The Best-Kept Secret of Successful HR Departments: Outsourcing Your Payroll

Do you ever wish you could snap your fingers and your payroll would be done? That all of the paperwork and processing could be completed in the blink of an eye? Unfortunately, there’s a lot of work that goes into compensating your employees, and managing payroll can feel like a tedious task. 

While snapping your fingers would be ideal, there is a solution that is quick and easy. It involves outsourcing your payroll. Payroll outsourcing is the process of using a third-party to run and manage your payroll. Depending on your needs and the size of your company, you may choose to hire a bookkeeper, local payroll provider or payroll software. No matter who you select for outsourcing, you're not just making your job easier, you’re partnering with a specialist or team of experts. Here are some benefits associated with payroll outsourcing: 

1. Cut Down on Time

Payroll plays an important role in your business because it’s how you compensate your hardworking employees. Whether you have to do this weekly, bi-weekly or monthly, there’s no more important responsibility for the HR department. It’s imperative to pay your workers properly to keep your company running, yet it can take a lot of hours to manually process. Of the companies that manage payroll in-house, in particular small businesses, 28% spend 6+ hours per month.

Instead, outsource these grueling tasks to the pros and let them streamline the process for you. A company that focuses solely on payroll will have a system in place where all records, including everything from time card data and W-2 forms to changes in rates of pay, can be integrated into one software solution. According to the American Payroll Association, organizations using a solution that has both timekeeping and payroll capabilities were 44% more likely to have a payroll error of 2% or less. Decreasing the likelihood of miscalculations means less time spent having to re-process payroll.

Utilizing an integrated system also makes it easier to make updates across the board and cuts down on time wasted trying to source information from different locations. Plus hours will be saved by having a company handle the disbursement of paychecks, create payroll reports, and simplify your record keeping. With your payroll being managed, your team will have more time to focus on bettering your business.

2. Manage Payroll Taxes

State taxes. Federal taxes. Social security. Unemployment taxes. Between taxes to pay, those to withhold, and various forms to fill out, payroll taxes can be complicated. When done manually, it can be easy to miss a filing deadline or make a minor mistake that can potentially lead to costly penalties and fees.

A simple solution is to outsource and let a payroll provider manage your payroll taxes. A team with experience and expertise is guaranteed to calculate taxes accurately and consistently. Tax rates, tax laws, and deadlines are constantly changing. You’ll no longer have to worry about missing deadlines. They will keep you current so filing and reporting will be not only done on time, but you’ll stay compliant and avoid any unnecessary late fees or legal issues. And come time to file your annual company taxes, the hard work will already be done.

Additionally, COVID-19 has led to an increase in the hire of remote workers. This means managing employees in multiple locations. Another benefit of outsourcing to professionals is they’re well-versed in various state laws, and already have state tax IDs open. This helps make managing taxes and the filing process easier. 

3. Streamline Benefit Deductions

Companies offer benefits to employees, and these deductions are important to payroll. Each plan is unique to the employee, and the coverage plans and status of each employee will affect the amount deducted. For example, some workers may opt in to dental and vision coverage, while others will not. Certain employees may claim dependents, while others will not. These factors make benefit deductions not only tedious to manage and manually deduct, but leave room for miscalculations and mistakes.

Reduce the risk of error and increase efficiency by outsourcing your benefit deductions. With the ease of an integrated benefits platform, a company like a PEO will be able to seamlessly handle managing coverage plans, make sure your deductions are aligned,  and properly calculate deductions for each payroll. 

It’s good to know when it comes to handling payroll, there are options to help your team work smarter, faster, and easier.