Benefits of Outsourcing Payroll for Small Businesses

Running a small business often requires you to wear dozens of hats, but should payroll be one of them? Each minute lost calculating taxes and pursuing timesheets is time taken away from business growth. 

Moving to payroll services for small businesses is the perfect way to avoid this. 23% of small businesses have already chosen to outsource their payroll to optimize their business processes. Let’s check out why outsourcing payroll services could be the smartest move your small business can make this year.

What is Payroll Outsourcing? 

Payroll outsourcing means hiring a third-party company to handle payroll tasks. Companies use online payroll services for small businesses to automate payments, tax submissions, employee benefits management, etc. 

Main Benefits of Outsourcing Payroll for Small Businesses

Outsourcing makes processing way easier. Check out some of its main benefits:

Cost Savings and Financial Effectiveness

In-house payroll processing could be costly. Employing a full-time payroll specialist could cost as much as $66,000 per year. And then come software subscription costs. 

You just need to pay a small monthly fee to a small company payroll services. As per stats, companies can save about 30-50% annually through payroll outsourcing.

Time-saving and Increased Productivity

Manual payroll could be time-consuming, especially for small businesses with limited resources. According to a Kabbage survey, 91% of business owners spend almost 20 hours per week on cash flow activities like payroll management. Outsourcing payroll services frees up valuable time for companies so that they can focus on what matters the most— sales.

Compliance with U.S. Tax Laws & Regulations

Tax laws are always changing. A simple mistake could cost heavily. 40% of small businesses pay an average of $845 as penalties for payroll errors. Payroll outsourcing companies stay updated with the new tax laws to keep your tax filings accurate. You can also include some clauses in the agreement to cover your company against such penalties arising from payroll errors.

Enhanced Security and Data Protection

Payroll is sensitive employee data. In-house payroll processing puts companies at risk of data breaches. In fact, payroll fraud affects almost 27% of companies with fewer than 100 workers. 

Reputed payroll service providers have high-level encryption and secure cloud storage to protect financial information. Most firms guarantee that payroll information is processed securely.

Access To Advanced Technology

Small businesses can’t afford to have advanced payroll management systems. Outsourcing is the only way for them to try out the latest technologies like AI-powered automation and real-time analytics. Simply speaking, they can optimize the entire payroll process without breaking the bank.

Team Satisfaction

As we all know, a late paycheck can hurt your team’s morale. Payroll outsourcing providers can do direct deposits on the right time to prevent that. Some companies can even manage employee benefits. Businesses can provide incentives such as health insurance and retirement plans. That makes it simpler to keep employees.

Scalability

Payroll management becomes tougher as a company grows. Payroll outsourcing services for small businesses offer scalable solutions that adapt to the growth of your company without the requirement of additional resources. You can add new staff in just one click. Payroll firms can automatically process multi-state payroll taxes for you.

How to Select the Best Payroll Outsourcing Provider in the USA?

Not all payroll management outsourcing companies are the same. Check out how to pick the best one:

Features

First of all, have a look at the set of features that the payroll company offers. Ideally, they must have a mobile app for managing payroll and an employee self-service portal. You can have an extra-safety if they offer a compliance guarantee. Similarly, Integrations with accounting software can speed up the entire process.

Compare the Costs

Payroll processing companies charge differently. Some are charges are made  by the employee. Most of them provide flat monthly packages that are scalable enough to accommodate various sizes of businesses. You must compare the pricing and features effectively to make the decision that works best for your business. Just confirm that there aren’t any hidden charges. 

Compliance Standards

Make sure that the payroll firm you choose adheres to both SOC 1 and SOC 2. And don’t hesitate to ask about the encryption and fraud detection systems of the company. 

Evaluate Customer Support

Remember, you will have a long-term relationship with the payroll service provider. So, customer service matters a lot. Ensure that they have 24/7 support, preferably through multiple channels.

If the work is done through software, you must also verify whether the payroll management software has a user-friendly interface. Because your team needs to use it daily. Complex software tools eat up more work time. And the software must also have sufficient integration facilities for automation.

Conclusion

Payroll management outsourcing simplifies the process. But getting it done correctly is what matters the most. That is where Finalert comes in. 

We do everything, payroll processing, tax filing, and compliance, for you, so you do not have to worry about any errors. Cut your administration costs now!