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3 Reasons To Outsource Payroll Processing In 2013

By December 26, 2012February 19th, 2015No Comments

iStock_000008800639XSmallManaging payroll means more than assuring employees are paid on time. As the end of the year approaches, the task of getting the books in order for tax reporting, creating W-2’s and 1099’s can be daunting.  Even with a terrific bookkeeper or excellent accountant new legislation and changes to tax laws remain the company’s obligation to be compliant.  For reporting, it’s critical to maintain accurate records, stay on top of changes to minimum wage, or new tax initiatives, pay payroll taxes, calculate benefits accrued or taken and then have a method for employees to have access to that information.

Many businesses are recognizing that using an outsourced payroll provider can streamline and simplify the process and create more accurate records.   Outsourcing can be more effective because the outsourced payroll processor will automatically implement government required changes because that is what they are in business to do; to manage the payroll process cost-effectively and efficiently on behalf of their clients.

Especially when implementing a solution like ADP for payroll processing, it’s helpful to have an ADP resource that understands the technology and can implement a payroll ADP solution that utilizes the robust technology.

Outsourcing payroll can provide three significant benefits for most businesses:


1. Save time to implementation and processing

An outsourced payroll solution is more efficient than processing payroll internally. The outsourced payroll provider is in the business of implementing changes as they occur and they are experts.  Internal staff can be freed up to devote attention other business needs, whether that’s year end performance reviews, revising job descriptions or reviewing policies.  Especially when it comes to implementing payroll processing software, there typically is a learning curve involved.  The amount of time between purchase and efficiency can be shortened by utilizing an outsource provider.
Outsource payroll saves time on:

  • Processing payroll
  • Cutting paychecks
  • Distributing paychecks
  • Calculating correct withholding
  • Calculating employment taxes
  • Maintaining payroll records
  • Preparing year end W-2s and 1099s
  • Employee payroll questions

2. Save money by efficiently handling payroll

Businesses tend to underestimate expenses associated with processing payroll internally.  There are many hours spent by employees implanting and maintain the payroll paperwork.  Outsourcing this to a payroll processing company saves money because there is no learning curve or downtime.
Understanding how much time is actually spent processing payroll must take into account the number of people involved in the payroll processing task, as well as the cost of that time.  Simple tasks, like addressing employee questions or answering concerns regarding deductions can be very time consuming for an in-house team, but are quickly accomplished by an outsourced payroll team that has associates trained and dedicated to providing that service.

3. Avoid costly litigation or penalties 

Filing payroll taxes to comply with federal, state, and local employment tax laws must be done appropriately and correctly.   If a mistake is made, it can be costly, due to penalties and interest charges that could accrue on money that was owed.  To the extent that there are ongoing changes made to laws that govern employees, tax withholding, benefit allocation, it’s pretty important to be sure that the payroll processing is done correctly.   Outsourcing payroll processing minimized this risk because the processing company must closely track regulation changes for their clients.
On a monthly or quarterly basis tax reports are generated to ensure appropriate and clear accounting.   This reporting can be an important tool for businesses to plan withholding and tax burden to remain compliant with government regulations and to assure that taxes are submitted correctly and on time.

Especially as the year comes to a close, it may be time to evaluate the internal payroll processing structure and determine whether outsourced payroll processing can save your company and minimize expense.

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