them
- Creating and distributing W-2 forms
- File all required paperwork with the government on your and your employees’ behalf
- Make payments to vendors on your behalf -Manage your employees’ benefits (such as 401(k))
- Generating payroll reports for your business
5 Points to Consider When Choosing a Payroll Outsourcing Company
Here are five payroll outsourcing suggestions to assist you in making the best selection for you and your company. Because not all payroll firms are the same, SOURCEitHR Payroll & HR Outsourcing is the one it’s important to find out what you need today and future as your company and team develop.
1. Verify if the firm has a low error rate
While everyone makes mistakes, you want to keep them to a minimum when it comes to payroll. When the IRS comes knocking, there’s nothing worse than an employee being shorted money in their paycheck or discovering your company made a mistake in computing payroll taxes.
The IRS has penalized 40% of small businesses for inaccurate payroll files, with the average penalty being $845. In addition, payroll troubles affect 54 percent of the workforce, prompting a whopping 49 percent to indicate they would look for a new job after just two paycheck glitches.
Payroll errors are serious business; they can cost you money and cause you to lose staff. Ensure that the company you select has an excellent track record and has not made any blunders. If they are a trustworthy business, it should have mechanisms to prevent such mistakes. Read internet reviews to discover if there are any recurring consumer difficulties while analyzing your possible choices. Please inquire about the company’s procedures for dealing with errors and what they’ve done in the past to remedy and prevent them.
You can also inquire with other business owners to see if they have any recommendations for payroll outsourcing businesses with which they currently work or have previously worked.
2. Find a Payroll Company that specializes in your industry
When it comes to payroll outsourcing, you want a provider specializing in companies like yours. For example, suppose you’re a small business with only a few employees and talking to a payroll company that works with giant organizations with hundreds of employees. In that case, it might not be the greatest fit.
Large enterprises will take precedence over your demands because they bring more money for the payroll company than a tiny upstart. Look for payroll outsourcing businesses that are a good fit for your company’s demands and structure.
Take into account the industry you work in as well. This can be advantageous if the service provider has other clientele in your sector. It could indicate that the organization has a thorough awareness of the nuances of your industry and that they can provide you with better-targeted advice and service options.
3. Look for a Payroll Outsourcing Service that will expand with your company
Businesses don’t start with 500 employees worldwide on day one of their entrepreneurial adventures, but that doesn’t mean they can’t expand to that size.
In your search for payroll outsourcing, find out what services firms provide and how you may use them as your company expands. If you’re starting out with a few employees and none of them will be full-time (so you won’t have to supply benefits), you won’t have a long list of requirements for the payroll business to deal with.
However, when your firm grows and your needs change, full-time employees may become necessary, and you’ll need the payroll provider to handle various perks. If you know you’ll need such services in the future, make sure the company you hire offers them. While switching payroll firms isn’t difficult in most cases, it’s more convenient to stick with a company that knows you and can grow with you.
4. Think about the price and the length of the contract
Only you know how much money you have to spend on payroll outsourcing and your budget. Determine your restrictions, and be careful to inquire about the cost per employee. Some organizations charge a flat rate regardless of the number of employees, while others offer a per-employee discount once you reach a particular number. This is useful information to have on hand to better understand the costs you’ll face as your business grows.
Another issue to inquire about is the contract’s duration. How long will it last? Some organizations will offer a month-to-month contract, an annual term, or even a multi-year contract to tie you in.
If you only want to try things out for a month or two, a month-to-month contract might be best. On the other hand, an annual or multi-year contract maybe you’re the best option if you want to save money in the long run.
5. Confirm that you will be able to speak with a single point of contact
How many times have you made a purchase and needed to contact the firm with a query or an issue? How many times have you tried to contact someone and been unable to reach them by phone or email?
Every minute you spend attempting to fix a problem with a firm that won’t pick up the phone is a minute you’re not working on your business. When it comes to payroll concerns, you need immediate assistance and responses. Ask the company straight away if they will commit someone to your company and provide you with a direct line if you need anything.
Consider searching elsewhere if the payroll outsourcing business cannot give you a direct line of communication with a member of their staff. You may be setting yourself up for some difficult waters ahead.
Remember, the whole point of hiring a payroll outsourcing provider is to relieve you of work and streamline your processes so you can focus on developing your company. The last thing you want is to spend time phoning and emailing a company you hired only to receive no answer.
Have you considered outsourcing your business accounting and bookkeeping while you begin launching and developing your company? Incfile provides entire business accounting and bookkeeping for a reasonable monthly fee to help you manage your business more efficiently and free up time to help you grow sales and operations. Consider incorporating such a service within your company right now.
This article has been published in accordance with Socialnomics’ disclosure policy.