Outsourced Payroll: Your Strategy for Business Success


outsourced payrollWhy Outsource Payroll?

Small businesses get big as the result of focus on strategy and focus on target
markets. But, even the best strategic plans encourage the taking of baby steps before taking leaps they are not prepared for. That’s reason enough to look into areas that are required of the business but do not add to that strategy.  One of those is leveraging an outsourced payroll provider to perform the necessary payroll function.  

In this article we review how outsourced payroll:
  • is the first step in aligning your team to your company’s focus 
  • is the path to allowing for future HR compliance needs
  • helps move your management team to thinking of HR as strategic
  • is the necessary baseline to begin using information as your strategic advisor

The Realities of Small Business – Outsource Payroll is the First Step

Small businesses start out as those in which the owner/entrepreneur does practically everything.  The prudent owner will look to outsource things where they lack absolute mastery over - but especially those things that distract them from building and growing the business. One of the first tasks in small business to be outsourced is payroll.  As you know, payroll means taxes, employment compliance and now healthcare compliance – and no one individual has time to keep up with all of that.  

Problems Multiply – Being Ready for HR Compliance

As a small business starts to add people, it multiplies its problems due to ‘the people’ but also due to government regulations that have to be adhered to.  Having started with an outsourced payroll option that allows one to move to a full HRIS allows that business to grow into a solution that meets their ever evolving needs along the way.  In effect, the business growth demands new time, focus, and accountability that only an outsourced provider that goes beyond payroll can offer.

Some of the experiences you can expect to gain are the following: 
  • Expertise: Payroll processing demands incredible accuracy and efficiency not easily assured with in-house work.  If you have employees in multiple states or even other countries the outsourced provider will help with this.
  • Guarantees: No small business can survive late payrolls, compliance failure, or data errors.  Your employees think of paychecks like they would the electric company – it’s expected to be delivered on time, every time.  
  • Labor burden: Outsourcing payroll reduces required HR staffing and frees leadership to up its game.  There is a time when you may want to bring HR and Payroll in house and forgo the outsourced option.  Many times this comes down to cost and control – many times it’s simply a preference of the owner.  
  • Cost savings: This can be argued both ways, however those on the outsourced payroll side believe that securing professional service on a service fee basis is considerably less than staffing up to perform the numerous tasks and responsibilities.

The Next Transition – Strategic HR Benefits

Outsourcing payroll is the beginning, and helps fulfill the obligatory tasks seen with having employees, but it also helps improve your human resources options. As a business grows the owner becomes the CEO and has an in-house HR and Finance staff. Some of their time will be working with the outsourcer who will help them with: 
  • Communications: Paper payroll checks can piggyback employer communications, newsletters, benefits information, and more. 
  • Data/Information: Employment and payroll data are kept off-site in payroll administration with redundant security. 
  • Reporting: The business owner and other stakeholders need current, accurate, and analytic reporting for budgeting and predictive strategies. 

The Final Phase – Ever Evolving Needs

Once a small company has become a company of considerable size, payroll outsourcing should have evolved to much more than that. HR/Payroll technology and services can now be used as strategic advantages that help grow the business. Today it is known as human capital information (or at times, big data) which is used to find the right employees, compensate them appropriately, identify future leaders, and help ensure the business continues into the future.   

To sum it all up, the first use of outsourcing payroll is critical to the future success of your small business because it’s the very foundation for success in human capital planning. Finding a provider that allows for that path to growth is no longer a tactical necessity but a strategic partner critical to that success.