3 Reasons to Outsource Your Employee Payroll

How to pay your employees

If you own a business and have employees, you know that you have to pay them. Many small and medium sized businesses outsource their employee payroll to save time and energy. Here are some benefits to using outsourced payroll services companies:

1. It lets your focus on what you do best.

Doing employee payroll takes a lot of time. While it is something all businesses have to manage, it is also very time and labor intensive a lot of the time. Any mistakes that are made when handling employee payroll can be very costly and painful. There are a bevy of rules and regulations that companies have to comply with.

This is entire process is complicated all the more when companies so business in more than one country. American companies that want to do business in Canada often run into trouble with this. Payroll in Canada is a lot different from payroll rules in the United States. Payroll services have to be very detail oriented. There are a lot of regulations regarding how taxes are recorded and paid.

Understanding the labor laws is also an important part of the employee payroll process. The tax portion of the employee payroll process is complicated but so are the laws governing how long employees can work, what kind of overtime they should get and so forth.

All of this takes a lot of time and energy. That is time that you could be working to build your business and improve your bottom line. Unless you are payroll outsourcing provider, employee payroll is not what you are best at doing. When you hire an outsourced employee payroll company, they can handle all of the minutiae of this and you can focus on your business.

2. Payroll services providers have the right technology and experience.

Companies across the United States have literally tens of thousands of federal, state and local rules and regulations. There are thousands of different state and local jurisdictions across the country that have their own rules for how taxes are collected. These laws are very complicated. Issues surrounding the Affordable Care Act add to the complexity of the employee payroll process.

Companies that handle employee payroll services are experienced at dealing with these kinds of issues. They know how to manage employee data and to manage tax payments and all of the other things that payroll services companies need to do. You may not have the expertise in this area but they do.

Payroll management companies also have the most up to date technology to help them with the task of keeping up with all of the rules and regulations that you need to comply with to do business in the United States and elsewhere. They can compile reports to show their compliance with the Affordable Care Act and other labor laws. Gone are the days where there are a few simple forms that need to be updated. The process of managing employee payroll is only getting more complicated by the day. The software needed to show compliance is always changing. Payroll providers keep up with it so that you do not have to.

3. Outsourcing employee payroll can save you money and reduce your risk.

Companies that outsource their employee payroll have been known to save about 4% on payroll. When you add to that the time you are saving and the time you are able to put into your business and do not have to spend working on payroll, you see a bigger savings in letting professional payroll services.

There are also very harsh penalties for mistakes that companies make while handling employee payroll. The Internal Revenue Service (IRS) reports that at least 40% of all small businesses have to pay penalties for filings that are late or wrong. The average penalty is $845 per problem. This can add up.

By contrast, working with an outsource payroll company, you can get an affordable service plan that saves you from these penalties and can keep you in compliance. At the end of the day, you really do save money when you outsource your employee payroll.

Handling employee payroll is something that every company has to do. It does not have to be painful, however. By outsourcing payroll, you save time and money.


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