What Can a Payroll Consultant Do for Your Business?

As your business grows, so will the size of your team — and with that comes the responsibility of managing payroll. Payroll is an extremely important part of any business for legal, financial and ethical reasons. And while it may seem straightforward, wrongly managed payroll can be disastrous and may lead to fines and penalties for non-compliance with statutory requirements.

Preparing payroll can be costly, time-consuming, tedious and prone to human error. According to a survey done in 2017, payroll consumes more time than any other HR tasks. An HR professional spends, on average, 11 hours each week on payroll. This time can be put to better use elsewhere, on more productive activities.

In addition, according to the National Small Business Association (NSBA) 2014 Small Business Taxation Survey, payroll taxes are the most financially crushing federal taxes for small companies.

To save time and money, many small- and medium-sized business owners outsource payroll tasks to a specialized consultant. All they need to do then is share their employees’ data, wage information and other necessary details to the payroll expert, who then performs payroll functions when needed. Such payroll experts have in-depth knowledge about employee pay, tax laws, wage laws and everything else related to small business payroll administration.

Here are six great reasons to outsource your payroll to an experienced and reputable payroll company.

Saves You Time

Handling payroll in house requires a lot of time and attention to detail. That's time taken away from core activities that can help you grow your business. By outsourcing your payroll, you free up that time, which you can then dedicate to improving workflow efficiencies and refining your sales and marketing strategies.

Also, by leveraging technology to automate such tasks as clocking attendance or making direct deposits, you can ensure that you don’t waste time and resources on repetitive administrative tasks.

Reduces Your Overhead Costs

Money saved is money earned. According to a study conducted by The Electronic Transactions Association, small business owners valued their time at $170 per hour, as they are responsible for such tasks as handling daily operations, generating new business, raising funds and so on. And in companies where they are also investing time in payroll, this corresponds to an annual expense of approximately $150,280 per year.

In addition, as a small business owner, you might make payroll errors, which can cost money in the form of extra taxes, fines, overpayments to employees and other administrative costs for finding and correcting mistakes.

Using a payroll consultant costs much less than a full-time employee — or doing it yourself. Consider it an investment that could help you save big bucks in the long run.

Minimizes Compliance Risks

According to the IRS, 40 percent of small- and medium-sized companies pay non-compliance penalties of $845 each year on average for late or incorrect filings. Compliance is of paramount importance. Outsourced payroll consultants are experts in tax law — it’s their job to keep up with all the rules, regulations and changes in the domain. They take on the responsibility and the accountability for your payroll by helping you stay compliant and avoid tax penalties. They can file tax documents on your behalf, make your state and federal tax payments, process the 1099 and W-2 forms for your employees and so on.

Improves Data Security Using the Latest Technology

Running payroll is a complex and risky operation. There can be a risk of embezzlement, identity theft or tampering with company files for personal gain, even with trusted employees. Apart from these risks, you'll have to ensure the security of your in-house payroll software. While the software itself could be relatively secure, the server or the network where you house your data may have security flaws that could lead to information theft.

Payroll companies store your data on highly-secure servers that use cutting-edge encryption technology to protect your sensitive and confidential payroll data, giving you the satisfaction of knowing that your information is safe.

Allows You to Leverage the Experts

Payroll service consultants make it a point to always stay up-to-date on the changing regulations that govern payroll, benefits and taxes. They are trained to maintain accurate records, prepare payroll data and make statutory filings accurately and on time, in addition to ensuring that every employee is paid correctly, keeping sick days, advances and other factors in mind.

Also, as your business grows and you hire more staff, you’ll face a whole new set of rules. For example, The Affordable Care Act (ACA) requires businesses to provide health insurance if they have at least 50 full-time employees — or full-time equivalents. A payroll expert can walk you through the details as you scale.

Gives You Access to Round-the-Clock Customer Service

Another benefit of outsourcing your payroll is having access to a 24/7 customer service team. In case of an emergency, they can help resolve any issues no matter the time of day.

Overall, hiring an outsourced payroll consultant can give you the payroll accuracy you need, while also freeing up your time to scale your business.