5 Considerations for Outsourcing Payroll Management

What are the benefits of outsourcing your payroll management?

There is no room for error in payroll administration and employee paychecks. Paying employees accurately and on time is critical to the success of any company to ensure a positive employee experience and minimize risks. Managing payroll effectively, however, can be challenging for in-house teams trying to keep up with local regulatory compliance while simultaneously addressing the needs of their workforce. Outsourcing payroll management may help employers save time and money and free up hours of administrative work, allowing employers to focus on their business.

1. Enhanced security

   Payroll processing is a complex and potentially risky business operation. Even with trusted partners, there is always a risk of identity theft, embezzlement, or tampering with company records for personal gain. Outsourcing payroll to a stable, experienced provider can offer a safe place for your confidential payroll data. In addition to redundant backup and multiple server locations, a quality payroll provider invests in state-of-the-art systems for storing and protecting data simply because it's part of the service provided to clients.

2. Cost

   Often, particularly for small or medium businesses, outsourcing payroll saves money. The time and resource cost of performing payroll in-house are almost always more expensive than the monthly cost of having a dedicated payroll company handle the process.

3. Time-Saving

   Handling payroll is no easy task. The payroll department must investigate several intricate and minutest of details such as garnishments, new hires, terminations, and benefit deductions, just to name a few. Plus, any changes in federal and state regulations could make it even more complicated. Outsourcing payroll to a professional firm prevents you from worrying about these time-consuming tasks requiring precision. It also frees up your HR department’s time which can be utilized for core functions that are strategically more important for your business.

4. Compliance (Tax filling, W2)

   Tax regulations and compliance around paying employees are often quite complicated. These laws also change regularly, and without proper education and training, employees can make unintentional but costly payroll tax errors. Outsourcing payroll to a dedicated company ensures those handling your payroll are well-trained and qualified to handle the tax aspects of payroll.

   Aside from taxes, using a payroll company with experienced and trained payroll professionals ensures that your payroll processes will meet all state and federal rules and regulations.

5. Reporting

   Payroll reporting is an integral part of the payroll process. The external payroll company will manage all the necessary record keeping and submit the necessary reports to the appropriate parties or organizations on your behalf.

   As HR departments are being tasked with moving the needle with respect to culture and attracting and retaining employees, outsourcing payroll administration lightens workloads to focus on what is important in today’s workplace.

For more time-saving assistance, check out this recent blog post: Outsourcing Leave of Absence Management.