Payroll is a responsibility that every business with a staff must handle. Whether you have one personal assistant or several thousand employees, it is your business’s responsibility to make sure everybody gets accurate compensation in compliance with all federal, state, and local labor laws. This can be a lot of work for some businesses, especially ones with limited financing and/or administrative staff. For these businesses, there is an alternative: outsourcing.
What is a Payroll Outsourcing Provider?
A payroll outsourcing service is a company that handles the duties associated with their client’s payroll such as direct deposit, taxes, benefits, garnishments, and paid leave. Businesses hire these services to ensure their employees receive their paychecks in a timely and accurate, manner with minimal risk of errors or noncompliance with labor laws. These services are best suited to certain types of businesses, primarily ones that want to focus on serving their own customers/clients. Companies best suited for outsourcing their payroll include:
- Companies without in-house financing and administrative staff.
- Companies who need their financing and administrative staff to focus on tasks other than payroll.
- Companies that need payroll continuity but don’t have good data recovery systems.
- Companies with concerns about payroll regulation compliance.
The Pros and Cons of Payroll Outsourcing
If you’re considering outsourcing payroll for your business, make sure to consider the pros and cons before signing any agreements. It’s important to be sure you’re aware of the benefits and the challenges it will provide. Payroll outsourcing is a significant time-saver for businesses since you no longer need to worry about the paperwork with issuing pay. It also minimizes expenses by doing away with the need to hire in-house accounting staff. It helps to avoid accounting mistakes by hiring a company focused on your payroll, as well as ensuring regulatory compliance by hiring professionals familiar with federal regulations as well as the regulations in your company’s state.
There are a few challenges to consider before outsourcing your payroll. When you outsource your payroll, you relinquish some control to the outsourcing service so things will run smoothly and quickly. You need to be very certain of the service you hire since you’ll be sharing confidential information with them, making confidentiality the highest priority. Finally, you’ll want to be sure you can coordinate regularly and effectively with your service of choice since a lack of communication could lead to problems.
Important Questions to Ask
Once you’ve decided if hiring a payroll outsourcing service is right for you, make sure you get the answers to some important questions for the services you contact. Here are some examples to get you started:
- “Does the service provide annual and/or quarterly payroll tax preparation and filing?” Tax preparation is a major part of payroll administration and should be handled by whatever service provider you go with.
- “How does the service provide retirement plan integration?” Most service providers help arrange employee 401k deduction and safe harbor calculations.
- “How does the service ensure data security?” Making sure your information is secured should be among your payroll service’s top priorities.
- “How does the service speak with your accounting and tax software (if you have it)?” If you use any software for banking, finance management, or tax filing, you want to be sure your payroll service can work with it.
- “How does the service train its staff?” It’s important to know that the service you’re hiring has knowledgeable staff that’s trained in the latest payroll accounting practices and knows the regulations you need to follow.
- What customer services does the payroll service provide, and what does communication look like? What is the proper expectation of response time?” If you have questions or a problem arises, you want to be sure your service provider will respond and have a solution ready.
Streamline Your Accounting with Payroll Vault
We are a payroll outsourcing service that provides customized payroll solutions for each of our clients. We ensure compliance with all payroll regulations relevant to your business, provide customized payroll reporting, promise easy communication with our team, and ensure your data security with our protected online portal. We also file and pay your taxes and process tax deductions, provide direct deposit, pay cards, and more. Contact us today to request an appointment at Payroll Vault - Fort Collins/Loveland or your nearest Payroll Vault location.