If you manage your small business's payroll in-house, you're probably one of the many payroll software users out there. While the software offers the necessary features to comply with payroll regulations, it can fall short because it lacks the intuition that only a trained payroll specialist can provide. In fact, there are many downsides to doing your own payroll.
So what's the alternative? Outsourcing your payroll!
At CSI Accounting & Payroll, we've worked with small businesses for more than 50 years. For the first few decades, we only handled small business accounting needs, but due to popular demand, we opened our payroll department in the 2000s. We fully understand that there are many benefits of outsourcing small business payroll, such as:
- Better compliance and accuracy
- Time saved
- More cost-effective
Compliance and Accuracy
Mistakes in payroll are commonplace, and even a simple mistake can result in expensive penalties. For example, many small businesses find it nearly impossible to stay on top of the numerous and complicated tax code changes. Consider how Minnesota has different cities (now Bloomington) expanding to include the Sick and Safe Time ordinance.
Outsourced payroll professionals are less likely to make errors than an in-house employee, as they’re trained specifically in compliance issues. Read more about what makes a payroll specialist an expert and what protection they offer.
Running a small business is difficult enough without piling on administrative tasks, such as payroll. Many small business owners find it a better use of their time to focus on activities related to the main goals of the business.
When deciding whether you are going to run your own payroll or not, you need to consider:
- If your payroll needs are going to continue to grow - and if you have time to meet them on your own
- Taking enough personal time to nurture your relationships and responsibilities outside of work
- What your time is worth as the business owner vs. what it would cost for a payroll service
A payroll service still requires information from you to run your payroll, but it takes less of your time. This is especially true if you were ever to run into any issues that you didn't know how to handle; a payroll specialist already has the compliance knowledge and accuracy to avoid mistakes that take time to correct.
Payroll is one of the largest expenses for small businesses. If it isn’t done correctly, it can also be your biggest struggle. You can save time and money by outsourcing if you aren’t confident in your skills or simply can't conduct payroll in-house.
There are three ways that you can conduct payroll in-house: doing it yourself as the owner, hiring a dedicated payroll specialist, or having another employee handle payroll on the side.
Payroll Done By Business Owner
We already mentioned that, as the owner, your time is likely valued at more than what you would pay a payroll service. Plus, we always say that payroll is simple - until it isn't. If you encounter an error, the hours spent on payroll can increase dramatically. Think of it like this equation:
Owner's high-value time * Number of hours spent on payroll > Fee of a payroll service
Payroll Done By In-House Payroll Specialist
Now, let's discuss the cost difference between hiring someone to do payroll versus hiring a payroll service. Hiring a payroll service can actually be less expensive than paying a dedicated employee in-house! This is especially true if you consider the value of time and accuracy on top of the costs of their:
- Hiring and onboarding
- Bonuses and retention incentives
- Ongoing education
Payroll Done On the Side By Other Employee
Many small businesses won't have a dedicated payroll employee on staff - but rather, an administrative employee who does payroll on the side. A lot of people don't see outsourcing as more cost-effective in this situation. Their logic is, "The employee is here anyway."
Don't get us wrong - in some situations with small businesses with uncomplicated payroll, this is a perfectly acceptable option! However, you should reflect on the point about compliance and accuracy. If the employee who does payroll does not specialize in it, this is a pretty important task to have a non-professional handle. It only takes one dissatisfied employee coming forward to get your business in trouble.
Get Started With Expert Payroll Service
Payroll services are designed to help you stay in compliance with all of the policies and regulations involved with payroll, taxes, and IRS reporting. If you are concerned about compliance or if your small business has been penalized in the past for payroll mistakes, it may be time to hire professional payroll services. Payroll providers are known to benefit small businesses by offering better compliance and accuracy, saved time, and cost-effective services.
Wondering how you can outsource payroll for your small business with CSI Accounting & Payroll? We guarantee payroll tax compliance and handle the details, including new hire reporting, quarterly and year-end local, state, and federal tax filings, and more. For a free payroll quote, click the image below:
Not ready for a quote? That's okay! In the meantime, we encourage you to read 3 Ways Accounting and Payroll Services Save You Time and Money.