March 21, 2023
There is a major misconception among many in the small to mid-size business community: outsourcing is something only a big business can afford to do. Compound this with the fact that many entrepreneurs get uncomfortable delegating different parts their business out-of-house, the mere mention of “outsourcing” can be an intimidating subject to broach.
But this “need to do everything myself” mindset is one of the greatest inhibitors when it comes to business growth.
Exponential Return on Investment (ROI) through Outsourcing
There’s no doubt, it’s because of technology that outsourcing has become a key element in business strategy. Through secure online portals, cloud and SaaS platforms, and the incredible speed of communication that occurs now, what once had to be managed internally or had substantial cost is now easy, accessible, and economical.
So whether it’s contracting with a marketing firm to promote the business or partnering with an outside firm for human resources, payroll management or time tracking, it can pay dividends to hand certain duties over to an expert.
Accounting — payroll included — along with Human Resources, continues to make the top-ten list of the most suggested outsourced services for small businesses. Outsourcing these types of services can simplify business administration and free up valuable time, letting management and employees focus on operating and growing the business while outsourced professionals handle the tedium and specificities of compliance and reporting.
Instead of bogging down an in-house manager with payroll management, outsourcing payroll saves time otherwise spent doing calculations, cyphering tax code requirements, prepping checks or deposits, and financial reporting on all of it. And then there are withholdings for benefits programs, retirement funds, and more, that muddy the waters for an overwhelmed internal manager.
Here are five ways outsourcing payroll solutions will simplify life in a small business.
1. Allows Operator to Focus on Business
To put it mildly, payroll is a headache for small business managers. Besides the investment of time, keeping up with changing tax requirements, withholdings, deposits, checks, and much more, can frazzle even the most stalwart of business owners.
But outsourcing payroll isn’t about passing off a time-consuming task. The real upside of outsourcing payroll is that it delegates something that, for most businesses, is a non-core function, and frees an entrepreneur to focus on a business’s stated function as opposed to its tangential operations.
Whether in retail, a professional firm, a service business, or something else, outsourcing payroll services delegates an essential task to those who know how to do it best and frees up the time for business leaders to concentrate on their next innovation.
2. Takes Advantage of the Latest Technology
Technology was mentioned earlier as a reason why outsourcing has become such a ubiquitous approach for small businesses — but with payroll services particularly, technology has made it so easy to outsource the service that it makes no sense NOT to.
Today’s employees expect options like direct deposit and easy-to-access records of their pay information. The bigger the business gets, and the more employees it has, the more critical it is to utilize the most up-to-date technology to keep track of and manage it all.
A payroll outsourcing provider lives in this space. Payroll providers invest in the best technologies and work to maximize the benefits, so their customers ultimately benefit and save time and money.
3. Improves Compliance and Reporting
Between wage and hour laws, tax regulations, filing deadlines, forms, legislation unique to each state, and frequent changes, complying with all requirements involved in payroll administration is head-spinning. Shocking as it may be, there’s a reason why payroll is a full-time job. An operator devoting energy to growing a business concept has little to no time to get an education on these complex rules, and often if they do try, issues arise only further complicating the process.
An outside payroll service is primed to take this on, doing it all the right way and on time. And, efficient management of your payroll means it’s all being tracked, right down to the penny. A payroll service can create regular or special reports as needed to give your business a clear picture of where you stand and where you’re headed.
4. Reduces Risk
“How hard can it be?”
This is what too many small business entrepreneurs say, thinking payroll involves little more than signing checks. But there is a right way and a wrong way to handle payroll procedure and plenty of opportunities to make mistakes, unfortunately.
Payroll must run on time and correctly, whether the party being paid is an employee or a governmental tax collection entity. If the latter is mishandled, penalties and fines can add up fast.
Tax regulations change constantly, and if you’re doing your entrepreneurial duties right, you won’t have time to keep up and properly run your business. Outsourcing payroll services makes sound sense, as the business experts say, leaving the details to seasoned specialists.
5. Reduces Cost
Historically, many operators assumed it was cheaper to do payroll themselves; and that just may not be consistent with business owners today. Once the team grows to a few and then several employees, the increased time spent navigating payroll for each pay period becomes an enormous cost, it simply takes time away from running the business and bringing in revenue.
In fact, even a business with just one employee may be better off outsourcing payroll.
Other costs of internal payroll management include software, updates, and training — as well as potential fines and penalties from mistakes.
Benefits of outsourcing payroll are clear, and they add up to a more efficient business, poised for continued growth and smoother operations.
To start the conversation, contact your local Payroll Vault office or reach out to Payroll Vault - Oklahoma City, Oklahoma.