While it can be easy to look at outsourcing payroll duties as an extra expense you could do without, this is a rather simplistic way of viewing it, and does nothing to explore or explain the amount of money that a small business can save in the long term if payroll is outsourced. In fact, when you examine outsourcing in closer detail – in particular, payroll – many of the direct costs associated with processing payroll internally, can be massively reduced when working with an outside provider. Let’s look at this in closer detail:
Can your small business afford an in-house payroll department?
For larger companies, it goes without saying that they will have an in-house payroll department, and with bigger numbers of employees, those payroll staff are probably working full-time and able to successfully perform their duties. For smaller businesses, however, an in-house payroll team can be a very real drain on their valuable resources.
If your small business employs less than 30 people, then statistically, you’re going to save money by outsourcing your payroll responsibilities. If you already have an in-house payroll employee (or two), then you can easily calculate the financial advantages of outsourcing by simply adding up the time and money spent by your payroll on each of the following:
- Printing
- Signing
- Offering support
- Distributing paychecks
- Software and program maintenance
- Training and support
- Staying updated with relevant payroll laws and regulations
- Keeping up to date with tax laws (which change frequently)
- Preparing and remitting payroll taxes and returns to the IRS
- W-2’s
- New hire reporting
- Garnishments
And then compare this with the total amount that a payroll provider is offering you in their most appropriate payroll plan. Most small business owners are pleasantly surprised when they see how much they could save when outsourcing.
Are you looking at the bigger picture?
It’s important to take the above activities into account when calculating your monthly payroll expenditures, but it’s also important to carefully consider the salary of your payroll staff, plus benefits, and the cost of everything when added together. It can be hard to see the bigger picture sometimes, especially when you’re a small business and every dollar you spend really counts, but only when you do so can you really understand the financial benefit of outsources, and how it could save you money in the long term. And let’s face it, nobody starts a business without wanting it to succeed and make money.
By not having a payroll employee to pay, you can either replace them with someone who can perform other important roles within your company, or simply make savings by not having them on your payroll. Another important consideration is that your payroll provider will never take a sick day, go on an extended vacation or even request maternity leave; they are there for you around the clock, and with a team of payroll experts on your side, everything should run smoothly. Not only that, but tasks will be performed quicker, meaning that you can save even more money because you’re only paying them for the tasks they perform.
The advantages of outsourced payroll are myriad, and if you’re interested in saving your small business some money, reach out to a trusted, professional payroll service provider today.