Your company is growing, and that’s terrific! You now have an office full of employees — and the headaches that go along with that: figuring out each person’s tax liability based on their W-4 forms, calculating overtime for non-exempt staff, and more. Did you know you can outsource this entire function to a third-party provider?
More and more employers are choosing to outsource their payroll service, and considering how busy you’re going to be with your core business tasks, this is often a wise decision. The services involved will make the process seamless and reduce the chances of any mishaps. Moreover, outsourced payroll is typically a scalable model: Your provider will be able to offer increasingly sophisticated services as your company grows.
Setting up and maintaining an in-house payroll system may seem fairly straightforward, but it does require some significant steps that you should be aware of:
- To start with, you have to obtain your employer identification number (EIN) and state/local ID, if necessary. Then, you must take care of the paperwork for your employees, and make sure you know what’s entailed for employees vs. contractors.
- You will need to decide on a precise payment period, and make sure you have the information you need to track employee work hours, manage part-time payments, and make the required distinctions for health plan premiums or business deductibles.
- As an employer, you are solely responsible for filing tax documents, recordkeeping, and making the necessary payments to support payroll taxes for your employees.
- Are you a multi-state employer? Be sure you know the potential tax and business ramifications of opening a location across state lines. State unemployment collect taxes at different rates. You’ll want to make sure your payroll processor understands these differences and adjusts payments appropriately.
Seeking a simpler, less labor-intensive solution? Here are just a few of the advantages to outsourcing payroll:
- It frees up your valuable time to do other things, like sales, marketing, and product development.
- You don’t have to become an expert. Managing payroll requires specialized knowledge and there are many pitfalls that can lead to regulatory nightmares.
- You don’t have to depend on one employee. Even if you have a staff member handling payroll, if that person suddenly leaves or is absent for an extended illness, it will be nearly impossible to bring someone in immediately to take over. Meanwhile, problems will crop up.
- You can actually save money by outsourcing. Let’s say you or a staff member — both untrained in the nuances of payroll — incorrectly file paperwork. Before you know it, you could find yourself hit with penalties ranging from $500 to $1,000. The penalty costs could soon be higher than outsourcing would have been in the first place.
- You can avoid the tax hassles. There are a wide variety of federal and state tax rules to follow, and you’ll save on time and aggravation by outsourcing tax management.
Of course, some companies try to save money by handing payroll over to an outsourced administrative assistant, who may be unfamiliar with payroll rules. You’re still not off the hook! If this assistant makes a mistake, in the eyes of the law, you’re still responsible as the employer. You need an outsourced provider that is familiar with the numerous payroll rules.
Learn more about our Managed Payroll Model or email us and we would be happy to connect. We’ll be happy to have a no-obligation talk about your particular situation and how qualified outsourced payroll solutions can help — no matter how small you are today or how big you’ll be tomorrow.