Low Cost Payroll Outsourcing Services: A Guide To Affordable Payroll
Can low cost payroll outsourcing actually save your business money? Find out why you may be spending too much on payroll tasks and how outsourcing can lower your costs.
Nearly40 percent of small businessesspend around $500 a month on payroll. A handful of owners spent more than $5,000 per month on these expenses.
As your business grows and diversifies, payroll becomes more complex. As tasks intensify, you may find payroll takes up more time and costs more money for you to administer.
If you're still doing payroll in-house, it may be difficult to see how much these tasks are costing you. Nonetheless, they add up. You may want to consider payroll outsourcing as a way to save both time and money.
How does payroll outsourcing work?
The process is usually quite simple. You research providers and select one that meets your needs. You then turn over your payroll activities for them to manage.
There are many myths about small business payroll processing. This guide will help you sort fact from fiction. We'll also help you determine if outsourcing payroll is right for your business.
What's Included in a Payroll Service?
Payroll is mandatory for your business. It includes the tasks of calculating taxes, sending them to the IRS, and paying your employees. The provider will calculate payroll, print checks, and make direct deposits to employees.
There are other tasks as well, like reporting new hires and filing the proper paperwork. Many providers offer payroll tax filing at a low cost. Some providers now offer tie-in services to assist with 401(k)s and Section 125 mutual fund plans as well.
These tasks can be time-intensive. The more complex your business, the more likely it is you spend too much on payroll.
Do-it-Yourself vs. Payroll Outsourcing
Many small business owners decide to keep payroll in-house. They may feel they're more than capable of handling payroll. They might also think outsourcing is too expensive.
The costs of the DIY method can creep up on you. Keep track of every minute you spend on payroll through a pay period, then calculate the time costs.
Unless you're a payroll professional, there's also a good chance you may make a mistake or two when you're doing payroll. This may seem harmless, but it can actually cost you more money. In fact, almost half of small businesses paidnearly $850in payroll penalties to the IRS.
You have better ways to spend that money.
The Ins and Outs of Filing Payroll Taxes
One of the most complicated parts of payroll for any business is filing payroll taxes. As you know, you're responsible for payroll deductions from your employees' paychecks.
These deductions then need to be sent to the IRS, along with some paperwork. This can be time-consuming. It's one of the leading causes of payroll penalties imposed by the IRS.
If you don't submit your payroll taxes on time, the IRS will penalize you. A service provider can help calculate and submit on time for every pay period.
Like other small business owners, you see the importance of payroll service outsourcing. It can save you time and money in the administration of your payroll. It can also save you from making costly mistakes.
The question isn't why you should outsource company payroll, but when. Many small business owners feel their needs are too minimal to send them to a service provider.
If you're wondering if it's time to outsource payroll, look for the following signs:
You've needed to hire an extra person to help with payroll administration
You're spending more time on payroll
Other essential tasks are being neglected
Employees notice mistakes
You've spent $850 or more on IRS penalties in the last year
Your payroll taxes are not being submitted on time
Any one of these signs can show it's time to outsource payroll. If you notice more than one of them, payroll outsourcing is a smart move.
How Much Does Payroll Outsourcing Cost?
The big question you have now is how much will payroll outsourcing cost you? There are quite a few factors at work.
To determine the cost of outsourcing payroll, you'll need to consider the following:
How many employees do you have?
How often is payroll conducted?
Do you offer benefits, 401(k)s, or other pension plans?
What are your federal and state tax obligations?
Are there special classes of employees working for you?
Are there special regulations applying to your industry?
You'll also need to discuss the level of service you need from any provider. Some service providers will allow you to self-manage many payroll activities. Others provide complete solutions, ensuring continuity every step of the way.
Calculating Your Cost Savings
When you get estimates from providers, you might experience a bit of sticker-shock. You'll may ask yourself if payroll outsourcing services are actually going to save you money.
In the long run, yes, they will. Be sure to calculate your current payroll costs to compare any estimate. Costs to include in your current payroll expenses are:
The cost of software and equipment
The wages paid to staff who administer payroll
The cost of mistakes and penalties
Costs associated with printing checks and mailing them
You may be spending much more on payroll than you think. Once you've tabulated these costs, it will be very clear how outsourced payroll can save you money.
How to Choose the Right Payroll Company
There's one caveat to saving money on outsourced services for small biz payroll. You have to go with the right payroll company.
There are good providers and bad providers out there. A company that charges a high price may not be the best option. Then again, neither is one that provides poor customer service or makes mistakes.
The best part? With the right payroll company, you'll still save money, time, and payroll frustration.
Get Ready to Save Money
Payroll outsourcing can be an effective way of keeping your business costs in check. If you think you've been spending too much on payroll, now's the time to make the switch.
Looking for more ways to save for your small business? Check out some of theother amazing dealswe have around the site. Meeting your budget just got easier.
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