Payroll outsourcing is an option for paying employees in a domestic or overseas location by using a third-party payroll provider. For most small business owners, managing payroll can be a costly endeavor. Handling payroll in-house requires the use of appropriate software to support the job, employees with hours to dedicate to the process every week, and a keen understanding of employer obligations and tax laws.
When you were just starting up, you may not have a problem handling payroll on your own. However, as your business grows, you will add new employees, offer more benefits, and open stores on other locations, making in-house payroll management overwhelming. If you are in this situation, it might be time to consider payroll outsourcing:
Is Outsourcing Payroll Right for You?
Apart from the amount of money and time you put into payroll every week, there are also less tangible costs involved. Your internal payroll manager should stay up-to-date with constantly changing tax codes, and errors in remitting tax payments can lead to costly fees and fine. Make sure to take this into account against the cost of an external provider. Often, payroll service providers charge a monthly base fee, plus an extra fee per employee or per check run. If you need additional services such as direct deposit, W2 and 1099 processing, state and federal tax filings, and others, you must be willing to pay for the extra costs.
Finding a Payroll Service Provider
If you have decided to use the services of a payroll provider, it is time to find the right one. Once you have identified some prospects, set up meetings to discuss the service they offer. During the meetings, ask about the number of clients they have. You want to hire a dependable and experienced company to handle your payroll. The majority of reputable companies have many clients. Also, you want a company that will be your partner in the long run. When you partner with a newly established company, you won’t be able to know if they will still be around in five years.
Moreover, depending on what your company needs, you must look for a payroll provider that can meet them. And if the company offers a broader scope of service than you need, ensure you can negotiate pricing to make sure you only pay for what you use. The right provider offers their services at a reasonable rate.