6 Signs You Need to Outsource Payroll
Payroll may seem straightforward when you start your business, but as it grows, it becomes a much more significant investment of your time and energy. Outsourcing payroll is an option many businesses use to ensure their payroll is taken care of by a professional while giving them more time to focus on their business.
If you’re unsure, here are six signs that your company needs to start outsourcing your payroll.
- Processing payroll stops you from growing your business.
When first growing your company, you may not need an accountant to manage your payroll because it’s a small team that can be worked with a small time investment. However, payroll processing becomes more complicated as your company grows, requiring a larger investment.
You can’t continue leading and growing your business at a certain point because so much time is spent managing payroll. At that point, it’s time to outsource payroll.
Outsourcing payroll is the perfect solution because an experienced professional will be responsible for your payroll. This will free up your schedule to focus on managing and growing your business and knowing that your payroll will always be correct.
- You’re not meeting compliance requirements.
There are federal and state laws and ever-changing regulations that must be met. If you are not aware of those regulations, or you are aware and unable to remain compliant, it’s time to outsource your payroll.
Regulations that must be met include:
- Minimum wage
- Pay frequency
- Methods of pay
- Payroll taxes
- Pay stubs
If you have remote workers, it’s important to remember that you must follow the regulations of the state they live in. For example, the minimum wage in the District of Columbia is $16.50, while in Georgia, it’s $5.15. Some states have additional payroll requirements, including additional income tax, required forms, workers’ compensation, and even additional administrative processes. If your payroll is not meeting each state’s compliance requirements, you are putting yourself in line for significant fines and potential legal action.
- You consistently have errors in payroll or run payroll late.
Payroll errors cost you time and money to fix, but they also come with the potential cost of losing your employees.
The majority of Americans (63%) are living paycheck to paycheck. Even a tiny payroll error could mean your employees cannot afford essential living costs like housing or food.
With one error, roughly one in four employees will start to look for a new job. After two errors, that number doubles to almost half of the employees looking for a new job.
No matter where your errors come from, if you consistently have payroll errors, it’s time to outsource your payroll.
- Your software is not up to date.
Payroll regulations are consistently updated at state and federal levels, and your payroll software needs to keep up with those regulations. If you’re using outdated software, there’s a good chance you’re making costly payroll errors without even knowing it.
If you use outdated software, everything will look fine when you process payroll. However, because your software follows outdated rules, every payroll you process has errors.
Ensuring your software is constantly up to date and following all regulatory standards can be a major investment, which is where outsourced payroll can help. By outsourcing your payroll, you can rest assured that every payroll follows all regulatory standards and that you are getting accurate and error-free payroll.
- You’ve missed tax deadlines.
The IRS is more strict than your 10th-grade English teacher about deadlines. If you miss a tax deadline, you have to pay a fine. The further past deadline you are, the more you have to pay.
For example, if you miss the deadline for form 941 or form 944 for one employee by only one day will cost you 5% of the total amount due.
Every missed deadline is more money your company has to pay and directly impacts your bottom line. By switching to outsourced payroll, you’ll know that with every deadline, every form is filled out correctly and submitted on time.
- You’ve struggled with deductions for benefits and garnishments.
If your company offers benefits, you are responsible for managing the added complication of deducting and withholding contributions from your employees. You’ll also have the responsibility when you get notice of a court judgment (like child support or alimony) that you must also manage.
These additional benefits and garnishments can take time to manage, and if done improperly, they can lead to fines and potential legal issues for you and your employees.
Start Outsourcing Payroll Today
If you have ever been frustrated, annoyed, or inconvenienced by payroll, it’s time to start outsourcing. Outsourcing frees up your time and removes all the payroll burdens, placing them on the shoulders of accountants you can trust.
Rather than wasting your time trying to learn how to manage payroll, with outsourcing, you can give all of that responsibility to an expert who is prepared to help you no matter what problems you throw their way.