Payroll processing firms are a great example of an outsourcing organization that can help small businesses be more efficient and concentrate on their core competencies. Some great reasons for using an outsourced payroll service provider instead of using an in house HRIS can include:
Cost
Small businesses can dramatically reduce the payroll processing costs by outsourcing . There is no need to keep a part time or full time employee dedicated to the task. It is no longer necessary to invest in the payroll software, training, and maintenance required to do payroll in-house. The total cost of ownership of an in-house payroll processing system can be considerable - even for a small business.
Direct Deposit
Most payroll services enable the small business to offer direct deposit to its employees. This can be difficult if the small business owner is doing their own payroll. Direct deposit is a very popular feature with employees. Other services and benefits are also easier to add, such as 401Ks.
Accuracy
Errors in payroll can be costly - and painful - for both the employee and the small business. Nearly half of all small businesses incur IRS fines for late or inaccurate filings. Outsourced payroll providers have sophisticated systems in place to avoid errors. Many offer protection against large IRS penalties. Check the agreement to see if they offer this protection.
Reliability
Payroll gets done on time without excuses. Vacations and illnesses won't affect payroll quality or timeliness. No more explaining to employees why their payroll checks aren't ready on time. Outside processors also have systems in place to prevent errors or catch them if they occur.
Flexibility
Using a payroll firm for outsourcing your payroll runs will free people to do work that provides better returns to the business. In most small companies, "doing payroll" is a task no one wants. Using an outside supplier will also allow for more complicated pay plans without any additional burden on the business.
Security
In small companies, the very real possibility of fraud in payroll increases. Payroll processors have sophisticated systems in place to catch payroll abuses and then alert clients to the possibility of payroll irregularities. In addition, all payroll information stays confidential within the outside processor.
Peace of Mind
Outside payroll providers are reliable. They also keep up with all the latest IRS regulations. Your payroll outsourcer is a specialist who knows and stays current on all federal, state and local regulations in a way that a small business just can't. They alleviate the concentration of a small firm's payroll knowledge in one person who might leave the company, or simply be ill or on vacation. The peace of mind that comes with using a professional employer organization to handle your payroll services can be priceless.
Finally, while we believe there are many benefits to outsourcing, always ensure that your HR Payroll Implementation has a step by step project plan in place.
About the Author
Carolyn Sokol writes about issues that may affect small businesses such as HRIS and HR Payroll Technology. Her background is in marketing and communications, employee education and training, development of policies and procedures and the ongoing delivery of outstanding customer service.
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