Effectively managing payroll is critical to the success of your business. Payroll mistakes can result in dissatisfied employees, potentially hindering engagement and productivity while increasing staff turnover. Additionally, these errors can result in costly penalties and fines levied by the Internal Revenue Service. Unfortunately, as important as accurate payroll is to your business, it is also among the most difficult and time-consuming functions to handle accurately.
As David McKelvey, Tax and Business Consulting Partner with Friedman LLP, explains, “There are so many little rules for a small business owner to stay on top of.” Increasingly, forward-thinking companies are increasing productivity and revenue by moving to outsourced payroll services. Sujan Patel, Cofounder of Web Profits, notes the following major benefits of outsourcing your payroll:
1. You Will Be Better Positioned to Focus on Core Priorities
Accurately handling payroll in-house is time consuming and accuracy is important. In 2013, for example, the Internal Revenue Service issued 6.8 million penalties totaling more than $4.5 billion to businesses for errors related to employment taxes alone and taxes are just one of the several functions related to payroll. You also need to be accurately reporting employee classification, overtime payments, state unemployment taxes and garnishes and levies. The more your business grows, increasing the size of your workforce, the more time consuming payroll becomes.
As Karen McMullen of The Staffing Edge writes, “One of the major challenges to in-house payroll processors is simply the amount of time it takes to complete and the inability to find much in the way of efficiency.”
2. You Will Reduce Costs
Businesses which believe they are saving money by handling payroll in-house tend to be misguided. The truth is that time is money and, as noted above, preparing payroll takes a lot of time. You can test this yourself by quantifying the time your company spends calculating employee hours, deductions, paid time off, sick leave and taxes, printing, signing and distributing paychecks and generating payroll reports. Now, multiply those hours by the hourly wage you pay in-house payroll preparers and compare it to the cost of outsourcing. Chances are you will be surprised at how much you can save by letting a third party handle payroll for you.
3. Your Data Will Be More Secure
There are both internal and external threats to the security of your payroll data. Internal threats include employees who, with access to personal data, can engage in identify theft or otherwise tamper with records for personal gain. External threats are even more insidious as any security flaw opens the door to hackers who can steal your data for criminal purposes. When you outsource payroll, your data is stored on highly-secure servers that employ state-of-the-art encryption technology and redundant backups. Matching that level of security in-house is generally too expensive for most businesses.
4. You Will Have Assistance with Government Compliance
Any errors created by your in-house payroll staff are subject to hefty government fines. The fact that those mistakes were not intentional is not an affirmative defense. If your business creates the errors, you are responsible, legally and financially. Companies with the sole focus of managing payroll have special expertise, including a thorough understanding of tax law. Unlike you or your payroll staff, they make it their business to stay on top of the continually shifting landscape of new rules and regulations. They are far more likely than your in-house staff to ensure you remain in compliance with all of those regulations.
5. You Will Have Access to Other Specialized Services
Many HR outsourcing or PEO organizations are able to offer payroll services on top of a variety of other solutions, like workers’ compensation, 401(k), health benefits and human resources support. In order to meet the specific needs of your business, organizations such as AlphaStaff allow you to pick and choose from many of these other specialized services.
Focus on Your Core Business
An increasing number of storage facilities have either already outsourced their payroll services or are actively considering doing so in the near future. Through a partnership with AlphaStaff, you can rely on certified experts to handle your payroll, HR, employee benefits and worker’s compensation needs. This can save you money, help put the focus back onto what your business is all about, ensure compliance with government regulations, secure your data and provide access to other specialized services so you may grow your business and add to the bottom line. If you would like to learn more, please contact Vice President of Strategic Business Development, Jeniece Carter-Henson, at JHenson@AlphaStaff.com or at 727-365-6722.