In general, businesses manage their payroll duties one of two ways, either handling payroll processing and its associated duties in-house, or outsourcing these activities through a third party like a CPA or payroll processing company. Although many businesses choose to continue processing payroll themselves, most recognize that although they maintain total control, it comes with a heavy burden. Outsourcing payroll management has gained in popularity because it relieves this burden by increasing accuracy, saving time, ensuring compliance, and reducing costs.
Managing payroll is more than just writing checks… it includes paying employees, processing and managing payroll deductions, report management, and remitting taxes accurately and on time. A great deal goes into ensuring accuracy, including correct calculations, appropriate withholdings, and local, state and federal tax knowledge to name a few. Professional payroll processors have the tools, technology, and expertise to get it done right and on time each and every time. They maintain a staff of experts trained in every aspect of payroll and tax management and have access to software designed for error checking that increases accuracy and ultimately serves to prevent payroll audits.
Payroll processing is a time-consuming activity, to say the least. At the end of each pay period, someone in the organization has to manage OT calculations, deductions and garnishments, tip credits and tip reporting for tipped workers, cutting and distributing checks, payroll tax calculations, deductions and reporting, and so much more. Don’t forget time spent monthly, quarterly and annually processing and preparing reporting, as well as annual W-2 processing. These activities are absolutely necessary, but serve as a distraction and time drain from core business activities.
“Managing payroll is more than just writing checks”
Employers who outsource payroll report a few pieces of information to their payroll service provider each pay period, usually review and approve just one report, and they are done. Because they have limited time invested in each payroll, they free up valuable time, resources, and energy that are better spent on what the business does best.
Because professional payroll providers have access to the latest information, technology, and training in the field, they stay on top of local, state and federal payroll rules, regulations and legislative changes. They know if there is a change that affects you or your employees and how to handle it with the appropriate authorities. Employee records, tax changes, ACA compliance and more are handled accurately and efficiently, freeing employers from the liability of non-compliance.
When companies process payroll in-house, they need to hire a full- or part-time employee, provide a suitable work space as well as the tools and technology, like software, supplies and equipment, to perform payroll processing and related duties. These personnel and overhead costs can be pricey and unpredictable, especially when employee illness, vacation or termination comes into play.
When working with a professional payroll processor, costs are very predictable. No additional staff is needed in-house and no overhead costs for payroll are incurred. The costs of temporarily or permanently replacing a payroll employee are no longer an issue. More importantly, the risks of losing vital payroll procedure knowledge and not processing accurately and on time due to staff changes are eliminated.
Equally important is the fact that the consequences for errors or late filing can be very steep – a single fine can often exceed the annual cost of paying an outsourced payroll provider. Reputable professional payroll processors guarantee on-time, accurate processing and tax filing, taking on the burden of paying fines and fees incurred, giving business managers and owners peace of mind.
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