Payroll Outsourcing Tips For Small Business

There are a number of duties you have, as an owner of a small business that can get tedious and time consuming. This article looks at one such duty – payroll – and walks you through the steps in evaluating if it’s time to outsource, what to expect, how to evaluate a prospective company and your responsibilities.

How do you know when it’s time to start outsourcing your payroll?

Well it’s pretty logical; when you run out of time! Too easy? Maybe, but it’s true. When there aren’t enough hours in the day to handle the day-to-day operations, outsourcing payroll function can be a cost effective strategy for your business. It should be pretty obvious when the right time arrives but you might ask yourself these questions:

• Are deadlines for payroll deposits being missed? Penalties can be as high as 10%
• Are you sure about the calculations for payroll tax? If not, you can be assessed with penalties.
• Do you have a lot of employees? With fewer than 20 or so employees just do the math comparing the cost per hour for what you are doing now verses the cost to hire a payroll outsourcing firm.

Why start with Payroll outsourcing?

Even if you’re the most adept business owner and manager, one of the most time-consuming duties you have to perform is payroll. There are also some benefits to outsourcing your payroll to an outside professional company.

• Reduce Potential Penalties from the IRS: If your payroll taxes are filed incorrectly it makes you vulnerable to fines. Outsourcing to a payroll service provider can give you some peace of mind that deadlines are being met and deposits are on time.
• Lower Costs: It could be less costly than hiring a temp, adding to your staff overhead or doing it yourself, depending on your needs.
• Direct Deposit for Employees: This is a common service that can save the people that work for you a trip to the bank. It also reduces end of the month paperwork saving you some time.
• Changing Regulations: Hiring a payroll service provider can provide up-to-date information you can count on for new regulations, changes in forms and rates of withholding.

What services should you expect from a payroll service?

• Payroll & tax calculations
• Reporting
• Printing and distributing payroll checks
• Direct deposits
• Issuing W-2’s
• Payroll tax filing Deductions for 401Ks
• Tracking benefits for employees

What is the best way to choose a company to outsource your payroll to and what to look for?

One of the best ways is through referrals from friends, other businesses or your accountant or tax professional. You can also start by searching online in your local area. Some things to look for or ask before you make your final selection are:

• What are their professional qualifications, licenses, experience etc.?
• Who will be doing the work and what’s their turn-around time and customer service policy; how often can you contact them?
• Will they handle tax filing for you, assume any penalties if filing is incorrect and handle local filing?
• What do they charge; base amount, per check extra services like direct deposit? Try to avoid excess add-ons in favor of a flat fee.
• How will you get the data to them and is it secured?
• Get references from them a permission to contact them?
• What will you be responsible for?

Even if you decide to outsource your payroll, you are ultimately responsible so at least, for the first few months till you get comfortable working with the payroll service provider, be sure to review their work each month. This means you still have to know the laws, regulations and paper work. Just go over it with the payroll serivce provider.

Source: www.easnc.com

If you have any questions, do not hesitate to contact our Payroll service.