Payroll is a big job and it takes a lot of training to get it right. If you have decided to do it yourself, you have to be very careful. You must be sure that the correct taxes are withheld from your employee’s paychecks, the wages and bonuses are correctly calculated, the correct taxes are paid, and that the payroll complies with state and federal employment laws. And of course, you must make sure that your employees actually get paid frequently and on time.
Outsourcing payroll is the probably the best option for most small businesses that are not large enough to host an in house payroll department. If your company has fewer than 20 employees, it probably doesn’t pay to hire someone to do in house payroll. By outsourcing payroll you will almost definitely save money on bookkeeping fees, even if you were splitting the work with the bookkeeper in your own precious spare time.
- According to the IRS, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings. Most payroll companies guarantee their work so that you won’t incur fees no matter what.
- Payroll is more work for hourly employees with changing schedules than it is for salaried employees. This makes a big difference to you, but doesn’t matter to the payroll company.
- Employees like direct deposit (which is difficult to set up if not through a payroll company). With direct deposit employees don’t have to come in to work on their day off or sick or vacation day to pick up their check, and they don’t have to wait for the check to clear.
- Employees prefer bimonthly paychecks rather than getting paid once a month.
- The payroll market is competitive and reflects local conditions. Some payroll companies have charges for extra features like W2s, frequent payroll, adjusting employee info, but many of them don’t so shop around and ask questions.
- Some time tracking services, like Timesheets.com, can send timesheet info directly to many payroll companies in electronic form. This way you don’t have to call in the hours (the traditional method of conveying payroll data).
Outsourcing payroll makes your company more efficient, and when it comes to payroll (the whole reason your employees are there to begin with) this makes your business more desirable and competitive.
If you’re still not convinced that doing your own payroll isn’t worth your time or headache, take a look at an article on HRWorld, providing 10 reasons to outsource your payroll.