Payroll services, outside of creating products and services for the market, represent every business’s top priority. Your employees rely on their paychecks. Very few have the ability to deal with payroll errors that keep them from receiving their checks.
Meanwhile, companies struggle as non-core responsibilities increase in size and complexity. This especially serves as the case when a company grows.
Almost one-third of small and medium-sized businesses currently outsource payroll with one in ten considering following suit. The question that many business owners face is this: will outsourcing payroll benefit my company and its employees?
Reasons to Keep Payroll In House
A number of good arguments exist in favor of keeping control of payroll in house. These generally revolve around the idea that businesses should maintain security and control over a task as sensitive as payroll.
Security and Fraud Threats
Unfortunately, some companies have found outsourcing payroll to be their worst nightmare. In 2014, South Carolina firms found that the company they hired to handle payroll had stolen funds set aside for payment of federal obligations. In total, the criminals bilked their clients out of $11 million, landing them in immediate trouble with the IRS.
Many companies avoid outsourcing, fearing that this kind of fraud could happen to them.
Almost as bad, payroll records represent a lucrative source of valuable data for scammers and online criminals. They break into databases to steal personal information, using it to open up credit cards and other fraudulent accounts.
Avoid Loss of Control
Overall, many businesses fear what could happen if they hand over control of a vital function to others. They trust their own skills, honesty, and desire to get the job right more than that of others.
Why Outsourcing Might Serve as a Better Option
Laws and regulations concerning employment and payroll grow more complex yearly. Small and medium-sized businesses, however, have the same obligations to keep abreast of changing mandates and expectations as major companies.
Furthermore, business expansion can lead to issues that your staff may be ill-equipped to handle.
Increasing Complexity of Managing Payroll as the Business Grows
Business growth often leads to the need to hire new employees. Increasing numbers of employees add to the burden of those operating human resources and/or payroll in small and medium-sized businesses.
Companies that have few or no staff experienced in payroll management might find keeping track of it overwhelming, leading to crucial mistakes.
Focus on Core Business Tasks
In many small businesses, the same individual or small team handles payroll, human resources, and other vital functions as well. When a company has a handful of employees, this dynamic may work.
As the business grows and the workforce expands, however, the expanding demands of payroll can detract attention from other important jobs.
Cost Effective
In most cases, outsourcing payroll can save a small to medium-sized business a lot of money. When a company expands, they would need to hire additional full-time professionals to keep up with the increased workload. Outsourcing to a firm of payroll service specialists can save your company up to 50 percent versus doing the job in house.
Payroll Outsourcing’s Benefits Outweigh the Risks
Outsourcing payroll can carry an element of risk, but so does keeping the job in house. While companies engaging in criminal behavior make the headlines, 80 percent of embezzlements occur at small businesses. When deciding to outsource, you want to do your due diligence to determine if a firm has a trusted and solid reputation.
Loss of control can take many forms. If your staff does not have a solid handle on the complexity or the expanding responsibilities associated with payroll, then you essentially have no control even when the task is done in house. Contracting a trusted and respected payroll services firm puts you back in control if your staff faces steep challenges in managing this task. Get in touch with us today to learn more about how our services can give your business an edge.