One of the main reasons people go into business for themselves is to do something they love or feel passionate about. Unfortunately, most soon discover that there are necessary aspects of entrepreneurship that they loathe. Two examples that we hear often: payroll and taxes. Many choose to get professional assistance with their taxes, but are not so quick to consider outsourcing payroll.
A recent Intuit survey of 1,000+ U.S. employers found that 63% did not realize how much time they spent on payroll and payroll taxes and 82% of business owners said they reviewed calculations manually to verify accuracy. For some, the time to process payroll could represent 21 total days annually. For those that processed payroll inhouse, 49% said the process was frustrating, 47% said it was complicated, 44% said it was confusing, and 33% said they were uncomfortable with the process, the survey said. Diverse labor laws across states and cities complicate the process, according to 70% of employers.
Some of the misconceptions that keep business owners from hiring a 3rd party for payroll services:
Outsourcing Payroll Is Too Expensive
Have you ever stopped to think about all of the indirect costs associated with managing payroll internally? Don’t forget to include recruiting and training expenses, benefits, coverage for illness or vacation time off, payroll software and related technology support costs. Then there is the hassle of correcting mistakes, not to mention potentially unhappy employees or worse, a mistake that results in penalties and interest due the government.
Switching Payroll Is a Pain
Change involving payroll may feel daunting; however, with cloud-based technology and expert implementation teams, a quality provider will ensure that the transition is quick and smooth, causing minimum disruption to your organization. The benefits certainly outweigh the inconvenience: streamlined functionality, more time, increased compliance, cost savings, and more.
Important Factors To Consider With Outsourcing Payroll
The validity of these misconceptions is often determined by the provider you choose. Some of the most important factors you should keep in mind when you are evaluating whether to outsource and to whom:
- Knowledge – Professionals who dedicate their days to payroll have had detailed training in industry best practices, federal, state and local tax regulations and compliance, data analysis, and technology skills and are very process-oriented. They are not just focused on numbers, but are engaged in innovative thinking and problem solving. They know what questions to ask, and usually recognize when things just don’t look right. They are well aware of all relevant deadlines, and have strong time management skills. Some are backed by the resources of a full-service accounting and tax firm (hint hint).
- Relationship / Communication Skills / Empathy – Let’s face it, payroll is one of those things that people pay attention to, and get upset when it is not correct or they don’t understand something. You want a payroll professional who is not only empathetic, but can communicate that in any interactions.
- Trustworthy – This should go without saying, but there are some less than reputable companies out there for whom payroll is just a numbers game, and service is not a high priority. You’ll want to talk to existing clients before making your final decision.
- Feature-rich software – Finally, all of this needs to be built on the solid foundation of a scalable, customizable, reliable platform that allows easy access to the data you need in a timely manne
What Would You Rather Be Doing?
So how would you prefer to spend your time instead of calculating, filing, and paying payroll taxes each pay period? Participants in the Intuit survey said:
- 56% spending time with family and friends
- 47% improving business products or services
- 42% spending time with customers
- 37% networking
- 31% maintaining or repairing the business
If you are ready to reclaim some time and peace of mind, we can help!
Some of the information referenced in this article first appeared here.