Outsourcing payroll has become one of the hottest trends in the business world. It allows business owners to focus more time on the growth of their businesses while ensuring that payroll is processed efficiently and correctly every time. One fantastic benefit that it carries – and that many overlook – is that outsourcing also helps to reduce a company’s dependence on its own payroll department.
While having a great in-house department dedicated to payroll might seem useful, it can be a burden on your finances. Below are a few of the surprising ways that your bottom line might be impacted by processing your payroll yourself.
1. It’s Time Consuming
Payroll takes time to process.
Unfortunately, time really is money in the business world. If you have employees processing your payroll, you’re spending money on processing and management that could be better spent elsewhere. If you’re doing the work on your own, you are using up time that could be better spent growing your business. When you choose to work in-house, you’re making the unfortunate decision to give up one of your most valuable resources – time.
How does outsourcing help?
As you might expect, outsourcing your payroll really does free up quite a bit of time. While there’s still some work that you’ll need to do in-house, the truth is that you’re going to be passing off the bulk of your work to an outside company. While this can feel like quite the savings in terms of hourly compensation saved, there’s an even greater related benefit: instead of putting all of those paid hours towards payroll, you can actually put them towards those areas of your business that can make you money. If you’re looking to help your business grow and move forward, outsourcing your payroll is one of the smartest moves you can make.
2. You’re Prone to Mistakes
Mistakes are a natural part of life. The mistakes that can be made by your payroll department, however, can be more serious than you might realize. While honest mistakes are one thing, there are certain mistakes that can spell doom for your company. These mistakes concern the rules and regulations that your company must follow in regard to employee classification, overtime pay, and dozens of other factors. Keeping all of this information can be difficult, especially when there are other aspects of your business on which you must focus. Dropping the ball on any of them, though, can net you significant fines and make it more difficult for you to operate your business. Even great departments can make mistakes, and these are certainly not the types of mistakes that you can afford to ignore.
How Does Outsourcing Help?
As you might imagine, it pays to keep your business focused on one area when it comes to the law. Since payroll companies focus only on payroll matters, they’re able to focus the time and attention necessary to keep up with all relevant aspects of the law. This means that the company is not only more familiar with the regulations that your business needs to follow, but also aware of what steps might need to be taken in order to keep your business compliant with the law. These companies are able to focus more of their bandwidth on these matters and thus are always able to be a bit better informed.
3. It Leaves You Vulnerable
When you handle your payroll in-house, you’re exposing your company to a level of vulnerability with which most would not be comfortable. To some degree, this is because most businesses are simply unable or unwilling to invest in the kind of hardware and software that would keep their data safe. Even those who make the proper investments do expose themselves to risk, though, simply because the data must go through so many people in order to be processed. Every time your data changes hands, you’re putting the information of your company and your employees at risk of either accidental loss or purposeful theft. Keeping this data in-house simply is not worth the inherent risks.
How Does Outsourcing Help?
Companies which primarily work on payroll processing are companies that understand the importance of data security. As such, these companies make it a priority to not only invest in state-of-the-art data storage and protection systems but also to keep tabs on the changing practices that are needed to ensure data security. Keeping data safe is simply one of the services offered by these companies and ensuring that data leaks and breaches do not occur is one of the most important ways that a payroll company can continue to show its value to both current and prospective clients.
Chris Giorgio is the President of Fully Accountable. Fully Accountable is an outsourced accounting firm specializing in eCommerce and digital businesses. Chris has served as a CPA, CFO and has over 14 years of experience in the accounting and finance industry. Chris has dedicated his career towards helping entrepreneurs and high-level business owners achieve greater profitability through specialized outsource accounting functions.
