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For the savvy small business owner, the outsourcing of payroll processing services might at first glance seem like a waste of valuable company resources.
Using on-staff administrative support can seem to be the most fiscally conservative way to handle paying your employees.
Studies have shown it can actually be more expensive to process payroll and perform the required tax reporting in-house. The truth is that it takes a significant amount of time away from you as the business owner, because of the time-consuming responsibilities and requirements associated with in-house payroll processing and personnel record keeping.
The Challenges of In-House Payroll Processing
Many small business owners are interested in ways they can save their companies money. This can often mean cutting expenses wherever they can.
At first glance, it may appear that processing your company’s payroll yourself can be very appealing. However, despite the attraction of saving a few pennies, internal payroll processing, detailed employee record keeping, and required governmental levels of tax reporting can often turn out to be a nightmare.
There is a significant amount of risk associated with processing your own payroll. For instance, if it is processed incorrectly, there can be steep payroll tax penalties. One minor miscalculation, late payment, or improperly placed file and your company could be handing over several hundred to several thousand dollars in fees and penalties.
Additionally, managing your own payroll means that you will, at a minimum, spend anywhere from 2 to 10 hours a month doing the processing for your business. For a very small company, with fewer than 10 employees, this may be a bit more practical and cost-effective. However, if you employ more than 10 people, the disadvantages of doing your own processing begin to significantly outweigh the benefits. Not only does the amount of time spent performing the administrative tasks increase, but processing payroll for more employees also means you are at a greater risk for error.
If processing your own payroll is a laborious and tedious process, consider this alternative: outsourcing your payroll processing and required tax reporting to an expert with the latest technology and support needed to make the process far less painful for business owners and managers.
Learn more about the benefits of payroll processing for small businesses.