If you’re managing your payroll in-house, it might be costing you more than you realize. There are significant hidden costs—from lost productivity to surprise IRS penalties—that can quietly eat away at your bottom line. Fortunately, there is a simple solution that can help you avoid all the pitfalls: outsourcing. A trusted payroll company can instantly save you serious time, money—and headaches. Here are five of the most critical reasons to outsource your payroll now.
1.) More than 200 hours in restored productivity
The average small business owner spends 235 hours a year on payroll. When you consider all that goes into the task—calculating hours, deductions, paid time off, and taxes; printing, signing, and distributing checks, processing direct deposit payments, generating reports, prepping your payroll taxes—it’s easy to see how the time adds up.
But you need to understand how much your time is worth in terms of dollar value. Let’s say you bill your clients an hourly rate of $100 for your time. That means that payroll is costing you $23,500 in lost revenue each year ($100 x 235 hours). It’s just not worth it.
Instead, look for a payroll partner that offers full-service payroll with the convenience of online self-service. You’ll be able to wrap up each pay period in just a few minutes.
2.) Guaranteed government compliance
As an employer, you’re responsible for monitoring hundreds of constantly changing federal, state, and local tax regulations, the newest wage and hour laws, and your Affordable Care Act (ACA) compliance. That’s no simple task: there are currently more than 15,000 tax codes in the U.S., and, on average, one new tax code change is introduced daily. And every mistake can lead to costly penalties. In fact, the penalty for filing incorrect returns for just one employee under the ACA is $500, and it’s estimated that 40 percent of businesses are hit with IRS penalties for payroll tax errors each year.
The good news: payroll companies are experts in the most up-to-the-minute tax and labor laws and they guarantee accuracy and compliance. Should a mistake occur, they are the ones handling the liability and corrections—not you.
3.) Easier employee retention and recruitment
Payroll errors don’t only cost you money—they can also cost you your people. A 2015 study by Sage UK found that more than one-third of employees would look for a new job if their pay was incorrect just once. The study also revealed that 77 percent of workers would tell other people if they had been paid incorrectly, while nine in 10 employees would be less inclined to work for a company with a history of payroll errors. Outsourced payroll helps ensure that your employees are paid correctly and on-time, every time. And that makes for a happier and more motivated workforce.
4.) Worry-free data security
In-house payroll can be one of your business’s biggest security vulnerabilities. Paper records and even most servers leave your data open to both employees and outside forces. Time theft, identity theft, embezzlement, and server hacking are all daily possibilities.
With a reputable payroll vendor, however, data security is a standard part of service. Most use a combination of highly secure servers, cutting-edge encryption technology, and redundant data backups to create a digital fortress for your data. You’d have to make a crippling capital investment to try and build the same infrastructure for your business.
5.) Day-to-day support that goes beyond payroll
Payroll is just one of the many employer responsibilities that puts your productivity and your bottom line at risk. Look for a payroll vendor that can support you beyond payroll with value-added services like employee handbooks and screenings, retirement services, on-demand HR support, and workers’ compensation payment programs. Having just one partner who can manage all your payroll and HR tasks will make your daily life dramatically easier and give you the ultimate peace of mind.
With the highest customer retention rate in the industry, Payce offers businesses a full suite of time-saving payroll and HR solutions and 40% average savings on payroll processing. Visit PaycePayroll.com to learn more or call 1-800-729-5910 to speak to a Payce specialist now.