As a business owner, I have outsourced payroll and I have done it in-house. Simply put, processing your own payroll is a mine field. If everything goes perfectly, then you should not have any issues but when does anything in life work perfectly. I have plenty of horror stories from both my experiences and those of my clients.
Let’s get right to it. Here are 5 reasons why you outsource payroll processing.
- It’s cheaper than doing it in-house. While that may sound counter intuitive, Price Waters Coopers conducted a study and the results were outsourcing can be 30% less than the cost of having in-house payroll processing.
- Embezzlement through a company’s in-house payroll system (along with check fraud) ranks among the most common. Eliminate this source of fraud by outsourcing your payroll.
- The IRS does not forgive. If you make a mistake – or worse, delay making your payroll tax deposits, the penalties are gigantic. And there is the possibility of criminal prosecution for screwing up the trust fund deposits.
- It is easier to maintain confidentiality by using a payroll service. Typically, there are too many hands in the company’s financial software to keep any secrets. The safest way to keep this information confidential is to keep it private.
- Payroll processing companies do a good job helping you with HR functions. From collecting immigration status information to head count reporting to tracking sick days, vacation days and disciplinary actions, the payroll companies have great facilities to do this.
Trudy Stemen is a friend of mine and a Small Business Consultant with Paychex down here in SW Florida. It is very rare that I will promote someone in my newsletter but she is so good and provides such a great service to small businesses that you need to know about her. Click here if you want her email address.
I gave you only 5 reasons because you would not even read the post if I told you I was going to give you 10,000 reasons why you should not process your payroll in-house. But I could probably come up with that list.
Have a great week.