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For small businesses of any size, handling payroll is a time-consuming, mission-critical and ongoing demand. As a result, payroll outsourcing has become a popular option for companies that are focused on their core business.
There is a steep learning curve for business owners and managers who want to fully understand payroll administration. Errors – including miscalculations, confidential information leaks and missed deadlines – are realistic risks that can come with costly consequences, including monetary losses, diminished employee trust and government penalties. The IRS frequently levies hefty fines on business owners for payroll deduction and calculation errors.
For many small and mid-sized businesses, it makes sense to rely on a trusted payroll outsource company, such as a professional employer organization (PEO), for payroll administration services.
Wondering if outsourcing this important part of your business is the right call for you? In this article, I’ll outline the considerations to keep in mind when weighing your decision to outsource payroll and show you how to get started if you think outsourcing might be right for you.
The right time for a small business to outsource payroll varies based on individual circumstances, but several indicators can signal it's a suitable move:
As your workforce grows, payroll can become more complicated and time-consuming. If you find the process becoming unwieldy or challenging to manage, it might be time to consider outsourcing.
If your business operates across different states or countries, dealing with varying tax regulations can become challenging. Outsourcing payroll to experts can ensure compliance with all relevant laws.
Regular mistakes in payroll can be costly, both financially and in terms of employee morale. If errors are frequent, outsourcing can help mitigate these issues.
On average, business owners spend more than five hours per pay period working on payroll and paying payroll taxes. In the span of just a couple of pay cycles, this work consumes an inordinate amount of time.
If you or your staff are spending an inordinate amount of time on payroll at the expense of other crucial business activities, it's a sign that you might benefit from outsourcing.
If you don't have a dedicated payroll professional in-house and are managing it yourself or with staff that have other primary responsibilities, you risk overlooking details. In this scenario, outsourcing can be beneficial.
Sometimes, when you factor in the time spent issuing paychecks, completing tax reporting and filing, and managing employee benefits plus potential penalties from errors and software costs, outsourcing might be more cost-effective than handling payroll in-house.
Many payroll service providers offer added features like integration with HR systems, time tracking, and benefits administration. If you're looking to consolidate these processes, outsourcing might be a good fit.
If your business is undergoing a change, like moving from a sole proprietorship to an LLC or corporation, the payroll needs can shift, making it a suitable time to consider outsourcing.
As businesses grow, employees might request additional payment options, benefits or reports. A professional payroll company can offer these features more easily than an in-house setup.
Conducting a regular review of internal processes and costs can help a business determine when outsourcing becomes the preferred option.
There are many benefits to partnering with a PEO payroll service provider that you may also take into consideration when deciding if you are ready to commit to payroll outsourcing. These benefits include:
If your small or medium-sized business cannot afford to hire an experienced in-house payroll administrator, then you might want to consider payroll outsourcing. Each year, a small business could easily spend more than 100 hours dealing with employment tax issues alone.
The decision to assign this responsibility to a PEO could add many hours of productivity back into your schedule. Saving time is one of the biggest benefits of outsourcing payroll.
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When you calculate the in-house costs of staff time, software, training and compliance-related expenditures, outsourcing payroll is a money-saving option. When you decide to outsource this function, you are likely to notice cost savings almost immediately. Further, outsourcing saves a small business owner the time-consuming headaches of payroll management and can increase productivity among the employees involved in payroll.
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Federal, state and some municipal governments have complex and individualized employment tax laws. These laws may be subject to frequent changes, making it difficult for small and medium-sized businesses to avoid mistakes and maintain compliance on their own.
Even one small oversight related to a payroll tax withholding that goes uncorrected for an extended period can become a major liability.
When you trust your payroll operations to an experienced PEO, you’ll gain access to payroll tax specialists who maintain a vigilant awareness of employment tax laws. Partnership with a PEO ensures both compliance and seamless payroll operations.
Axcet HR Solutions, a Kansas-based PEO, provides each client with a dedicated payroll administrator who is supported by an expert team specializing in the management of the complexities of payroll administration, taxes and payroll compliance.
It is our job to ensure that benefits and other withholdings, as well as overtime or other additions, are calculated accurately. That way, your small business always pays the precise amounts you owe your employees every pay period.
Axcet’s PEO payroll services protect small business clients from year-end tax surprises that could undermine their success. And, as a certified PEO, Axcet is solely liable for the federal employment taxes on wages paid to clients’ employees, another benefit that insulates clients from penalties. Certification is an added level of security Axcet believes is owed to our clients in maintaining their trust.
Cyberattacks are a growing threat, especially where small businesses are concerned. In fact, surprisingly, hackers view smaller companies as more vulnerable targets than larger companies. Payroll processing has become a new and popular inroad for hackers.
A PEO payroll provider protects against data breaches and cyberattacks with strict security protocols, providing the added benefit of ensuring your information is safe. Axcet’s payroll system is monitored around the clock, and we maintain redundancy, back-ups, and on-premises storage, as well as an auxiliary location, to maintain secure and uninterrupted payroll services.
RELATED: Top 3 Security Measures that Ensure Your Payroll Partner Treats Your Data Like It's Their Own >>
When it comes to payroll, workers want peace of mind knowing their paychecks will be accurate and on time. Partnering with a PEO payroll administrator gives your company access to the latest HR technology without the costs and headaches of purchasing, maintaining and upgrading systems on its own. Your employees can trust the payroll process, which reinforces your reputation as a reliable employer.
Through Axcet’s self-service site, employees can access all their information at any time and from any device. The system is optimized for smartphones, tablets, desktops and laptops – it automatically adapts to the user.
Employees can use the portal to easily update their pay-related personal information and find answers to questions like how much paid time off they have available. This transparency builds trust and loyalty.
The user-friendly client portal is a valuable resource that makes it easy to generate standardized reports like invoices, payroll registers and check journals. Employers also can customize reports to fit their specific needs. With this technology, every aspect of payroll administration is completed more efficiently.
Is your business ready to free up time and resources, gain access to innovative technology, reduce costs and risks, and improve the employee experience? If so, it’s time to explore outsourcing payroll. Download our free report to find out what to look for when searching for a PEO or contact us today to see how Axcet can help.
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