For small businesses that are starting out, outsourcing some business processes can have multiple benefits.
Particularly, outsourcing payroll and bookkeeping services can help small and medium-sized businesses focus on driving profit and providing their customers’ needs.
Having an in-house payroll service creates extra operational costs. Studies have shown that, on average, outsourcing payroll services is 35% cheaper than in-house systems.
These savings mean less operational costs, which means higher profit generated per month.
Outsourced payroll services also assist in determining job costs. This is particularly attractive for service providers, as payroll services can help in calculating hourly rates.
Payroll services also help companies that produce a product by calculating the cost of labor. This impacts the actual cost of goods when it goes on sale.
In-house payroll services can mean an extra step in the company hierarchy. By outsourcing this process, companies are free to focus their energies on its core revenue-generating activities: increasing production, or improving services.
Most third-party payroll services handle employee tax obligations, management reports, employee retirement plans, and other payroll responsibilities.
An internal payroll department will often be called upon to navigate a tricky and often complicated list of federal and state laws.
Using a payroll service allows companies to be fully compliant with tax laws, while avoiding severe penalties and legal fees. Issues like employee benefits, sick pay, and withholding taxes are processed and analyzed by certified accountants who are experts in taxation laws.
With the right payroll service, small and medium businesses can increase management efficiency, lower operational and production costs, and boost their own bandwidth, all while remaining completely within the bounds of the law.
When looking for a payroll service, make sure that their systems are ironclad, considering that they will be handling your company’s private financial information.