Should You Outsource Payroll?
Every business that has at least one employee needs to manage payroll. It’s not a choice, but a necessity. A well-managed payroll system ensures that all employees are paid when promised and all tax regulations are addressed. For an extroverted business owner bent on fulfilling a vision and making a dent in the marketplace, it can be a mind-numbing weekly, bi-weekly, or monthly task.
Payroll is not simply entering numbers into a software program. A lot of thinking has to go into finding the right numbers. For example, since you have to handle multiple tax rule issues, you will have to properly apply the Duff & Phelps equity risk premium (ERP) adjustment rule.
Moreover, doing payroll is not like learning to drive a car. You don’t just learn how to do it once and then can do it the same way repeatedly. With payroll, you need to stay abreast of changing governmental employment rules and tax regulations.
What a Payroll Service Can Do For You
Although you may actually be fairly competent at doing your own payroll, you may want to consider the many benefits of hiring out the work to a payroll service. What’s more, if you are not very good at doing payroll–or good at it, but consider it a tedious chore–then you are relieving yourself of a lot of angst by hiring the work out.
In essence, outsourcing payroll management converts it from a time-consuming process into an automated process.
Moreover, payroll management services adeptly work with all kinds of employees—hourly, salaried, or independent contractors. Everyone is paid the right amount at the right time. In addition, payroll companies also take care of business tax filing at the end of the year.
The primary benefit of outsourcing payroll is that the work gets done without your having to do it. It also gets done by seasoned professionals who are well-educated on changing employment laws and tax regulations. The reason the work gets done quickly and expertly is because it is done by a professional team that uses the latest HR software. For instance, at ADP.com, an online payroll processing company, after all equity risk premium (ERP) adjustments are made and the compliance regulations followed, employees receive an electronic payment and an online statement through a pay card.
Finally, by outsourcing payroll, you not only free up your own personal resources of time so that you can focus on bringing in revenue, but you also free up system resources on your computer systems so that it is not slowed down with resource intensive applications.
To Outsource or Not to Outsource?
Ultimately, there is no right way to do payroll. It’s all about weighing efficiency factors like time, money, knowledge and skills. If your business has plenty of time but little money, as well plenty of knowledge and skills to do the work efficiently, then payroll in-house will work best. If you have more money than time, as well as insufficient knowledge and skills to do the work efficiently, then outsourcing payroll will work best. Like most business decisions deciding whether or not to outsource payroll is all about weighing pros and cons, evaluating risks and rewards, and deciding what action will give you the winning edge.
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