Instead of doing the tiresome task of payroll, you should reorient your energy towards your core business activities. You can do this by hiring payroll outsourcing services.

Even though your company only has twenty employees, payroll can still be stressful. Doing payroll yourself can cost a lot less, but it is prone to errors and very time-consuming. If you start getting headaches over this, it might be time to consider payroll outsourcing.

What is Payroll Outsourcing?

Payroll outsourcing is the process where you hire external services to handle your company’s payroll. This will include transferring data about your company's detailed payroll routines and established guidelines. Even though allowing outsiders access to sensitive information like payroll was once out of the question, according to Forbes, now it is worth considering because many payroll outsourcing services can adapt to your company's needs.

For example, if you are not comfortable entrusting specific information to outsiders, there’s an alternative called payroll co-sourcing. Payroll co-sourcing is a hybrid situation where you appoint several aspects of payroll to a payroll service while the rest is handled in-house. For instance, you might want to hand over compliance to an expert while managing employees' payroll yourself. You can choose the most suitable model or system that suits your company.

Benefits of Payroll Outsourcing

Payroll outsourcing offers a wide range of advantages depending on your business needs and size. But in most cases, hiring a payroll service might relieve some of your burden. Here are the details of several potential benefits of payroll outsourcing:

Cost Effective

Payroll outsourcing can benefit large or small companies. Even though large companies are usually capable of handling their own payroll, as stated by Team Blue Sky, there are payroll employees' salaries, benefits, and office equipment to consider. These aspects need to be calculated to determine whether outsourcing payroll will cost less and produce better output than in-house payroll.

For small businesses, having a comprehensive in-house payroll team can be costly. So as an alternative, some employees might have multiple responsibilities in the payroll process. This can result in inaccurate or slow payroll processing. This is why outsourcing payroll is imperative for small businesses.

Reduce Compliance Error

Regulations and requirements change constantly. It can be confusing to keep up with payroll compliance without the necessary background. Outsourcing payroll to an expert can help reduce the chances of missing important updates, as the experts are well-versed in all the laws and regulations and constantly monitoring the changes in the field.

Next Read: How to Avoid the Most Common Payroll Errors

Able to Focus on Core Functions

If you are a small business owner, chances are you just have enough staff in your team. Assigning tedious payroll responsibilities to your existing employees will waste their time and energy. By outsourcing payroll, you can redirect your and your staff's time and energy toward your company’s core business activities.

When to Consider Outsourcing your Payroll

Perhaps you could afford to do payroll manually, but when you spot these signs in your payroll operation, maybe it’s time to consider outsourcing payroll.

Compliance Failure

As stated above, keeping up with laws and regulations updates can be overwhelming when it’s handled by regular employees. There’s a high chance of missing important updates, resulting in expensive penalties. If you have paid these penalties several times, maybe it’s time to hand over payroll to an expert. Most of the time, experts’ fees are much lower than the cost of hefty fines levied for missed or incorrect filings.

Slow Paycheck Delivery

Spending too much time on payroll can result in slow paycheck deliveries. It could be because you do payroll manually or your software is old. By manually doing payroll, you are likely to make mistakes or miss important steps. This can lead to delays in processing and issuing paychecks. 

Additionally, if the payroll software is outdated, it may not be able to process payments quickly enough, resulting in slow paycheck delivery. If it happens too frequently, it can lead to poor employee satisfaction and disruption of work morale. This can ultimately result in reduced productivity and even employee turnover. Hiring payroll outsourcing companies will prevent this from happening. 

Organizational Shift

If your company undergoes a major change in organizational structure, you might have payroll-related challenges. A significant change in employees, as described by ciphr, can be overwhelming for your HR or payroll team. Payroll outsource service will save you and your team from unnecessary and inefficient payroll tasks, and direct the focus towards more urgent matters. 

Outsourcing can also help you tackle any potential compliance issues that may arise due to the changes in the organizational structure. It can also help you save time and money in the long run. Furthermore, it can ensure that you and your team have the right expertise and resources to manage payroll efficiently.

Final Thoughts

Ultimately, payroll outsourcing is meant to help your business and direct focus toward core business functions and generate more revenue. Yet, outsourcing to third parties can be confusing if you are a first-timer. It’s critical to take time to do deep research to decide which payroll outsourcing service suits your company the most. Consider the specific needs of your business, such as the size of your organization, your budget, and the services you require. Doing so will help you choose the right service provider and ensure the best results.

Next Read: Payroll Specialist: Day-to-Day Job Descriptions and Essential Requirements