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When was the last time you had someone quote your payroll?  It may be time to review your current payroll situation. When considering payroll processing for your company:

  • Is it best to do it yourself or hire a reliable payroll firm?  
  • If you are a small business with less than fifty employees or even a company of one, what is the benefit of outsourcing payroll?  
  • If you are considering outsourcing payroll or currently outsource payroll, what should you be looking for in a payroll provider?  


Happily, we have done some of the homework for you in creating the summaries below.

When to Outsource Payroll? 

Why Outsource Payroll? 

What to look for in a Payroll Provider? 



When to Outsource Payroll? 


If you find yourself answering yes to any of these 3 questions, now is the time to outsource your payroll.

1.      You are not well versed in accounting and payroll processing, nor have the time or interest to learn. 

2.      You find it difficult to keep up with changes in the healthcare or tax laws. 

3.      You have made mistakes in tracking PTO accruals, payroll deductions, or incurred penalties from the IRS for misfiled or missed payment on taxes.


Why Outsource Payroll?

Many business advisers look at payroll as a non-core function, something you can't charge for and is not a profit center.  Payroll is an essential part of your business, but is not a strategic or differentiating point for your company.  So, what do you gain from outsourcing your Payroll?


1.       Cut Costs and Reduce Risk
Many employers do not realize they are actually overpaying employees, and can reduce cost by having a more accurate time and attendance solution.  A payroll provider can also help you avoid or limit your risk of errors and potential penalties.  It’s important to note,:approximately 40% of small businesses incur an average of $845 per year in IRS penalties.

2.       More Time to Focus on Your Business
Payroll takes time, and that time takes you away from what you do best, which is running your business.  As your company grows, you may find you no longer have the time to spend on payroll. So, would you rather spend time researching new tax laws or when to pay overtime or worse, the unexpected surprise from the IRS that now needs investigating to determine what really happened?

3.       Expertise and Technology
Now when you have any questions on payroll or changes in tax laws, you can easily reach out to a payroll expert for support.  Payroll providers often have better technologies for implementing payroll such as an online portal making it easier to enter payroll, from anywhere and anytime.


What to look for in a Payroll Provider? 

Outsourcing your payroll should simplify the process to free you of the hassle, and provide complete peace of mind.  Therefore, selecting the right payroll provider and asking the right questions is critical. Here are some important factors to consider. 


1.       Credibility and Reputation
Since, you are providing confidential and critical information, such as social security and bank account numbers of employees, the company you select must be highly trustworthy, secure and reliable. The payroll company should be bonded and insured.  You'll also want to establish a track record by asking how many years they have been in business.  What type of businesses or industries they serve and what is the typical size of their clients?  You can learn a lot about a firm, by talking to their current clients.  Asking for referrals whose size, industry and/or program offerings would be similar to your company can help you determine which payroll firm is the best fit for your company.  To give you the best insight, focus your questions on the firm’s accuracy response time and knowledge of processing payroll.


2.       Quality of Service and Programs
Payroll is notorious for changing laws and regulations in employment, healthcare, and taxes, knowing and understanding these changes are required, and this is one of the key benefits to having a payroll service do this work for you.  Some larger payroll services offer call centers, while others may provide more value with a dedicated processor, who understands your account, and is easily accessible via phone or email.

When comparing payroll firms offerings, can they provide a flexible and alternative solutions to fit your needs or are they a "one-size-fits-all" program?  Consider the cost difference between how often you pay employees (weekly, biweekly or semi-monthly) and how you pay, live check or direct deposit, you might be able to save some money based on the different payment options you select.  For example, direct deposit payment stubs are emailed to employees, reducing paper and mailing cost, and employees enjoy the benefit from not having to make a trip to the bank or worry about accidentally misplacing their paycheck.  


Another benefit to having a payroll services, is access to insightful reports on business earnings and deductions and/or a breakdown of employee and employer taxes, and many more custom reports. 

Lastly, do they show an effort towards technological growth? Do they offeran online or mobile capability? As your company grows, you will want to make sure your payroll provider has applications that will grow along with you.


3.       Price
Most payroll companies charge a flat base per month, plus a charge for each paid employee, and depending on the level of service, pricing may vary.  Additional services may be extra, such as direct deposit, workers' compensation, 401k reporting, new hire reporting, etc.  Some larger firms offer a suite of Human Resource Management tools to help small businesses that cannot afford a Human Resource Manager, as well as administering of retirement or insurance programs.    



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