Should You Keep Your Payroll In-house or Outsource It?
- Seda Bayraktar, CPA
- Partner
- Accounting Compliance & Reporting
- E-mail to Seda
Savings in time and money, avoiding possible confidentiality issues and having the comfort that experts are handling your payroll functions are today the compelling reasons for exploring the benefits of outsourcing.
Every business that has at least one employee needs to manage its payroll. It is not a choice, but a necessity. A well-managed payroll system ensures that all employees are paid when promised and all tax and social security regulations are addressed accurately.
Payroll is not simply entering numbers into a software program. A lot of thinking has to go into finding the right numbers. Moreover, doing payroll is not like learning how to ride a bicycle. You do not only learn how to do it once and then can do it the same way repeatedly but you need to stay abreast of changing governmental employment rules, tax and social security regulations.
While some companies handle the payroll function internally, some prefer to use the expertise of professional payroll service providers. Outsourcing payroll, they have found, enables them to focus on processes and strategies that directly affect the future of their business and the bottom line.
Although you may actually be fairly competent at doing your own payroll, you may want to consider many benefits of hiring out the work to a professional payroll service provider.
Here are some of the top reasons why companies outsource their payroll function:
Compliance and accuracy
Generally speaking, many business owners, human resources or accounting personnel are not the experts in the complicated world of government’s tax and social security regulations. At the same time, the business owners are legally responsible for any cases of misrepresentation or a failure to accurately report employment taxes or social security premiums to the government authorities. Mistakes can lead to government inspections and subsequent penalties.
Government rules and regulations are always changing and business owners cannot be expected to stay on top of these changes. Professional payroll service providers, on the other hand,mustkeep abreast of the current rules, regulations and changes in tax rates.
Confidentiality
Confidentiality across organizations, particularly in small- to medium-sized businesses, can be a real challenge. When personal matters become community knowledge, employees can be embarrassed, ridiculed and judged. And, such undesired events can have a direct impact on productivity – quality and quantity – and, therefore, on the bottom line.
One of the most difficult areas to manage confidentiality lies in payroll. It is not just about keeping confidential the wages and additional compensation items such as bonuses, but keeping personal matters such as garnishments for child support or other court ordered payments private.
It is not uncommon to discover that private information is shared with the general office via gossips. Whether it is intended to be malicious or not, gossips always end up harming the organization. As in most countries, well-managed companies take extra care to make sure the payroll information of their employees remains confidential. Outsourcing payroll is the easy and affordable way to manage the confidentiality of payroll.
Time saving
Running a business is hard enough with getting bogged down with administrative tasks, and payroll processing inside your business is one of the most important but time-consuming processes. Outsourcing payroll allows employers to concentrate on the core business and frees up the business owner, human resources or accounting personnel to work more on strategic tasks that could ultimately affect the bottom line.
Lower long-term costs
The choice between in-house and outsourced solutions is a question of what is most efficient and cost-effective for the size of the operation.
Time saved equals the money saved. Think of the time required for each of the following tasks:
- Calculating payroll each time period.
- Printing, signing, and distributing pay slips.
- Generating reports for in-house and accountant use.
- Preparing and remitting payroll taxes and returns to government agencies.
When evaluated on a per-payroll period or monthly basis, a time/cost analysis may well indicate the benefits ofan affordable full-service provider.
The expertise of professionals
A professional payroll provider employs individuals who know payroll processing inside and out. These individuals are specialized in the complexities of payroll taxes as well as compliance with social security regulations. It is what they're trained for and it is the part of the guaranteed service they provide.
Multi-tasking payroll responsibilities with an overworked human resources manager or accounting employee,every business with in-house payroll function runs the risk of receiving notice that your payroll person is taking an extended vacation, falls ill, takes another job or are not able to do payroll. If your bookkeeper or controller gets a new job, they will walk out the door with their knowledge of the payroll process. Outsourcing your payroll will also secure the retention of the knowledge of all the payroll information.
With the help of a professional payroll service provider, the hassle and pain often associated with processing payroll is gone. You provide the basic information, and your payroll company takes care of the rest.
There is a lot to be said for the peace of mind that outsourcing payroll services can bring to a business owner or manager. No headaches, no hassles: You are left to focus on running a profitable business. A clear focused mind is one of thetrue benefits of outsourcing payroll.
We, as the Cerebra team, have a wealth of knowledge and experience in processing your company payroll. We have professional staff with a proven track record of improving and developing your company payroll that is accurate, effective and timely for management. We would love the opportunity to speak with you about how we can help your firm — please contact us.