Payroll is a necessary function for any business, but it’s also a time-consuming process that’s not always the best use of an entrepreneur’s (or HR employee’s) time. Thankfully, there are several options for outsourcing payroll that place the responsibility in someone else’s hands.
The week of September 6–10 is National Payroll Week, so now is a great time to revisit your company’s payroll practices and make sure you’re making the right choice. With that in mind, here are four reasons to consider outsourcing payroll instead of tackling it internally.
1) Save Time
First and foremost, outsourcing payroll is a great way to save time for your business. Payroll accounting software has made the process more manageable in the last few decades, but it’s still time-consuming to learn how to use the software and execute the process successfully. The time loss is even more significant for small businesses that process payroll manually.
Outsourcing payroll relieves you of this process and gives you additional time every pay period to focus on what you do best. Chances are, the time you’re spending on payroll is not time that’s putting your strengths to use most effectively.
2) Reduce Costs
Similarly, outsourcing payroll can reduce costs for your business. If you were considering hiring in-house staff, you should know that the average salary for an HR manager, according to Glassdoor, is more than $78,000 per year. Couple in a few additional employees to help manage payroll and benefits, and your business can be looking at spending more than $100,000 in increased payroll costs alone.
When you outsource your HR needs with a PEO, you end up paying a fraction of the cost that would come from hiring a traditional HR team. This results in a savings of $450 per employee, according to the National Association of Professional Employer Organizations (NAPEO).
Many business owners find that they recoup the investment of outsourcing their payroll quickly and easily by freeing up time to focus on other projects.
Another benefit of outsourcing your payroll process is mitigating errors, as mistakes can be costly to correct. Noncompliance with government regulation can result in fines. By trusting your payroll to experts in the field, you’ll ensure that you’re not incurring additional costs outside of employee wages.
3) Prevent Mistakes
As mentioned above, outsourcing payroll can help you prevent mistakes throughout the process. Payroll is not always a simple process. There are nuances to what’s required of you as a business, and misunderstandings are common. Some companies make mistakes with payroll simply because of the complexities associated with it.
Other mistakes arise when businesses rush through the process. Correcting errors can be incredibly time-consuming and costly. It can also create tension between you and your employees when mistakes such as these occur. Sometimes, it can even lead to the loss of some of your most valuable team members. Outsourcing the process relieves you of all of these potential mistakes.
4) Protect Your Data
Finally, outsourcing the payroll process helps ensure that you’re adequately protecting employee data. Your internal protections may not be robust enough to truly safeguard this sensitive information. Most payroll software has data protection built-in, but there are still opportunities to mishandle information if you’re not careful. You’re genuinely ensuring protection by outsourcing payroll to experts who know precisely how to keep this data secure.
With all of these benefits, it’s no wonder over 39 percent of U.S. companies—more than 10 million businesses—claimed they outsource their payroll processing. (source: Report by Robert Half and the Financial Executives Research Foundation.)
Are you ready to join the 10 million businesses trusting experts to handle their payroll process? Get started with Merritt Business Solutions here. When National Payroll Week rolls around again next September, you’ll be glad you spent this time investing in your process.