Nine reasons to outsource your payroll: security, money, time, energy, effort, privacy, expertise on call, and more.
1. Get the best in payroll processing for less.
A payroll outsourcing company is constantly upgrading and improving their ability to provide the best service for you. They upgrade their software and systems on a regular basis. They, of course, have to keep up with the changes in the law of all 15,000 plus payroll-taxing entities as they happen. A payroll outsourcing company must be able to print out any updated form as needed or they will have to do it by hand. This is a chore they do not want to undertake with many clients to complete them for.
2. Deflect unwanted and unwarranted government interference.
Occasionally everyone misses a deposit or filing deadline, forgets a form or otherwise makes a mistake that results in a penalty that YOU have to spend a great deal of time resolving and usually end up paying the penalty anyway. Outsource payroll companies greatly minimize the chance that your company will pay any penalties or interest due to missed deposits, late filings, bad calculations or other clerical and computational errors of your payroll taxes. If a payroll outsourcing company makes a mistake, they are responsible for the research and costs. They have much more practice in doing this kind of work and make very few mistakes; otherwise, they do not last very long in the business. A good outsourced payroll company should deposit your payroll taxes and file all your payroll tax reports – on time, every time. After all, they are not processing taxes for just one company; they are filing for hundreds of companies.
3. Protection from check fraud artists who could/would raid your bank account.
When you use a payroll company to process your payroll, you reduce the number of checks that you write substantially. This not only lowers your accounting costs by reducing the size and complexity of your bank reconciliation; it can also reduce your banking fees. It reduces the checks that can fall into the hands of check fraud specialists. Check fraud is the largest dollar value crime in the country year after year. The Nilson Report indicates that check fraud exceeds $20 billion dollars a year and the American Bankers Association recently stated that check fraud losses are growing by 25% per year. Payroll processing companies hire specialists to consult about reducing fraud. A good outsourcing company should be able to discuss numerous devices that they use to protect themselves and their clients from fraud.
4. Take advantage of Tax Credits that you may not even know exist.
A payroll outsource company should have the ability to check to see if your company or location makes tax credits available for hiring some or all new employees. This varies widely from State to State and location to location. It is very hard to keep up on all of the available credits unless you are in the business.
5. Upgrade privacy for you and your employees.
When you outsource payroll you actually increase your security and privacy. All the reports are computerized and encrypted. No reports left around for people to see. No boxes of old reports. Your payroll outsource company should have the ability to restore all your old files to a new computer for you if the existing one is compromised in any way. With direct deposit and employee self-service, there are no paychecks or paystubs to be left in the wrong place for the wrong person to see.
6. Take a vacation.
With an internet payroll provider, you can input payroll form any internet-connected computer in the world. We have a client who submits payroll via the Starbucks Wi-Fi at the beach in Hawaii twice a year. You have someone else submit the payroll and then you can check it from anywhere. You have the option to submit early or just have the payroll company replicate the previous payroll. It is like having a staff without having to pay for it.
7. Call on payroll tax experts at no charge.
Your payroll service provider should have CPAs on staff to answer your technical questions. If you have to talk only to a call center or a clerk then you are not getting the service you are paying for. They should have employment tax experts on staff to advise you and to be able to advocate for you to the IRS and the States. You would not go to court without an attorney why would you even talk to the IRS without a CPA.
8. Save time.
No checks to print. No tedious filing. You don’t have to keep up with tax or software updates. You don’t need to keep up with changes in tax or employment law. You don’t have to become a payroll professional. Your payroll service provider should have them on staff. Your payroll service provider will keep up on the changes and advise you if there is something you need to do. It will advise you when the I9 changes and you need to throw out the old. No calculating net pay and taxes. No filling out tax forms. No remembering to make tax deposits timely.
9. Save money.
Having current software always available at no additional cost. No costly tax updates sometimes multiple times in a year. No penalties for small oversights. Have less staff time and training to keep up with changes to payroll and tax laws. Your payroll service provider offers you economies of scale on everything from paper, checks, envelopes, to banking fees. Everything that saves you time saves you money. Everything that lessens your exposure to fraud saves you money. Everything that increases privacy without you having to do anything saves you money.