Thinking about outsourcing payroll? The recurring expenditure may put some SMB owners off, but it is a sound investment in the long term.
If you are on the fence about assigning your payroll to a third-party provider or hiring in-house staff, you are not alone. Read on why it might be in your best interest to outsource here.
Cost and Time Efficiency
The first and most obvious benefit of outsourcing payroll is cost-efficiency. SMBs have to work within a limited budget and manage resources with care.
The most important resource is time. Each hour you or your managers are spending time on payroll, it’s an hour you are not investing in growing your business.
Payroll takes up a lot of time and needs a lot of attention to detail to avoid costly mistakes. Unless you have a sizable accounting department, outsourcing payroll is more cost-efficient than doing payroll in house.
Today, there are several payroll services that offer a broad range of payroll outsourcing solutions, from simple pay slips to complete payroll processing. The cost of outsourcing payroll will not fluctuate on a monthly basis, and you will always know what you are paying for.
Payroll comes with certain inherent risks to SMBs. These risks include embezzlement, hacking, and even identity theft. Even with the most advanced payroll software, SMBs are more vulnerable to hacking than ever.
Outsourced payroll providers add an extra layer of protection against such external threats. Payroll is particularly attractive to hackers, as it processes a lot of money. If a hacker can gain access to your payroll, they may redirect funds, which can be catastrophic.
In addition to business security, payroll services also guarantee compliance with all federal and state regulations. Calculating tax deductions is a complex process, and mistakes can cost your company a lot of money.
Payroll also involves maintaining accurate reports of hours worked and numerous other parameters. By outsourcing payroll, you let your payroll provider deal with these issues and ensure your company remains compliant.
Automation and Advanced Reporting
Finally, outsourcing payroll enables you to leverage big data to further grow your company. Modern payroll providers also offer advanced integration with HR and analytics tools. These tools allow you to use the power of data to find issues within your company and identify areas of improvement.
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