Here’s Why Payroll Outsourcing is a Solid Business Decision
Let’s face the reality – employees come to work to be compensated. Even the most loyal employees, ones that are excited about a company’s vision and values, devote themselves to their employer for their paycheck. With employee compensation being the primary driver for your human capital, it is vital that payroll is handled by experienced professionals.
While companies can choose to do payroll themselves, that doesn’t typically result in the best outcome. Most often, mistakes aren’t noticed until it’s too late – usually caught by the employee themselves when they see something wrong with their paycheck.
You are the expert in your business. That expertise lends you a thorough understanding of your industry, how to best serve your customers, and what types of checks and balances you need to have in place to continue providing top-tier service or products. Where your expertise may be limited is where a payroll company’s knowledge and expertise are extensive. That’s why even the IRS deems payroll outsourcing to be a sound business practice.
Let’s dive into the top six reasons to outsource your payroll to experts.
Top Six Reasons to Outsource Payroll
As we briefly touched on, expertise is perhaps the most prevalent reason to outsource payroll. There are far too many variables that impact payroll for in-house payroll operations to be the most effective option. With specialization in payroll, payroll companies are able to establish infrastructure around every single component of payroll. That means organizations get to reap all of the benefits of strategic operations, technologies, and of course, thoroughly developed expertise without the hassle of trying to figure out how to approach those things internally.
The next reason payroll outsourcing is beneficial to companies is improved accuracy. Lack of accuracy is tied closely to a lack of expertise. Where you have deep knowledge and understanding, you are able to develop better quality control and assurance. Let’s say, for instance, a company has an in-house payroll staff – each person with experience in the industry. How might that organization’s ability to have reliable checks and balances compare to those of a payroll company? There is a clear difference in a payroll company’s ability to ensure accuracy versus an in-house staff of a couple teammates performing payroll responsibilities. When it comes to employee pay, and everything encompassed in that, there isn’t room for errors. Especially if those errors could have been avoided.
A mistake an employee makes, and they will because they’re human, has an immense downstream impact. Without the quality control process a payroll company has established, employee mistakes may fall between the cracks. When that happens, your company is responsible for potentially significant penalties and as well as potential legal ramifications. Avoid inevitable employee mistakes resulting in large consequences for you by taking advantage of payroll outsourcing.
Opportunity to Leverage Technology
From a cost perspective, it doesn’t necessarily make sense for your company to purchase the latest payroll technologies. Beyond the technology itself, learning how to use it is also time (and money) that is better spent elsewhere in your organization. Payroll companies need the latest payroll technologies like you need your CRM. It’s essential to their business. When you partner with a payroll company, you get to leverage all of the benefits that come with the latest payroll technologies. That allows you to create more efficient processes, streamlining your payroll. Even more, you get to go paperless and get rid of the stacks of highly sensitive information your staff is currently managing.
Effective Resource Allocation
When you outsource your payroll, you are left with resources that can be reinvested back into your business. That is where your resources are best spent – in the place they will give you the best return on your time and money investment. This is true for companies that are potentially interested in outsourcing their payroll, but it is also true for bookkeepers, accountants, and other hired professionals that are struggling as they sift through payroll that wasn’t done properly. When something as vital to a business as their payroll is done correctly, the organization and their business partners all benefit.
Scalability is truly where all of the other benefits we have shared so far compound. With resources now more effectively allocated, an opportunity to scale follows. With the latest payroll technologies comes hyper-efficient, streamlined processes. With mistakes reliably minimized, the peace of mind that comes next allows room for clearer strategic decision making. Finally, by leveraging the expertise and established infrastructure that comes with specialization, having increased workflow is handled with ease. All organizations aspire to scale their business into the future, and that can only be done by outsourcing tasks to experienced professionals wherever appropriate.
Last on our list of payroll outsourcing benefits is an important one: privacy. When it comes to compensation, the information is far too sensitive for many people to have access to it. It is certainly fair to assume that you can trust your payroll employees not to share the information. However, even if they don’t share compensation details with a friend at the company, they themselves may have a reaction to the information. Afterall, it’s easy for employees to fall into a comparative mindset. By outsourcing payroll, you are giving sensitive information to a trusted company that doesn’t care who makes more than who. They simply care to handle the information accurately and with great care.
Beyond compensation information, payroll requires immense personal information in order to be processed. Some of the most sensitive personal information, in fact. Social security numbers, tax information, birthdays – all sensitive pieces of information that would have detrimental outcomes if they ended up in the wrong hands. Payroll companies have firewalls in place to assure sensitive employee information is safe from malicious intent. Unfortunately, there are data threats to be concerned about. Alleviate the pressure and stress of keeping sensitive information safe by entrusting a payroll company to do so for you.
Outsource Payroll & Reap the Many Benefits
The list of reasons businesses should outsource payroll is endless but these six reasons should convince any growth-minded organization that it’s time to make the change. With services that are customized to your needs, Commonwealth Payroll & HR is the premier choice to outsource your payroll to. We want you to be able to focus your time and resources on what is most important to your business.
Strategically delegating vital responsibilities in your business is how organizations grow at an exponential rate. Sometimes it feels safest to keep every task in-house but that mindset could put your business at risk. With more time and better resource allocation, the opportunities for your organization are limitless. Make the decision today to outsource payroll and reap the rewards of all of the benefits we shared.