Home Professionalisms The Benefits Of Outsourcing Payroll

The Benefits Of Outsourcing Payroll


by Brett Shapiro, co-owner of GovDocFiling

It is no secret that loyal and satisfied employees are an invaluable asset to your company, whether you run a startup or a growing small business. Today’s employees are searching for peak work-life balance. A solid, fully developed and well-executed payroll processing strategy can help you attract, retain and motivate employees. On the other hand, poor payroll practices often result in high turnover and damage to your business’s brand through negative online reviews of your organization.

As a growing business, however, you may still struggle to find the most effective way to perform your payroll duties without sacrificing your focus on core business functions. Keeping in mind that both goals are equally important to the health of your growing company, you might find that outsourcing payroll is the optimal solution.

Outsourcing payroll functions provides several excellent advantages for your business, including the following:

Lowers expenditures.

Running a payroll department is costly for a small and growing business. Thus, saving money anytime possible is probably a top priority for your organization. Industry experts suggest that companies with fewer than 30 employees can save money outsourcing their payroll operations. Once you compare the numbers of running your in-house payroll department to that of a payroll service provider, you may be surprised to see that huge potential savings await.

Lowers stress.

Being responsible for a small business lays many demands on you. Knowing the high stakes involved with paying your employees on time while also considering tax and compliance matters can certainly cause added stress for you and your payroll team. By outsourcing payroll duties, you can rely on an entire team whose focus is solely on payroll responsibilities.

Avoids penalty risks.

The IRS has shared that 40 percent of small businesses end up paying an average penalty of $845 each year for late or incorrect filings and payments. Common reasons for incurring penalties include late payroll tax filings, omissions and errors. Reporting mistakes involving the government often lead to audits and financial penalties that no business — especially not a small and growing business — can afford.

Offers the latest technologies.

The technology involved with payroll processing continues to improve the process. However, each upgrade can add substantial costs to your business. Additionally, some updated technologies may not be compatible with your existing computing system, compelling you to make another investment. Payroll outsourcing providers naturally stay abreast of the latest technology to streamline their business and pass the benefits of that technology to you.

Provides improved security.

Payroll processing is laden with potential risks that include identity theft, embezzlement of funds, and tampering with company or employee files. Another possible risk organizations face is when payroll employees discuss confidential payroll matters with anyone outside of the department — breaching your trust, as well as the trust of your employees. A payroll outsourcing company can help solve each of these issues since you will work with an off-premises and objective team that you can fully vet.

Another important security risk lies in your in-house payroll software. It is crucial to understand how to secure your data in the network and on the server. This concern can cut into time and resources for payroll, IT and the executive team of a small business. The best payroll services invest in technologies that can spot threats and emit alerts that indicate a potential breach or any attempt to commit various types of payroll fraud.

Brings stability.

Employees need time off for a variety of reasons, which include illness, vacation or maternity leave. Such disruptions, while necessary, can cause confusion and even some mild chaos when you attempt to cover for an absent payroll employee. You may need to pull someone away from his or her core responsibilities to help — leaving a productivity vacuum elsewhere.

When working with a payroll outsourcing company, you do not need to worry about these matters since it maintains a pool of talented employees who can expertly take care of your payroll processing.

After reviewing these key benefits to outsourcing your payroll duties to a team of experts, hopefully you can see what a solid investment it can be for your growing business.


Brett Shapiro is a co-owner of GovDocFiling, which provides information and services to help start a business — from government form filing to financial and legal business services. Shapiro, who started multiple companies prior to GovDocFiling, focuses on developing services and partnerships that support and encourage entrepreneurship across all industries.